Brighter Days Ahead?
Local real estate and construction professionals share their expectations for 2022.
I would consider my company’s success has more to do with internal reflection than project completions or profits earned this year.
Ryan D. Mayer, owner, Mayer Building Company
The past two years have had their ups and downs, perhaps more downs. Drew Brees retired, ZZ Top is now one man short, and COVID-19 is still hanging around. However, there have been some bright spots. ‘Keeping up with the Kardashians’ ended, The United Nations declared 2021 the international year for fruits and vegetables, and the mask mandate has come to an end — at least for now.
One word comes to mind above all others when describing 2020 and 2021 — survival. With a global pandemic and natural disasters, life has made most days a tough go for us all. People lost their jobs, businesses and spirit at times.
“Any South Louisiana small business still standing in the last quarter of 2021 deserves commendation given the pandemic, the 2020 and 2021 hurricane seasons, the questionable state of New Orleans leadership, the supply chain hang-ups and the labor woes,” says Ryan D. Mayer, owner of Mayer Building Company. “I would consider my company’s success has more to do with internal reflection than project completions or profits earned this year.”
In order to survive the past two years, Mayer’s team placed an emphasis on three things: leadership, effort and patience.
“In any business, leadership must be present, and effort and patience must be employed, or the business will not thrive or last,” he says. “This year, all three are being tested, here, and likely everywhere. As the owner, I am the leader, sure, but the courage to demonstrate leadership in every superintendent, technician and manager is worthy of attention. We are being patient with ourselves, with the collapsing supply chain, the vendors and stakeholders. Our efforts are based in customer advocacy, pushing against labor shortages, prevailing human angst and uncertainty.”
Robust Residential Market
Despite shutdowns, Hurricane Ida and a general fear of instability, the real estate market held strong in 2021 with further success predicted in 2022.
“2021 was robust despite Covid, [and] a temporary slowdown due to Hurricane Ida,” says Gigi Burk, owner of Burk Brokerage Real Estate. “The lack of inventory created a strong seller’s market in 2021. This seller’s advantage is projected to continue into 2022, but at a less aggressive pace. Our 2022 market is looking very strong, with a 10-15% increase in values within a more balanced market for buyers and sellers.”
Burk Construction and Development, owned by Burk’s husband, Billy Burk, has several new luxury projects slated for Lakeview and Old Metairie.
“The company expects to see continued demand in its top tier of luxury homes, where price points start at $1.25 million,” Gigi Burk adds. “High buying power, enabled by low interest rates and confidence in continued market value increases, has created the perfect incentive to buy or sell. This is framing up to be a once-in-a-lifetime opportunity, one that we are sure to reflect on for years to come.”
Construction On the Rise, One Shingle at a Time
Material shortages and limited selection have not stopped Earl J. Mackie of Mackie One Construction from flourishing in 2021. Mackie says his company has already doubled its gross revenue from 2020, with sales exceeding $1 million. Mackie One construction also increased its workforce by 50%.
Mackie believes his company’s success will continue to grow in 2022.
“We strive to be the most reliable and respected roofing company in our market,” he says. “We will also continuously strive to provide a high level of value and customer service to our clients throughout the New Orleans metropolitan region.”
The company’s new projects include a Treme location of Ma Mommas House of Cornbread and Chicken & Waffles. Mackie also plans to “dig deeper into the residential home improvement market and penetrate into the small commercial roofing industry.”
Lease Deals vs. Sales
Richard E. Juge, CCIM, SIOR, president of RE/MAX Commercial Brokers, says most of his team’s success has resulted from lease deals vs. sales in 2021.
“We see a lot of office tenants rethinking their office needs, and still doing longer-term deals,” Juge says. “lndustrial has been on fire for years, and there is no sign of that changing anytime soon.”
However, Juge believes that New Orleans lacks new quality products, which has left companies scrambling to find viable options.
“There’s trepidation in the sales market that’s twofold,” he says “‘A’ sellers are concerned about proposed tax changes by the Biden administration specifically related to capital gains taxes and limitations proposed on 1031 exchanges. If those go into place, there is no doubt transaction volume will decrease dramatically, which spills over to banks, title companies/attorneys and hundreds of others involved in these transactions.”
According to Juge, while the market rebounded a bit in 2021, we have not returned to pre-pandemic levels.
“Unlike residential, COVID-19 really stymied commercial transactions — it seemed like the markets were frozen for three to six months,” he says. “The impact has been greatest on retail, and more specifically, hospitality-related [businesses] in the city. [The Louisiana Commercial Database] shows major absorption of property in the New Orleans Metropolitan Service Area. The inventory of retail-for-lease options fell 20.35% from this month vs. the two-year average, and the number of office buildings available for purchase fell 16.31% in the same time frame.”
While the news was not good for 2021, Juge expects 2022 to be a recovery year for New Orleans.
“We’re working on 20-plus months since COVID-19 shut this city down, and my sense is there is tremendous pent-up demand,” he says. “While tourism doesn’t immediately impact office and industrial, it would be a big boost to the psychological recovery of this market.”
Juge also predicts good things for the energy industry in the coming year.
“I do feel like the energy sector is about to see a return to prosperity,” he says. “It’s been shrinking for a half dozen years, but we are seeing activity return and I predict a resurgence.”
A couple of projects Juge says are worth keeping an eye on include the revamp of Clearview Mall and the new logistics hub in Luling, the latter of which is designed to provide quality inventory to the industrial market. But the biggest project of 2022 might be Bayou Phoenix, the development project selected to revitalize the old Jazzland site in New Orleans East.
“I’m really hopeful that the Bayou Phoenix development can get inked,” he says. “That truly should be transformative for the East, which has been stuck in a rut since Katrina. The plans for that development seem to have a good balance of distribution, retail and entertainment.”
Our 2022 market is looking very strong, with a 10-15% increase in values within a more balanced market for buyers and sellers.”
Gigi Burk, owner, Burk Brokerage Real Estate