Once an eyesore, the Plaza Tower in the CBD is receiving a $100 million makeover on its way to becoming Crescent City Residences. Condominiums to be constructed in an ambitious reconstruction of the St. John's Masonic Temple in Algiers Point in many ways reflect the advantages of buying condos in the red-hot New Orleans market.
The historic building was vacant yet filled with amenities attractive in today's real-estate market: charm, elaborate detailing, red brick, high ceilings, huge windows and wood floors, all with a unique history -- the space once housed a post office. The building sits in the middle of a quiet, live oak tree-lined neighborhood street. Security is provided for the entire building. The rooftop will serve as a communal party deck that provides a breathtaking, panoramic view of the city's skyline, from the Crescent City Connection bridge to the Central Business District to St. Louis Cathedral and the French Quarter. All that, and no grass to mow.
Plus, with prices in the upper $200,000 range, the units sell for roughly half of a similarly sized and furbished property in Uptown would cost.
"The original condo craze started in the French Quarter with out-of-towners wanting a second home in New Orleans," says Stephen Bandi, one of the developers of the Masonic Temple. "Then it started in the Warehouse District with professionals looking for a place to live near work. All that success in the Warehouse District created a vibrant area out of nothing."
Bandi was in banking at the time -- the early 1990s -- when the Warehouse District began taking off as a hot area for property, a gentrification anchored and symbolized by celebrated chef Emeril Lagasse placing his now-famous namesake restaurant in the area. "Everybody at the time was like, 'Who is this crazy guy Emeril? Why's he putting his place there?' Bandi recalls. "And now look at him. Sometimes it's the people that step up to the plate and take initiative that dictate the action."
The Warehouse District and beyond
Action in the local condo market has been significant in the past two years, with the Warehouse District alone gaining an estimated 2,000 new units. While this pales in comparison to a projected figure of a whopping 70,000 new condo units to be constructed in Miami in the coming few years, there's little room to argue against the fact that condos now figure heavily in local real estate.
Condos weren't always a success story in New Orleans. Many of the first high-profile projects in the 1980s were tainted and subsequently bankrupted through connections to the savings-and-loan scandal. Natural factors --Êsuch as the New Orleans metro area's lack of land mass due to its swampy environs --Êplus the city's age means most desirable locations have been developed. Thus, either a renovation or a tear-down is often needed to begin a project instead of moving forward from an original design, as condos traditionally have been constructed.
The primary push remains in the downtown areas with condos still attracting largely young professionals and out-of-town investors. Yet, condo projects are also taking root in various parts of the metro area. Different types of potential buyers are now attracted by all the features and amenities that owning a condo has to offer.
A reconstruction of the once-vacant Krauss Department Store on Canal Street placed nearly 250 units in the famed building, nearly all of which were sold before the renovation even began. The 215-unit Regency Apartments sold out in weeks. Uptown, condos to be constructed out of the St. Elizabeth's Orphanage on Napoleon Avenue once owned by writer Anne Rice, have virtually all been pre-sold with price tags climbing above $400,000. The boom extends to the Northshore as well, as plans for the 350-unit Northshore Marina Tower Condominiums near I-10 in Slidell have generated plenty of buzz in real estate circles as a great investment and idea.
There are plans to construct luxury condos atop a building along Carrollton Avenue in Mid-City that currently houses a law firm and video-rental store. A condo tower is planned near the river in Gretna. The unique options for design that are offered in these projects are part of the allure. Consider, for example, the 20,000-square-foot atrium in the Cotton Mill development in the Warehouse District, which is landscaped and features a swimming pool.
The boom has, of course, garnered the attention of national real estate brokers, who are developing large-scale projects that will, in some cases, literally alter the face of the city. The much-maligned eyesore that is the Plaza Tower -- a 44-story structure in the CBD near I-10 that has suffered from a severe asbestos problem (cost of removing the asbestos is estimated at $10 million) and has been vacant in its former life as an office building for years -- was purchased in March in a group led by renowned developer Edward Giannasca of Baltimore, Md. While the price tag on the project seems relatively low at $4 million, a $100 million makeover of the building is planned. To be named Crescent City Residences, the building is promised to sport a stunning, avant-garde design of staggering balconies. A restaurant, fitness center, swimming pool and a 350-car parking garage are also planned for the building. Prices are reported to be starting at $350,000.
The Giannesca purchase, coming from a developer known for massive projects including one in Baltimore's Inner Harbor, is indicative of a projected trend that will bring more out-of-state investors looking to milk the cash cow that is New Orleans real estate (the New York/San Francisco dollar travels far down here, the logic goes). A group of investors based in Pensacola, Fla. recently purchased for $6.5 million an empty parking lot at the corner of Poydras and Magazine streets, with plans to construct a 700-foot tower (by comparison, One Shell Square stands at a mere 697 feet) to be filled with 500 condo units.
National and local trends
All this growth in condos and interest in condos comes in a city with an infamously depressed economy and population base that declines by thousands each year. So what explains the local condo boom?
"What's happening in New Orleans is part of a national trend," explains Shaun Talbot, who as head of Talbot Realty Group recently completed condo projects at 625 St. Charles Ave. and another on the lakefront at West End Boulevard. "A lot of it stems from the fact that the real estate market in general right now is so hot, with low interest rates coupled with the ease of financing alternatives."
Talbot says the forces driving the condo boom in New Orleans, in some regard, are unique to the city. "It's a very dense city. We have a shortage of available land here, as we're surrounded by water. We have a large inventory of historic housing you can't tear down, or you'll have to fight neighbors to build (a condominium complex) in their neighborhood. So, to stay in the city, you have to develop what's already there."
With the sudden rush to buy condos, Talbot advises potential buyers to exercise caution when jumping into the market. "With this big rush for development, you're going to run into glitches," Talbot says. "You'll find developers that don't have lots of experience, and buyers that get themselves into trouble because they don't ask the right questions. You're buying not just your personal space, but a part of the building, when you buy a condo. So, you're going to want a building that is managed well, because you're affected by whatever else is done in that building. It can have a major impact on your property value."
Yet, Talbot is impressed by the local condominium boom. "Now we're even having a tremendous demand for high-rise residential space, even Uptown. This is something we haven't seen before. It's been fun to be a part of this."