by Kirsten Early, CCIM
Partner and Director of Retail, SRSA Commercial Real Estate
The New Orleans commercial real estate retail market historically has had low vacancy rates due to the small land mass and resulting low inventory of space. While some vacancy holes in the market have opened up with Stein Mart, Stage, and Pier One closings, the overall vacancy rate remains low.
As retailers cautiously proceed ahead with store openings, Total Wine has opened three new stores in Louisiana. The first Total Wine that opened was in Metairie, LA in June, backfilling a former Best Buy location. Opening in June 2020, it was the first retail opening in Metairie since the COVID-19 outbreak. Since then, Total Wine has opened in the Lafayette market 140 miles west of New Orleans, and in Mandeville on the northshore of Lake Pontchartrain just 30 miles to the north.
Large redevelopment projects continue to move ahead. One particularly transformative project along the Veterans Memorial Boulevard corridor is Clearview City Center. Located at the junction of I-10, Clearview Parkway, and Veterans Memorial Boulevard, Clearview Mall was developed in the 1960’s as a traditional enclosed mall anchored by Maison Blanche and Sears. Over the years, Target took over two floors of the Maison Blanche box. The ownership entity purchased the Sears parcel in 2018, which allowed for a 35-acre total redevelopment tract. During the interim two years of redevelopment, ownership has secured a Regions Bank ground lease and a high-end multi-family development. Additionally, Ochsner Health and Clearview City Center have just announced plans for a 185,000 square foot "super clinic" medical facility expected to open in late 2022. Conversations continue with concepts for an entertainment anchor.
On the edge of downtown New Orleans, the one million square foot Charity Hospital redevelopment hasn’t slowed down. A one million square foot mixed use redevelopment project, it will combine a large-scale medical user (300,000 square feet), a charter high school, an early learning center, retail, restaurants, and 300 multi-family units. Opening is slated for mid-2023. Overall, the Downtown Development District (DDD) President and CEO Kurt Weigel sees the condition of the New Orleans Downtown retail market as a “mixed bag.” With work-from-home policies lowering office building densities and tourism slowing during the pandemic, downtown New Orleans has seen restaurant closures like other places and many retailers are just getting by. On the other hand, the DDD is pitching Downtown to brands that are expanding and have an interest in Downtown New Orleans, and major new developments like the Four Seasons, Virgin Hotels and the Odeon residential tower have not missed a beat. Weigle stressed the importance of office workers returning to the downtown recovery: “we are encouraging everyone to come back and support the merchants who make Downtown New Orleans such a special place.”
The market has seen Covid-19 specific shifts. The General Manager/Leasing Manager of Lakeside Shopping Center, Tricia Phillpott, was one of the first to work with state officials to make sure enclosed shopping centers had curbside delivery options in the height of the pandemic. Now that stores are open and preparing for the holiday season, several of Phillpott’s tenants have requested kiosks to alleviate their in-store occupancies. Rhonda Sharkawy, a Senior Retail Advisor with Stirling Properties has seen a “gradual and uneven” recovery with open-air shopping centers, especially those with grocery, pharmacy, and discount store anchors performing well, while enclosed malls with B and C class anchors struggle. The retail sector was one of the first and hardest hit sectors. Retail sales are ticking back up with retailers adapting to customer needs through online and contactless pick up options seeing the best results.
We are seeing the modest return of soft goods, traditional retail, and restaurants as brands adjust to current market conditions. Medical anchored developments and multifamily developments have largely stayed on track during the pandemic with medical tenants taking the traditional “anchor” position in several developments. As a 300-year-old city, history has proven the resilience of New Orleans as we look forward to 2021.
