Commercial Real Estate Market Analysis

Robert L. Hand RE/MAX Commercial Brokers, Inc. October 31, 2006 3rd Quarter 2006 Issue

This Issue services. Local and regional developers have proposed many apartment complexes to offset this This issue covers the activity in commercial real problem, but rising construction and insurance estate in New Orleans in recent months. First of costs have made these projects less feasible. all, the current trend is a transition away from However, the Louisiana Housing Finance Agency warehouse space to new apartment construction, is dolling out $103 million in tax credits to due to the expected demand for housing. There is developers who dedicate percentages of their also new, but reduced, interest in office and retail properties to lower income tenants and complete space. Just to review, the post-Katrina their projects by the end of 2008. At the other end environment witnessed three distinct cycles. The of the spectrum are developments for expensive first lasted from September to December 2005, condominium complexes such as Donald Trump’s with demand in leasing office space outside of on Poydras Street. New Orleans, so that businesses could continue to operate. The second cycle, from January to March In the uptown area, Albertson’s sold their 11 acre 2006, witnessed residents returning to the City site to a developer who will build a large apartment because schools re-opened, creating heavy complex just blocks off St. Charles Avenue. In the demand for housing. Due to new demographics, suburbs, a Harahan country club is proposing a some businesses re-opened which increased “mini-Bellagio” condominium resort and Slidell is demand for warehouse; however, demand for going ahead with a lakefront resort-style retail space was minimal. The third cycle, from condominium complex. However, most of the April to July 2006, witnessed a flood of property for housing and condominium development will occur sale, with wide discrepancies between prices in the CBD and Warehouse District. sellers wanted and prices buyers were willing to pay; therefore, few transactions were completed. Many real estate corridors that were once thought hopeless before Katrina are now thriving on the Housing a Rising Population increasing demand of the slowly repopulating City. Existing casual dining restaurants, fast-food In the following month of August 2006, the restaurants, and gas stations along the Carrollton commercial market was dominated by demand for Ave corridor have reopened and there is demand vacant land upon which to construct apartments, to lease and purchase more property. Home using Low-Income Tax Credits awarded through Depot is proceeding with a 6 acre development at the Louisiana Housing Finance Authority, funded South Claiborne and Earhart Boulevard, and their through a plan created by the Bush Administration. competitor, Lowe’s, has purchased part of the Prices for warehouse space reached equilibrium former Lake Forest Plaza Mall in New Orleans during August, due to additional supply coming to East to develop a store. Both Lowe’s and Home market. This contrasted with the first quarter of the Depot report that sales in the New Orleans stores year where strong demand and very little supply are 50% higher than normal. pushed prices upward. Short-Term Forecast The population of New Orleans slowly rose in August and September with the reopening of As the 2006 comes to a close, the real estate school districts. Latest estimates are that New market in the New Orleans area should remain Orleans’ population approximates 190,000, which fairly stable. Expect most retail development to be is vastly different from Mayor Ray Naqin’s forecast initiated by corporate chain retailers who are of 300,000. Jefferson Parish population estimates willing to take the risk of developing in the area. are approximately 435,000. Most small businesses have already settled back in less risky areas on higher ground. Also expect The greatest impediment for growth is the inability the entire metropolitan area to see a marginal rise for employers to get their employees back into the in population as migrant workers settle in the area City due to a lack of affordable housing. As a with a steady workload of renovations. result, many retailers in the New Orleans area are unable to meet the demands of their customers Purchases Exceeding $1,000,000 YTD 2006 and many are closing early or provide limited Orleans Parish

Copyrighted. For permission to copy or quote, contact the author. Information from reliable sources but cannot be guaranteed. There are 138 transactions exceeding one million  1319 W. Esplanade, a former Lone Star restaurant, for dollars in value so far in 2006 in Orleans Parish. $1,135,000 by Al Copeland Investments. Notable purchases of commercial real estate  4401 Veterans Blvd. by Henry Defraites and Raymond include: Peacock for $1,200,000.  271 Citrus Rd in the Highland Acres Industrial Park for $1,425,000 by Jeffrey A. Mitchell.  2331 Magazine, to Tom Tarnow by John Hamide and Robert Perret for $1.1 million for multi-family.  A tract of land on the WB Expressway near Sengette Park for $1,943,685 by Wal-Mart LA LLC.  Carrollton Avenue, bounded by Olive, Edinburgh, Lowerline and Fern, for $1.25 Million, to Gerald  1220 Peters Rd., a tract of industrial property along the Wasserman by Robert Autenreith. Harvey Canal for $3,950,000 by Waste Management. 800 Commerce Rd. in the Elmwood Village Industrial  814 Canal Street for $1.45 million to Damin Halum by  Krauss. Park for $6,000,000 by Elman 800 Assoc. 2824 Kingston, an apartment complex, for $6,100,000  South Claiborne at Earhart, a new Home Depot site,  several lots for $1,850,000. Additional land in the same by Arthur Lawson III. area was purchased for $1,800,000. Current Selling Prices for Property  Falstaff Brewery on Gravier Street for $1,100,000 by SF David Miller and Kenneth Vitter. Category Price/SF  601 Galvez, a 70,000 SF warehouse for $1.75 million Available to Kid Gloves, Inc. Office-For Sale 106,204 $103  2221 Cleveland for $1.89 million by Pincus Friedman.  848 Carondelet for $3.3 million by Eugene Ducote. Shopping Center-For Sale 26,590 $71.46  5700 Read Road for $3.4 million to Louis Lauricella by Retail-For Sale 172,739 $70.52 Milton Cooper.  Oretha Castle Haley block, for $3.45 million to Kathy Industrial-For Sale 257,774 $36.39 Laborde. Retail-For Lease 396,680 $19.07  516 Royal for $4.1 million to John Walker by Henry Granet. Shopping Center-For Lease 4,000 $18  Carrollton Winn-Dixie for $5 million to Radah Butler. Office-For Lease 248,705 $15.21  Burgundy & Bienville for $5.5 million to Vincent Marcello by Frank Bruno. Industrial-For Lease 692,989 $6.56  5301 Tullis for $8.4 million to Daniel Brown. Vacant Land-For Sale 12,719,374 .87  381,000SF land near the Lafitte housing project just blocks from Canal and North Claiborne for $2,259,306 Multi-Family-For Sale, Units 120 units $68,167 by Film Factory from Alabama Southern RR. Hospitality-For Sale, Units 268 units $63,806  1667 Tchoupitoulas for $1,100,000 by Robert From 180 properties listed in the Louisiana Commercial Database, excluding Armbruster and Tim Ritchie. 4 CBD office buildings listed in Loopnet. As of May 29, 2006.  4021 Behrman Hwy, a strip mall in Algiers, for $9,850,000 by Hauck Holdings. Services for Real Estate Buyers and Sellers  918-926 Gravier St. for $9,925,000 by Louis Corna and Steven Abney of TCI NO Properties. Real estate pricing is inherently inefficient because  329-333 St. Charles Ave, a hotel complex, for often there are few buyers for any one property $22,000,000 by Edward Dufrense, Jr., Michael St. and information is not widely known. The more Martin, and James Falgout of St. Charles Hotel Inc.  The largest transaction to date is for 2901 Leon C. knowledge you have about the real estate market, Simon Drive, an office building occupied by the FBI for the smarter your decisions will be. Call me for a $31,812,000 by Rubicon GSA. complimentary valuation about your real estate; meanwhile, our website is always available to Purchases Exceeding $1,000,000 YTD 2006 search for properties. Jefferson Parish Robert L. Hand There were 86 transactions exceeding one million RE/MAX Commercial Brokers, Inc. dollars in Jefferson Parish so far in 2006. Notable 3331 Severn Avenue-Suite 200 purchases of commercial real estate include: Metairie, LA 70002 Office: 504-838-0001  4100 Veterans for $1.25 million to George Ackel. www.nolacommercial.com  2400 Edenborn for $1.33 million to John Benton Smallpage.  2701 Veterans for $1.35 million to Victory Real Estate by Walker Baus.  1940 I-10 Service Road for $1.52 million to Craig Daste by Crutcher Tufts.  2401 Veterans for $2.35 million to Robert Richmond by Ed White.  2439 Manhattan for $5.4 million to Manhattan Building.  100 WestBank Expressway for $5.9 million to Surit Singh.  314 Hesper for $6.1 million to Ray Massett.  2824 Kingston for $6.1 million to Arthur Lawson.  300 Carrollton for $6.2 million to Leonard Tubbs.  4320 Hessmer for $7.1 million to CSS.

Copyrighted. For permission to copy or quote, contact the author. Information from reliable sources but cannot be guaranteed.