The state of commercial and residential construction in NOLA
In 2014, real estate construction, including both residential and commercial, comprised $1.0656 trillion, or 6.1 percent, of the nation’s economic output as measured by Gross Domestic Product.
Here in New Orleans, real estate continues to make steady and significant contributions to our local economy with an improving housing market and exciting commercial projects and developments.
“The real estate outlook continues to gain momentum and promises strong growth throughout 2015 to at least as far out as 2018,” says Billy Burk with Burk Brokerage and Burk Property Investments.
Commercial Hot Spots – South Market District in the CBD
“Looking back at last year, one of the most exciting projects has been the South Market development, as it’s really brought new life and vitality to that part of the CBD,” says William Hoffman, senior vice president for corporate planning and development with Woodward Design + Build. “It’s really expanded the residential footprint.”
The Domain Companies, a local development company first launched in New York by two Tulane University graduates — Matthew Schwartz and Chris Papamichael — is the developer of the South Market District. Domain specializes in large-scale, mixed-use development in partnership with municipalities. The company has been involved in more than 3,500 housing units and 250,000 square feet of retail space in markets large and small around the country.
Here in New Orleans, they partnered with Woodward Design+ Build, Eskew+Dumez+Ripple, Humpheys & Partners, and Terremark Partners on the South Market project.
The development encompasses a five-block area at the intersection of the Warehouse/Arts District, Central Business District, Medical District, and Sports/Entertainment District. South Market District is a mixed-use, transit-oriented development combining luxury apartments with shops, cafes and restaurants, and exciting entertainment venues. When complete, the district will include more than 700 new luxury apartments, 200,000 square feet of retail space including a 40,000-square-foot full-service gourmet grocer, and 1,300 garage-parking spaces.
New Orleans’ biomedical corridor encompasses 1,500 acres and is estimated to have a $3.3 billion local economic impact.
This summer the new University Medical Center New Orleans, the anchor of the biomedical corridor, officially opened its doors to patients at 2000 Canal St. The state-of-the-art facility spans 2.3 million square feet and offers 446 in-patient hospital beds. It also employs 2,000 full-time workers.
“The opening of University Medical Center is exciting with all it offers the area,” says Rachel Wulff, real estate agent and host of the WGSO-AM radio show “Real Estate Rundown. “This is good for residential real restate because doctors, nurses and medical staff will need housing.”
The much-anticipated University Medical Center opened its doors August 1 and currently employs 2,000 full-time workers. Photo Benjamin Benschneider
Hotels are Hopping
Another economic boost from the biomedical corridor comes from properties bought and developed to support the needs of the hospital, such as hotels. In fact, there has been a hotel boom all around the city recently.
“We are going to continue to see a growth in hotel development in 2016 and construction going on in the Downtown area,” says Hoffman. “This has been going on for a couple of years, and I see it continuing for a few more years.”
Two Marriotts, One Building
NewcrestImage, a Texas-based hotel development and management company, recently purchased and is planning to convert a 13-story tower located on 1600 Canal St. into a 105-room TownePlace Suites by Marriott and a 78-room SpringHill Suites by Marriott. It will be the first building in the country to combine the two hotel brands.
The hotels will share amenities, including a single lobby and registration desk, breakfast area and indoor bar. NewcrestImage is also building an 8,000-square-foot rooftop garden with an outdoor bar, exercise room and laundry facility for guests of both hotels to use.
NewcrestImage is no stranger to the hotel market in New Orleans. In 2013, it bought the city’s historic Cotton Exchange Building and invested $12 million into converting it into an AC Hotel by Marriott.
Another big project for the city is the development of the former Jung Hotel. Developer Joseph Jaeger is leading a $13 million project to redevelop the 17-story building located on the riverside corner of Canal and LaSalle streets.
Plans include a multiuse facility, which will feature 175 luxury apartments and 145 hotel suites. There are also plans for 50,000 square feet of retail, meeting rooms and event space and a 484-space parking garage. Completion is projected for fall 2016. Also contributing to the project are John C. Williams Architects, Trahan Architects and the McDonnel Group as general contractor.
World Trade Center to Become Four Seasons Hotel
The iconic building at 2 Canal St. once known as the World Trade Center will become a Four Seasons Hotel and condominiums. It is also expected to bring more than 1,600 construction jobs and 450 permanent jobs to the area.
The development team made up of Carpenter & Co. and Woodward Interests plan a 350-room Four Seasons with 76 hotel-serviced condos. Their design also adds two wings to the sides of the building.
A visitor center will also be included on the site. “New Orleans: History at the Confluence of Cultures,” will be developed with guidance from Henry Louis Gates Jr., a Harvard University professor of African-American studies, and Tulane University history professor Lawrence Powell. According to the developers, the attraction will be a digital, immersive experience.
LEFT: The World Trade Center will become a Four Seasons Hotel and condominiums. RIGHT: Uptown, the Lower Garden District, CBD and Warehouse District are all currently commanding residential prices of over $200 per-square-foot. Photos Cheryl Gerber and Thinkstock
Residential Real Estate
Wade Ragas, a leading expert in the real estate industry here in New Orleans and throughout the country, provides housing-market analyses for the New Orleans Metropolitan Association of Realtors that focuses on data by ZIP code.
His most recent analysis of data from the New Orleans Metropolitan Association of Realtors and Gulf South Real Estate Information Network shows that the New Orleans residential real estate market has more than rebounded 10 years after Katrina.
“For example, one of the things our most recent report looked at was the housing market, and it showed that that market has fully recovered in levels of housing prices and sales volume,” Ragas says. “Just for example, the metro New Orleans average prices have risen from $102 per foot before Katrina to $121 per foot or by 18.6 percent. So the average price of a house in the metro area in 2005 was around $196,000, and now it’s around $234.000.”
Ragas’ reports’ latest figures also show that the market has improved in the desirable neighborhoods spanning the Warehouse District, Lower Garden District, Uptown and the French Quarter, which now average well over $200 per square foot for single-family homes. There was also double-digit percentage growth in eastern New Orleans, a footprint that includes the recently reopened New Orleans East Hospital.
The Garden District remains an influential neighborhood, where the average home price is approximately $1,080,935. Uptown saw an average price-per-square-foot rise to $240 from $223, making it the most expensive neighborhood for single-family homes in New Orleans last year.
According to Kevin Ivens, real estate developer and investor with Buckstone Investment Group, “Finding a house, particularly in Uptown, has become a challenging task. Due to the recent cultural shift, more emphasis is placed on who’s living where. The demand is high and the inventory is limited. There are just not that many high-end renovated properties available.”
Some experts believe that the people coming close to their retirement periods will drive much of the real estate sold in 2016, and millennials are predicted to account for 65 percent of the homebuyers.
“New Orleans is experiencing a renaissance of new business startups and diversified commerce that is being coined as a ‘brain gain’ for our region,” says Burk. “Investors would be wise to focus on millennials, whose preference in real estate falls primarily in urban areas featuring views or near water. This gives the New Orleans area a significant advantage over other U.S. cities.”
Another thing to consider, according to Ivens, is that the National Association of Home Builders shows that the average home nowadays is 10 percent smaller than the new home five years ago — about 2,200 square feet. An eco-friendly home with plumbing and energy-efficient windows and a smaller carbon footprint is preferred by downsizing boomers and millennial buyers.
Advice for Buyers
Burk believes that with low interest rates and real estate markets on the rise, now is the time to borrow.
“Homebuyers should buy big and buy now,” he says. “Investors and retirement planners should focus on new construction, remodels in the short term, and urban multifamily for the long term.”
Many, like Wulff, who along with her husband in the past eight years has renovated 19 properties, believe the residential real estate business will continue to climb.
“It’s an exciting time for New Orleans,” she said. “There are more educational opportunities and options for families with public and charter schools. It’s affordable to raise a family in New Orleans. And we see history and hope on every street we walk down. It’s a feast for your eyes.”
In both commercial and residential real estate Ragas says there’s no end of growth in sight. “I’m not seeing any kind of bubble phenomenon here,” he says. “Even though we’re in our sixth or seventh year of expansion, I’m not seeing anything that looks like a bubble.”