Retail growth in Mid-City and the rising popularity of the linear park that runs through it have prompted a surge in residential development beyond anything the neighborhood has seen in decades, according to local real estate analysts.
Owners of a $65 million apartment complex that is under construction at Conti and North Cortez streets and an upscale townhouse project that's going up a block away say they are tapping into rising demand for new types of housing in an area where traditional single-family homes and aging apartment buildings have long predominated.
Edwards Companies, a family-owned, Ohio-based developer of apartments around the country, is entering the New Orleans market with the 382-unit project that straddles North Cortez Street between Conti Street and the Lafitte Greenway.
Hope Sherman, vice president of land acquisition and development for Edwards, said the company settled on the site after several years of scouting local prospects.
"We loved the Mid-City site," Sherman said. "We think the greenway is fantastic, and we thought that building along the greenway would not only be a great asset for us but also kick off a lot of investment that would benefit the city as a whole."
Edwards Companies generally targets cities in need of workforce housing, providing units that Sherman describes as being "at the higher end of middle market" apartments.
The firm's project includes two separate buildings with mostly studios and one-bedroom units. They're slated to go on the market in early 2019, featuring open kitchens, big closets, in-unit washers and dryers, garage parking and public spaces that include a clubhouse, pool and fitness center. Some apartments will have terraces that open onto the greenway.
Late last year, Edwards Companies received a $6 million tax break from the Industrial Development Board in the form of a payment-in-lieu-of-tax program that reduces the company's property tax liability while construction continues. To obtain the break, the company agreed to offer 13 of its apartments at reduced rates to individuals who make about 30 percent of the area's median income.
The company has not yet set pricing for any of the units, but Sherman said the market-rate apartments will likely range somewhat above the rates at the nearby American Can and Esplanade at City Park complexes.
Housing demand in Mid-City is strong, driven in particular by the nearby University Medical Center and Veterans Affairs hospitals. But Sherman thinks the new apartments' access to the Central Business District via public transportation — or by bicycle along the Lafitte Greenway — will make them attractive to workers throughout the city.
Around the corner, in the 3700 block of Bienville Street, a company called VPG Enterprise, which has been buying and renovating apartments around New Orleans since 2011, recently partnered with Cobalt Hospital Group to build a group of townhouses on land that Cobalt owns.
Dubbed 37 HUNDRED, the $8 million townhouse project consists of 20 three-story homes, each containing at least 2,200 square feet of space and separated from adjacent units by a single shared wall. Each home will have its own two-car garage on the ground level, with access via a locked gate.
Pricing on the three-bedroom homes will start around $500,000, according to VPG owner Michael Merideth, who said he has pre-sold six of the units. An initial group of units is slated for completion late this year.
"This was an opportunity to provide a top-notch product in an area poised for growth," he said, adding, "There is nothing like this in Mid-City."
Developments like these two projects would have been nearly unimaginable just a decade ago, when Mid-City was still in recovery mode following Hurricane Katrina. But commercial real estate investment during the post-Katrina years produced unexpectedly strong results.
The real estate company Stirling Properties led the way with the development of the Mid-City Market along North Carrollton Avenue, and in a relatively short time the success of retail and dining establishments in the shopping center, anchored by a Winn-Dixie grocery, generated ripples of new business throughout the area.
"Stirling really initiated all this action, and then all these other retailers came along — Marshalls, Petco, CVS, Massey's (Outfitters) and a bunch of restaurants — now you have retail and restaurants galore," said Kevin Hilbert, a local real estate appraiser and consultant.
The expanding retail and dining choices in the area boosted the popularity of Mid-City with locals and soon caught the attention of investors.
Hilbert said it was inevitable that residential developers would find their way to Mid-City on the heels of explosive redevelopment activity in neighborhoods such as Faubourg Marigny and Bywater.
Young home buyers and renters who like the idea of living close to the city's core are driving much of the action in all these areas, he said, though many older people have also warmed to the trend.
Because unused land is scarce throughout New Orleans, building new residences generally involves demolition or conversion of existing structures. Edwards Companies, for instance, is building its new apartments on land previously occupied by old warehouses, which lined the former railroad corridor that has evolved into the Lafitte Greenway.
"Throughout the city, we're seeing former industrial land being converted to higher and better uses, whether it's multifamily (housing), a mix of retail and multifamily, or some other type of commercial use," Hilbert said.
Though rapid construction of new apartments and condominiums may have some worried about the city becoming "over built" with residential units, Hilbert said he has no such concerns.
His analysis shows that New Orleans currently is absorbing, or filling, about 30 units a month, a rate he says can easily consume the inventory that's now under construction or due to begin soon. And Hilbert guesses that more residential developments will pop up in Mid-City.
"This neighborhood is in the middle of the city, and accessibility to the whole metro area from there is great," he said.
While developers appear enthusiastic about the prospects, a potential hurdle is the large eyesore at the corner of Bienville and Jefferson Davis Parkway. Some observers think that until owners of the long-vacant Lindy Boggs Medical Center take steps to return the building to commerce, many investors will think twice about undertaking new projects in the area.
Now co-owned by St. Margaret's Daughters, which operates a nursing home on a portion of the property, and local real estate developer Joseph Jaeger's company, MCC Group, the hospital has stood empty and deteriorating since it was flooded after Hurricane Katrina.
Emily Leitzinger, president of the Mid-City Neighborhood Association, said that while the organization has often sought information about the status of the hospital, and owners of the hospital have attended some of the association's meetings, no plans for redevelopment have been forthcoming.
But a spokesman for the owners said they recently finished an environmental cleanup of the property, to remove hazardous materials, and while redevelopment plans are not final, the owners are considering options ranging from residential uses to elderly care.
Other investors in the area are keeping their fingers crossed that action on the property will come soon. "We have very high hopes that something will happen there within the next few years," said Sherman, of the Edwards Companies.
One developer who says he's not worried about the vacant hospital is Sidney Torres IV. The businessman, who built a successful waste management business and owns a number of properties around the city, has been an active buyer of tracts near the Lafitte Greenway and said he is confident that Jaeger soon will put the vacant hospital property to good use.
Jaeger has been a business associate of Torres and was a part owner of the former warehouse property that Torres sold to Edwards Companies for its apartment complex.
Torres now is developing a bar on the adjacent tract that he still owns. He said the bar, which may open late this year, will be operated by the owners of two successful local establishments, the Bulldog and the Velvet Cactus.
Torres believes that the Lafitte Greenway has the potential to become a people magnet much like the Katy Trail in Dallas, a pedestrian and bicycling path developed on an old railroad line that now draws thousands of people to enjoy the park; dining and retail spaces have sprouted alongside it.
That scene is part of Torres' vision for several remaining acres he owns along the Lafitte Greenway, where he plans to build a multi-use complex that will feature small "food markets," restaurants and boutiques on the lower level and condos on the upper floors.
Torres acknowledges that the greenway is a work in progress, and that it will take time for some vacant properties in the corridor to be put to new uses.
But he feels so strongly about the future of the Lafitte Greenway that he continues to scout properties in the corridor that he might be able to scoop up. "Anything that pops up around there, if the price is right, I'll buy it for sure," he said.