Riding Out the Storm
- May 23, 2012
In the nearly seven years since Hurricane Katrina struck the Gulf Coast, New Orleans has undergone a dramatic makeover as real estate developers have turned abandoned industrial buildings into thriving, modern multi-housing communities. From crumbling warehouses to former crime-ridden housing projects, these developments are transforming eyesores into architectural gems. Developers say they’re not only providing multi-housing products that consumers want, they’re transforming derelict neighborhoods into thriving communities.
Sitting at the forefront of New Orleans’ revitalization, HRI (Historic Restoration Inc.) has redeveloped and converted almost a dozen industrial buildings into chic living spaces. One of their more recent projects is turning the 23-story, nearly-vacant Hibernia Bank building into a mixed-income property with 175 units and 38,000 square feet of retail space. Across town, they’re also turning the old abandoned Blue Plate Foods building (formerly used as a mayonnaise manufacturing warehouse) into 72 loft-style apartments with a leasing preference for artists.
David Abbenante, President of HRI Management, said like many other major cities, New Orleans is seeing a trend of people wanting to move back downtown. Many of the company’s properties, such as the American Can Apartments and the Woodward Apartments, have brought people back to areas that were formerly in decline. Prior to being turned into a 265-unit apartment complex, the American Can Co. was abandoned for 13 years. Since opening its doors in 2000, it has helped spark a revitalization of the mid-city neighborhood. Nestled in a 1911 warehouse in the Warehouse District, the Woodward brought 192 units to a neighborhood that, until recently, wasn’t residential.
“We wanted to bring people back down to the city. When the core of a city decays it can have a negative impact on the whole region. We’ve found that there is a demand; it was just that the product wasn’t there,” he says.
Abbenante adds that many New Orleanians have a love of nostalgia and fond memories of some of the buildings they renovate. When American Can Apartments first opened, HRI actually had to give non-leasing tours of the property because there was such a demand from the public to view the restored building.
“There were so many people that worked there through the years. They had no intention of leasing but wanted to take their family through and show them around. You can look in their eyes and know it was a special place to them,” he says.
It was a success, and after Hurricane Katrina, rebuilding tax credits, incentives and investments propelled the further redevelopment of some of the city’s blighted industrial properties. The Domain Companies has pumped more than $150 million into mixed-use and mixed-income multi-housing development on the Tulane corridor since 2006. Not long ago, many parts of Tulane Avenue were more known for decay, streetwalkers and drug dealers than upscale living.
Since the storm hit in 2005, Domain has built five developments with 500 apartments and 20,000 square feet of retail space. At The Preserve, the company built 183 units on the site of the old Baumer Foods building. A block away, the Gold Seal Lofts will soon feature 31 mixed-income apartments in the former Gold Seal Creamery, which was in operation from 1920 to 1986.
Domain principal and co-founder Matt Schwartz said they were attracted to the Tulane corridor because of the construction of the new University Medical Center. The $1.2 billion project is scheduled to open in 2015 and will bring 1,000 new jobs to the area with an average salary of $100,000. Getting in early has its risks, but Schwartz believes there will be big payoffs down the road.
“We’re certainly pioneering, and you have to look at these investments with a longer time horizon than you would others. It still needs to support itself, but you go into it knowing that it will reap greater benefits in the future,” says Schwartz.
Over at the abandoned Blue Plate mayonnaise factory, HRI is helping revitalize the neighborhood by building 72 loft-style apartments specifically designed for artists. As one of the few buildings constructed in the city during World War II, it was used as a manufacturing facility until 1999 when it was sold to a private investor.
According to Abbenante, such abandoned industrial properties offer the ability to create unique spaces that have one-of-a-kind historical elements. Large windows, historic ceramic tiles, stained concrete floors and a sense of history offers what he said is an attractive “product differentiation.” At most properties, developers leave the original signage and architectural elements in place. While this is often a requirement by the U.S. Park Service for historic tax credits, retaining that sense of history is a strong selling point for residents.
“The sign is often an iconic part of that building and its history. We want people to drive by and see the original soul of the building,” says Abbenante.
Both HRI and Domain have been able to redevelop such properties with GO Zone tax credits and incentives put in place after Katrina to help rebuild the region. They’ve also been able to use historic tax credits and state tax credits that create a win-win situation for developers, residents and local government. Schwartz says that public-private partnerships focusing on such properties in the city center have been the key to New Orleans’ post-Katrina rebuilding.
“There would still be opportunities for these developments,” Schwartz adds, “but the GO Zone programs and incentives have allowed us to build higher quality mixed-use developments closer to downtown than otherwise would have been.”