For its first retail store in Louisiana, designer jeans company True Religion decided to set up shop at Bourbon and Canal streets, where its mix of fashion accessories and high-end jeans could catch the eyes of the thousands of tourists, conventioneers and locals who pass by the corner every day.
That the high-end retailer chose mid-Canal Street is a sign the corridor has turned a corner and is gaining traction with leading retailers, city officials and local business leaders say.
As New Orleans continues to thrive as a tourist destination and as downtown living continues to draw interest among young renters and second-home buyers, some companies that in the past wouldn’t have given New Orleans much of a second thought are taking note, those leaders say.
And among the areas that stand to benefit, some say, is the section of Canal between Rampart Street and Claiborne Avenue — an area of the city’s onetime main commercial corridor that once boasted a landmark department store (Krauss, now converted to condos), top-line theaters, important hotels and major office buildings.
In recent decades, however, most of those businesses closed or went downhill, creating a sort of commercial wasteland that many, rightly or wrongly, blamed in large part on the proximity of the Iberville public housing complex.
More recently, however, publicly and privately funded projects like the reopening of some of the historic theaters have breathed new life into the area, especially in the evening hours, when it once felt like a ghost town.
And even though it’s not yet finished, the new streetcar line along North Rampart Street and St. Claude Avenue from Canal Street to Elysian Fields Avenue is jump-starting more development downriver from Canal Street.
“This whole area continues to move forward,” Eric Bauer, the chief financial officer for the Los Angeles-based True Religion, said of Canal Street. “We can debate the timing of it, but I think it’s just a matter of time that it’s going to become really kind of the commercial corridor again.”
Near the seven-block stretch of Canal between Rampart and Claiborne, more than $275 million has been poured in the past five years into major developments including the New Orleans BioInnovation Center, the Joy and Saenger theaters, the 144 Elk Place apartments, the Marais Apartments at the former Texaco building and the initial phases of a more than $210 million redevelopment of the 23-acre site of the former Iberville housing complex — a transformative project that many say has changed the trajectory of the surrounding area.
“I do think that you’ll see the upper end of Canal Street is moving toward developing as much as the lower end,” said Cindy Connick, executive director of the Canal Street Development Corp., which oversees city-controlled properties in the area, including the Saenger.
Of course, the biggest factors spurring development along upper Canal Street are the $1.1 billion University Medical Center, which opened last year, and the $1 billion Veterans Affairs Medical Center, slated to open later this year, both on the other side of Claiborne but close enough to stimulate the area closer to the river.
If everything planned is realized, the work in the area surrounding upper Canal, not counting the hospitals, could add up to $650 million.
A watershed year?
So far, the Iberville redevelopment has added more than 300 market-rate and affordable apartments to an area adjacent to, but in some ways isolated from, the nearby CBD and French Quarter. The work is expected to be finished by 2018.
One-bedroom market-rate units rent for about $1,000 a month; two-bedroom units go for $1,300. “As soon as we finish them, they fill up,” said Tom Leonhard, president and CEO of HRI Properties, which is overseeing the Iberville redevelopment.
“With that kind of major investment happening on that end (of Canal Street) and really the palpable change in attitude of national retailers — especially toward the traditional shopping section of Canal Street closer to the river — we think this is a watershed year for us,” said Kurt Weigle, president of the Downtown Development District, which has sought for decades to spur the commercial revival of Canal Street.
Now, work is underway to renovate three Canal Street hotels within a few blocks of Claiborne Avenue: the 17-story Jung, a $120 million project that includes 145 hotel rooms, 175 apartments and 50,000 square feet of retail and event space; a 13-story building formerly owned by the University of New Orleans Foundation that is being renovated into a Marriott dual-brand hotel; and the shuttered Canal Street Hotel, a long-neglected property that previously was a Days Inn.
Hotelier Michael Valentino, part of a group that purchased the Canal Street Hotel last year for $4.8 million, said demolition work began last week to renovate the property into a 224-room hotel, including dozens of extended-stay rooms, by next year.
“Absolutely, this is a renaissance of the Claiborne end of Canal Street,” Valentino said. “There are numerous undeveloped sites on Canal Street between Rampart and Claiborne. We’re anxious about all of them but confident that this wave of redevelopment will include them and make them commercially viable.”
One project that seemingly remains stuck, though, is the long-neglected Loew’s State Palace Theatre, which has been sold twice in two years but has made little apparent progress toward redevelopment.
It’s the only one of downtown’s five major theaters that has yet to reopen. The process started with the city-owned Mahalia Jackson Theater for the Performing Arts in 2009, followed by the Joy Theatre in 2011, the Saenger and the Civic in 2013 and the Orpheum last year.
Built in 1926 as a silent-movie house for first-run MGM films, the State Palace sold for $3.5 million last year to LC Hospitality Group, a limited liability company registered to Chen Horng Lee and Chin Li Lee. They also own the Wyndham Garden Baronne Plaza New Orleans hotel in the CBD. Reached by phone recently, Chen Horng Lee declined to comment on his plans.
With the State Palace property’s various ground-level businesses having all closed recently, the fact that the entire blockface directly across Canal from the Saenger is vacant has caused concerns about public safety and crime.
A dash of cold water
The vacant block also cuts off the flow of pedestrian traffic that would otherwise connect the Canal business district’s two ends, Weigle said, throwing cold water on upper Canal’s burgeoning revival. “It stands in stark contrast to the rest of downtown,” he said.
Developer Gregor Fox, who purchased the State Palace property in 2014, had planned to renovate its 50,000 square feet of potential retail space, most of which is on the ground floor, before gradually restoring the theater. But his piecemeal approach was fraught with challenges, and his plans were estimated to cost as much as $50 million.
Gary Solomon Jr., president of the New Orleans-based Solomon Group, an entertainment production company that helped in the $10 million renovation of the Civic Theatre, said bringing the State Palace back online is “a big project.”
“It’s a challenging thing, because the model of the theater in general begs the question of how many more seats does New Orleans need,” Solomon said. “Do we need 3,000?”
What the future holds for the site is unclear. New ground-floor retail may find suitors, experts say, particularly as more stores look to leave suburban malls and move into downtown New Orleans — back to the area many of them or their predecessors fled in the 1960s and ’70s.
“Retail follows where people live, and there’s certainly a trend of populations shifting back to urban environments,” said Sherif Ebrahim, a professor of strategy and innovation at Tulane University.
With the added population density downtown, there’s a growing need for amenities like restaurants and shopping that is within walking distance of all the new condos and apartments, Ebrahim added.
“There’s certainly been a longtime move, or a longtime slow march up Canal from the river, but I think you’re beginning to finally see some impact,” he said.
The flurry of activity has helped attract new attention.
“It’s night and day difference between now and five or six years ago,” Weigle said. “We were starting to get some bites back then, but in hindsight, I think a lot of that was more courtesy on their part than open-mindedness. Now, what’s different is that there’s a real buzz about New Orleans and about retail opportunities in downtown.”
Bauer, of True Religion, is confident that he’s getting in early on the trend, betting on a resurgence.
“Maybe we’re on the early side of it, but come talk to me in a year,” he said last week. “I think you’re going to see a whole bunch of additional people coming in and saying, ‘Wow, there’s something here.’ ”
Follow Richard Thompson on Twitter, @rthompsonMSY.