SOUTHEAST SNAPSHOT, APRIL 2008

New Orleans Retail Market

Two and a half years after Hurricane Katrina, the New Orleans retail community is healthy. The storm spurred new retail development and increased sales. Retailers experienced some of their highest grossing units nationwide, which is attributed to the need to replace clothing, home goods, electronics & appliances and building materials. Retailers specializing in electronics/appliances and home improvement are still thriving.

The New Orleans MSA is made up of eight parishes with a pre-Katrina population of 1.42 million and a post-Katrina population that has bounced back to approximately 1.23 million. The greatest losses were in Orleans Parish, which suffered the greatest effects of the floodwaters. North of Lake Pontchartrain, the Northshore area benefited the most from a population increase driven by people looking for high and dry housing.

There are two major submarkets on the Northshore, Mandeville/Covington and Slidell, and a minor submarket in Hammond. The Northshore experienced an immediate 25 percent surge in population. It has since settled to a 12 to 15 percent increase in 2 years, which would normally have taken 8 to 10 years. Because of this surge, three new projects are being built. In the Mandeville/Covington market, Colonial Properties and Robert Aikens have teamed up on Colonial Pinnacle Nord du Lac, a 140-acre retail development in the northeast quadrant of Interstate 12 and Highway 21 that will consist of approximately 1 million square feet. The center will be anchored by Dillard’s, Kohl’s and Dick’s Sporting Goods. Phase 1 is expected to open in October 2009 with 850,000 square feet.

At the new Fremaux Avenue and I-10 interchange in Slidell, Birmingham, Ala.-based Bayer Properties and landowner Robert Levis are developing a 400-acre mixed-use development. At completion, the project will consist of more than 1 million square feet of retail, and is proposed to be anchored by Dillard’s, Belk, Barnes & Noble and a 14-screen cinema. There will also be 300,000 square feet of lifestyle retailers. A proposed Dick’s Sporting Goods will transition the center from the lifestyle component to a 200,000-square-foot power center. Some of the leading candidates for the power center will be Kohl’s, Best Buy, PetSmart, a home goods store and Michaels. In addition to the retail, University of New Orleans will construct a new technology park. There will also be office, healthcare components and residential. Corporate Realty is assisting Bayer on the leasing and development of the project.

In Hammond, New Orleans-based Stirling Properties is redeveloping Hammond Square Mall. The mall will be gutted, keeping only Dillard’s and Sears. Target, JC Penney, Best Buy and several lifestyle retailers are being proposed for the space.

New developments have given retailers such as Dick’s Sporting Goods, Ulta Cosmetics, and DSW the opportunity to enter the New Orleans market. Additionally, the results of Hurricane Katrina have given several retailers such as Best Buy and Lowe’s the opportunity to expand into Jefferson Parish, where most of the traditional retail had been established, and also get a foothold in Orleans Parish, where large tracts of ground did not previously exist. One of which will be the redevelopment of Carrollton Shopping Center by New York-based Feil Organization. Because of the flooding, Carrollton Shopping Center, previously a deep discount center, was completely inundated and demolished. Now it is under redevelopment with possible tenants such as Best Buy, a home goods store, PetSmart, and possibly a bookstore.

In addition, a new Macy’s is currently under construction at the 1.3 million-square-foot Lakeside Mall in Metairie. The department store will join Dillard’s and JC Penney. The mall is also owned by the Feil Organization and is one of the highest grossing malls in the entire Southeast.

The strongest new development is occurring north of Lake Pontchartrain with two major ground up prospects and the redevelopment of Hammond Square Mall. Veterans Boulevard, which is the main commercial street in all of the New Orleans MSA, remains strong with major retailers jockeying to find either their first or second store on the busy street. As a great alternative to Veterans Boulevard, the 1 million-square-foot Elmwood Center just added Best Buy and Old Navy. Several opportunities have presented themselves because of Katrina enabling big and medium box retailers to get a foothold.

— Larry Rabin is director of the retail division for New Orleans-based Corporate Realty, Inc.

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