Three years ago, Tyler Conger was renovating a house for an investor at Conti and North Tonti streets when he noticed a blighted house that had nearly collapsed around the corner at 2301 Conti.
A recent transplant from Nashville, Tennessee, Conger had taken to the neighborhood bounded by North Broad, St. Louis, North Galvez and Canal streets, a patchwork of rentals and owner-occupied homes that, despite its share of empty lots and blighted houses, still had a sense of community and cohesion.
“It’s kinda got that feel, and people are proud to be part of those blocks,” he said of the area, which, along with a small swath upriver of Canal Street, is designated as Tulane-Gravier on some city neighborhood maps but is generally considered part of Mid-City by locals.
In January 2014, at a city foreclosure auction, Conger paid less than $30,000 to buy the blighted house that had earlier caught his eye. He set to work gutting and renovating it. Unsure of the market, he did much of the work himself to keep his costs down.
The house went on the market in April 2015 and was under contract in two days for the full asking price of $299,000.
In February, Conger had bought his second property, a camelback several doors away on North Miro, just down the street from the soon-to-open Lafitte Greenway.
This time, he had the confidence to hire a crew to help get the house on the market sooner.
It went up for sale Monday for $365,000 and already has attracted “a ton of interest,” said Latter & Blum agent Jo-Ann Fitzpatrick.
While the neighborhood’s prospects have been on the rise with the construction of the greenway and the arrival of a Whole Foods store on North Broad, the main reason for the recent surge in interest can be seen just over the rooftops to the southwest.
After years of planning and construction, the $1.1 billion University Medical Center opened its doors last month to the first 600 of the more than 2,100 people who eventually will work there. Just across South Galvez, the $1 billion Veterans Affairs Medical Center promises to bring another 2,000 workers when the 1.7 million-square-foot facility opens in 2016.
Real estate experts say that while the new hospitals already have created a ripple of residential and commercial investment and development, the major effects, particularly on the commercial side, have yet to play out.
In the residential market, the steady swell of anticipation got a jolt earlier this year.
“I think in the last six months, that’s when we’ve really seen the hospital have an effect on the residential market,” Fitzpatrick said. “That’s when we’ve seen residents looking for housing close to the hospital and investors looking for properties to house those residents.”
Fitzpatrick and her real estate partner Eileen Nolan, who not only focus on Mid-City for Latter & Blum but live there as well, said the last couple of years have seen buyers and investors of means creep outside their old comfort zones, first crossing Jefferson Davis Parkway and then Broad.
According to data provided by Latter & Blum, the price per square foot of the most expensive house sold in the neighborhood east of Broad in 2015 was $199, compared with $90 for the highest sale in 2012.
Nolan noted a 2,300-square-foot house on South Dupre Street that recently sold for $429,000.
“A couple years ago, you probably wouldn’t see an investor put that much money into a renovation there,” she said.
While the neighborhoods surrounding the hospital projects still have plenty of neglected properties, renovation and new construction projects can be seen on many blocks.
James Thomas, a retired truck driver, points to three such homes within sight of his Gravier Street rental.
“There’s definitely people coming in and purchasing homes in the neighborhood with the intent to flip them,” said Daisy Hatchett, a bartender and cosmetology student who also lives on Gravier.
Fitzpatrick predicts activity will continue to escalate over the next year at least, as more and more people go to work at the UMC and the VA hospital opens.
Conger, however, doesn’t have any new projects there in his immediate future. Gone are the days when an investor could pick up a piece of blighted property in the neighborhood from a bank for under $30,000, he said, noting a similar eyesore near his two projects just sold for $65,000.
“Prices have already started to escalate,” he said.
On the commercial side, a smattering of bars, cafes and restaurants have joined the inventory already serving the crowds at the nearby courthouse at Tulane and Broad.
HRI Properties has opened a new apartment complex with street-level retail across Tulane Avenue from the UMC. A new bank is taking shape next door on the corner of South Galvez.
More food options
Justin and Christy Pitard opened their restaurant, Avery’s on Tulane, in March 2012, figuring the hospitals’ construction would create enough demand to sell more than a few po-boys for lunch.
While the first two years were difficult, the restaurant has turned a corner through good word of mouth and an expanding menu, Justin Pitard said. He has started to see some hospital workers joining the lawyers and construction workers that typically make up the lunch crowd.
And when one of the VA hospital buildings that’s across the street from Avery’s opens up, “I think we’re going to see our peak business,” he said.
When that happens, Pitard said, he plans to expand the restaurant to upstairs and next door. And he will open for dinner — with delivery to hospital staff — starting in October.
A cocktail, wine and craft beer spot called SideBar recently opened on South White Street, another sign that food and entertainment options are increasing in the area at night.
With the exception of nearby motels, some of which remain sketchy, Pitard said, Tulane Avenue “is getting so much better. Before, when we thought about opening up at night, we thought, ‘Nah, nobody is going to want to come out here.’ But now it’s getting good enough to where people could feel comfortable coming out here.”
Paul Richard, of NAI Latter & Blum Commercial, predicts the boom in small retail development will continue, followed by larger projects as the hospitals’ workforces expand. He noted the 2000 block of Canal already has been targeted for a hotel.
“Now that the hospital is a reality, the development community is circling the wagons to identify what’s left of the land that could be developed,” he said. “I don’t think we’ve seen the impact yet, but the process has begun, no question.”
Richard said he expects the full impact of the hospitals will be comparable to those surrounding medical districts in Birmingham, Alabama; Cleveland; and Houston.
The major factors that will shape development in the neighborhood, he said, will be the height and density restrictions in the city’s zoning code, the availability of large lots and the restrictions associated with historic buildings.
City and economic development officials have hailed the potential economic impact of thousands of workers and patients coming and going to the two large hospitals every day. But the projects were met with some community resistance and were not without controversy.
Good and bad effects
Critics of the decision to replace the old Charity Hospital building with the new UMC said Hurricane Katrina hadn’t rendered Charity unusable. Some called the billion-dollar project a boondoggle that was enabled by bogus state claims of massive damage to the old hospital.
Then there was the decision to raze entire blocks of homes to make way for both hospitals. Nonprofits were brought in to help move many of the houses to nearby neighborhoods, but the process was marred by delays and many of the homes sat without roofs, exposed to the elements, for many months.
Now, as the fortunes of the neighborhoods around the hospital rise, so do property values and rents — and with them the insecurity of working-class and low-income residents.
Sister Vera Butler, director of the Tulane Canal Neighborhood Development Corp., a nonprofit dedicated to providing homes for low-income renters who want to stay in the neighborhood, said the pressure already is being felt.
Butler said her organization, which has sold 13 homes since 2001 and has two under construction and two in the pipeline, may soon be priced out of the market.
While those who already have become homeowners will benefit from the increase in value, she said, those who haven’t may end up missing their chance.
“I guess there’s good and bad in it,” she said of the run-up in prices. “It’s good to see the neighborhood get a little bit more life in it, but if you’re trying to bring homeownership to low-income families, it’s not good.”
Hatchett, the cosmetology student, moved to Gravier Street five years ago and said she’s seen plenty of evidence of the hospitals’ impact. She said her neighbors were offered a price they couldn’t refuse for their home of four decades and moved away recently.
Her rent is thus far unchanged, but she doesn’t expect that will last forever.
“I am certain that, come the completion of the hospital project, our rent will be too high to afford,” she said.
Lauren McGirney, a pharmacy technician renting on Perdido Street, said she also has noticed rental rates on available units rising, though she also said the neighborhood has gotten safer.
McGirney, who lives with her sister in a three-bedroom, two-bath double next to a vacant lot, said someone was stabbed to death behind her house just days after she moved in about three years ago.
“We had a lot of drug dealers, and it just wasn’t a good area,” she said. “But in the past two or 21/2 years, it’s more of a family-oriented neighborhood now.”