New Orleans: A Work in Progress
Commercial construction in the city is booming.
Seems like everywhere you look in the New Orleans area these days you see backhoe loaders, huge excavators and rolling scaffold towers.
Nationally, the American Institute of Architects predicts that commercial construction spending will increase 8 percent in 2015. As the economy continues to stabilize, non-residential construction will continue to grow, stimulated by declining office and retail vacancies, as well as growing commercial property values. Led by the hotel and retail project categories, the commercial sector expects to see the biggest gains in construction spending, with demand for institutional projects increasing at a more moderate level.
Richard Tyler, construction practice chair of New Orleans law firm Jones Walker, says the city is seeing significant activity in commercial construction, “especially in the construction of multi-family housing and associated amenities, particularly in the CBD (Central Business District), such as the Domain Companies’ South Market District development. Outside of New Orleans, there are numerous significant projects involving heavy manufacturing and the petrochemical industry.”
Following is a look at the latest projects from local commercial construction companies.
The McDonnel Group
This Louisiana-based general contractor, located in Metairie, specializes in ground-up new construction, additions, interior and exterior renovations and remodeling services. Currently, The McDonnel Group boasts annual revenue in excess of $100 million.
The company’s most notable project is the work they are doing on what was previously known as the Jung Hotel. Once the largest and grandest hotel in the Southern United States, the site is now undergoing a massive redevelopment.
The Jung Hotel will soon consist of 338 residential apartments, an extended-stay hotel, ground-floor commercial space and a large parking garage. Its grand opening is planned to coincide with the opening of the new University Medical Center and the Veterans Affairs Hospital of New Orleans. It’s intended to attract medical students and medical staff of the nearby BioMedical District, another major boom in commercial construction.
Other projects by McDonnel include Jefferson Parish Data Center, Paul Dunbar Elementary School and Lake Forest Elementary. Next up are a few redevelopment projects: World Trade Center and Plaza Tower.
Chase Marshall Architects
Nick Marshall is the design director for Chase Marshall Architects and the son of a fireman. As such, he says he finds it very satisfying that his firm designs fire stations across Louisiana, from Violet to Arabi.
“It’s great working with the various municipalities and designing functioning buildings for our state’s firefighters and first responders,” Marshall says.
Other projects by Chase Marshall include Price House, NOLA Residential Project and the Entergy office in Chalmette.
Chase Marshall Architects has been busy designing fire stations across Louisiana, like this one – Fire Station 11 in Yscloskey.
-Photo courtesy of Chase Marshall Architects
CM Combs Construction
CM Combs specializes in commercial and custom residential construction in Southeast Louisiana, often working with public entities such as the Archdiocese of New Orleans, the Louisiana Stadium and the Exposition District. Recently, they finished work at the National WWII Museum, completing the Andrew Higgins Bridge, which connects the pavilion and theater museums with a sky bridge over Andrew Higgins Boulevard.
Other recent projects include: enhancements at Zephyr Stadium, Verdad Real Estate’s New Orleans headquarters on Camp St., the renovation of the St. Tammany Parish public defender’s office and the renovation of old Whitney Building in Slidell. Next up: a medical complex and an art museum in Covington.
Hot spots for commercial construction
Marshall says he feels it is very positive that Greater New Orleans is moving away from the use of federal assistance money and beginning to generate its own revenues for commercial construction.
“We are coming alive again,” he says. “I also think it is important that we are renovating our historic theaters. These renovations will bring more commerce into the area.”
Chris Combs, owner of CM Combs Construction, is excited about the area’s expanding entertainment industry and thinks one of the hottest spots for commercial construction right now is in Uptown New Orleans.
But many other contractors view the area’s hot spot as South Market District, which they feel is responsible for transforming New Orleans’ historic downtown.
South Market encompasses a five-block area at the intersection of the Warehouse District, Central Business District, medical district and sports/entertainment district. It is a mixed-use, transit-oriented development combining luxury apartments with shops, cafes and restaurants and entertainment venues. 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.
Marshall agrees South Market is hot. “But we are also waiting to see what will happen along Tulane Ave,” he says. “That area is going to boom very soon.”
Spurring development along is BioDistrict New Orleans, which encompasses 1,500 acres spanning the Downtown and Mid-City areas of New Orleans. The project is estimated to cost more than $3 billion for construction, create 3,600 construction jobs and offer 11.6 million square feet in new commercial space. This project alone is estimated to have a $3.3 billion local economic impact.
Building in New Orleans
Brian Katz, a partner with the law firm Herman, Herman & Katz, notes several challenges commercial constructors face when designing for and building in New Orleans, the largest of which he says is handling the city’s humidity.
“The biggest problem I have encountered after the completion of a building is moisture intrusion,” he says. “A building in New Orleans must be designed and constructed with moisture intrusion as its biggest concern. A building that can be built most anywhere else will not work here and litigation will result if this issue is not properly addressed.”
Allan McDonnel, president of the McDonnel Group, agrees that building in New Orleans presents specific problems. “Annual rainfall, soils conditions, limited labor market and limited talent pool compared to larger markets are all real challenges,” he says.
But McDonnel also sees some real advantages in doing business in the city. “There’s a fairly good base of subcontractors, not a lot of large contractors to drive fees down, and good building officials are real advantages,” he says.
New Orleans is experiencing a surge in construction, especially with multi-family housing.
-Photo courtesy of Thinkstock
There are various legal issues and requirements, such as licensing, liens, prompt payment, and anti-indemnity statute, that are unique to the construction industry.
“The key is advising the client at the front-end about the various risk elements and giving them guidance on how to manage them,” Tyler says.
“I really don’t do much on the front end,” says Katz. “What I try to do is spend time on negotiating the construction and design contracts and making sure they have laid the groundwork to get the building they want built. It is very expensive to litigate over a construction or design dispute.”
Even with all the challenges and legal issues, the future of commercial construction in New Orleans is especially bright. Michael Hecht, president and CEO of Greater New Orleans, Inc., shares his thoughts.
“Commercial construction is strong in New Orleans right now,” he says. “From exciting new projects like South Market, to adaptive reuses, like the World Trade Center (made possible by historic tax credits). New Orleans is seeing more construction than any time since the ’80s. The bottom line is the New Orleans market is very good and getting even better.”
Commercial Permit Jump Boosts St. Tammany Economy
In the fourth quarter of 2014, commercial building permits rose in St. Tammany Parish by nearly 30 percent.
“Though the first six months of 2014 were slower than we like to see, a positive surge in the second half of the year significantly impacted our economy,” says Brenda Bertus, CEO of the St. Tammany Economic Development Foundation (STEDF).
Permit growth for the year ended at 10.4 percent, surpassing the economic expansion of the parish, which increased by 2.5 percent.