After more than nine years of planning and preparation, the Acadian Village shopping center on Perkins Road is complete, bringing to the area a mix of new high-end tenants that are paying among the highest lease rates in the city.
Those top-dollar retailers include Trader Joe’s, the center’s prized anchor tenant, and Galatoire’s restaurant, which opened earlier this year in a freestanding structure fronting Perkins Road. There’s also a trendy New Orleans-based gelato shop, several boutiques and a Petco, all housed in a brick-and-stucco strip center with arched entranceways and thoughtful architectural details.
Directly across South Acadian Thruway is another strip center—Acadian-Perkins Plaza. Though the main portion of the development is new—having been rebuilt in 2010 after a fire—its tenant mix includes a payday lender, a tattoo parlor, hair and nail salons and, for the time being, a Halloween store. Temporary banner signs hang from its façade, and several kiosks front Perkins Road on the edge of the parking lot, which is further cluttered by an overgrown concrete outparcel.
“I think they missed a huge opportunity after the fire to go in and do some things that would have dressed it up a little,” says business broker Camm Morton, who developed shopping centers in the 1980s and 1990s. “Mathematically, it might make sense for the center, but aesthetically it kind of stinks for the city.”
While the two shopping centers stand in stark contrast to each other, local real estate experts say they will benefit from one another. Rather than compete, they will likely generate a critical mass of visitors, most of whom, admittedly, will be coming to the new Trader Joe’s and Petco. Whatever the reason, though, it will be good for both developments.
“Acadian Village has some major traffic generators—Trader Joe’s and Petco,” says Mark Hebert of Kurtz & Hebert Commercial Real Estate. “That will be good for the whole area. There is strength in numbers. A rising tide lifts all ships.”
The $20 million development of Acadian Village has been in the works since 2004, when Commercial Properties acquired the vacant Walmart building and demolished it. But the project was slow to start for several reasons, including Hurricane Katrina in 2005, which sent construction costs soaring, and the recession of 2008, which quelled commercial development until 2011. Along the way, the scope of the 76,000-square-foot project changed from a mixed-use or lifestyle center to pure retail and restaurants.
“There are challenges with mixed-use—particularly in a small space like that—that make it problematic,” says one local developer. “For instance, you have to have parking that does not conflict with retail; or you have to build structured parking, which is expensive. … So while I know some people wanted to see mixed-use there, I think they made a good call.”
The first tenant, Acme Oyster House, opened in 2008 in a free- standing restaurant. Galatoire’s opened early this year. But the main shopping center was not finished until this month. Already it is 94% leased, with 16 tenants who pay an average of $26 per square foot. That puts it on a par with Perkins Rowe and slightly above Towne Center.
On top of a quality development and a desirable anchor tenant, Commercial Properties has enjoyed favorable demographics that allow it to charge the $26 per square foot rate. Some 200,000 vehicles a day pass the center on Interstate 10, and the intersection has more than 36,000 households within a three-mile radius, nearly one-third of which earn $75,000 per year or more.
“Those are good demographics, and demographics are key in determining what makes a good location,” says appraiser Wesley Moore of Cook Moore and Associates. “In real estate, location is everything.”
Another reason the location was attractive to Commercial Properties—the for-profit arm of the Baton Rouge Area Foundation—is that it represented an opportunity to redevelop an abandoned and potentially blighted property in one of the city’s older neighborhoods near the LSU campus.
“Because of our relationship with a community foundation, a portion of our profits go towards improving the quality of life in areas where we operate,” says Carolyn Martin, president and CEO of Commercial Properties. “This busy corner, set with an abandoned Wal-Mart, is a vital neighborhood to our city.”
Across South Acadian Thruway from Acadian Village is Acadian-Perkins Plaza, which has occupied the northeast corner of the busy intersection since the Claitor family bought it in 1968. Throughout much of the early 2000s, its biggest tenants were CVS and Major Video. The video store succumbed to industry pressures and closed in September 2009. Three months later, the center was destroyed by fire. The Claitors began rebuilding in 2010, and the $6 million project was completed in 2011.
The main portion of the two-story center is bright and airy, with a retro Mid-Century modern design and two stories of retail and office space. The tenant mix is more downscale than that of Acadian Village. Jon Claitor, who manages the center, has had trouble attracting an anchor tenant, despite several deals that almost came to fruition.
Claitor says part of the reason is that he’s a tough negotiator. He says he gets between $25 and $30 per square foot for space in his center, and he’s not willing to settle for less.
“I’m not going to say, ‘Oh, it’s Martin Wine Cellar so I’m going to give them half the building,'” says Claitor, who was negotiating with the New Orleans-based wine store last year for the 12,500-square-foot anchor space that temporarily houses Spirit Halloween store. “I’m going to do what is best for the center.”
There are aesthetic challenges, namely a weeded concrete parcel on the corner of the development that formerly housed a gas station and is owned by Larry Brooks. He and Claitor have been at odds over the property for years, and it is tied up in litigation. Red River Bank now has it under contract and hopes to build a new branch there; but until the lawsuit is settled, the property will likely remain an eyesore.
The center is also draped with several banners—temporary signs that Claitor says he has asked his tenants to remove. One of those banners is his, however. Another belongs to the temporary tenant, Spirit.
“Banners create all sorts of clutter and detract from your tenants,” says Hebert. “That’s why the city has sign ordinances, but they are hard to enforce.”
There are several kiosks in the parking lot of the center that front Perkins Road. One houses a snowball stand. Another does windshield repairs. Claitor says they may detract from the center’s overall curb appeal, but they are good tenants.
“You can look at a shopping center like that in one of two ways: What’s the ultimate value in it, or how much cash flow does it bring in?” Morton says. “Claitor’s worried about how much cash that center is bringing in, and that’s a legitimate perspective.”
While the two shopping centers have different styles and different tenant mixes, the synergy created by two retail developments should be good for the economic viability of both. Acadian Village is projected to draw thousands of additional visitors to the area each day. In fact, traffic is expected to rise so much that a new signal light is being installed on Perkins Road at the main entrance to the center, where it will be sandwiched between two existing signal lights that are just a few hundred yards apart.
While traffic may cause headaches for residents of the area, it will generate a critical mass for the two centers—likely bringing more business to Acadian-Perkins Plaza, not less.
“Everyone will benefit,” Hebert predicts. “There is strength in numbers.”
For his part, Claitor says he is looking forward to having new neighbors and agrees it will be good for his business.
“I’m all about a beautiful shopping center next door,” he says. “It’s very fortunate we are on this corner and are almost able to pick and choose whatever we want.”
But observers say the contrast between the two developments also points to something else that’s sorely lacking: stricter building codes in the city-parish and better enforcement of the laws on the books.
“When you look at them side by side, you can see why we need higher standards,” Morton says. “We need to demand higher standards of our developers. A tattoo parlor will pull down everyone’s averages.”
