In the four years since Hurricane Katrina, New Orleans has undergone an impressive transformation led almost entirely by a new generation of entrepreneurs, educators and civic activists who love the historic city in spite of its chronic problems. They are bent on making it better.
Instrumental in this movement is a handful of real estate developers who are helping to turn the core of New Orleans into a real urban center where graduate students, professionals and baby boom-era empty-nesters can live, work and play 24/7. Sure, these guys are in the business to make money. But they also possess a keen awareness of what long-term impact their developments will have on a community they deeply care about—personally as well as professionally.
We profile three such developers, who stand at the cutting-edge of the Crescent City’s urban revitalization. They are not alone in their approach, but they are representative of the new class of developers who are making a difference.
When New Orleans native Brian Gibbs graduated from Tulane University in the mid-1990s, he moved to New York City to get experience in the business world. He returned home a few years later, but went back to Manhattan in 2002 to get a graduate degree in real estate development. Then he came home for good, armed with the following realization:
“Hey, New York is a great place to get experience but New Orleans is a better place to live,” Gibbs says. “Because it’s not so much about where you live if you want to be successful; it’s how you live.”
And in New Orleans, Gibbs believes, you can work hard and accomplish a lot and still have time to enjoy the rich, unique cultural landscape with family and friends—something lacking in the pressure-cooker business climate of the Big Apple.
“In New Orleans, you might have four guys chasing down a business deal,” he says. “In New York, you have 4,000 so it’s much easier to make things happen here.”
For the past decade, Gibbs has been making lots of things happen in the downtown area. He has redeveloped several old, abandoned office buildings and warehouses as condos and apartments. His projects include the Civic Lofts on Baronne Street, a 72-unit rental building in a former discotheque; 825 Lafayette St. and 909 Lafayette St., an apartment complex and condo development; and The Orphanage Apartments, an adaptive reuse of an old orphanage in the 3000 block of Magazine St. Currently, he’s building a 21-story apartment building in the 900 block of Poydras Street, the main thoroughfare of the Central Business District.
Gibbs has also gotten lots of ink lately for a project known as the IP Building, one of several entrepreneur hubs that have sprung up in New Orleans in the past two years. He originally acquired the former law firm office building in the Warehouse District with the intent of converting it into an apartment building. But when the real estate market soured, he began to think about other uses for the property.
The Idea Village and GNO Inc. came up with the idea of creating a setting that would attract a cluster of entrepreneurs who could share ideas and collaborate, much as high-tech firms do in Silicon Valley. Gibbs liked the idea and The IP building was born.
Like many, Gibbs sees economic development as a key component to improving the quality of life in New Orleans and attracting professionals to the area. But he doesn’t believe in spending big bucks to recruit large manufacturing companies or corporations as the best way to achieve it. Rather, his vision of economic development is about creating attractive, vibrant places for professionals.
“A lot of people speak about economic development but capitalism will take care of itself,” he says. “First, you have to have a city and an area where people want to be.”
Gibbs believes people want to be in New Orleans, particularly downtown New Orleans, and he has seen a noticeable increase in their numbers in the past few years. When he developed the apartments and condos on Lafayette Street in the early 2000s, most residents were what he describes as “pioneer-type tenants,” namely artists or DINKs [double-income, no kids]. Just seven years later, the pool of residents is much more diverse and mainstream. At his latest project, the Civic Apartments, 30% of the residents are law school or medical school students. Many others are young professionals right out of college or graduate school.
“A lot of the interest in downtown living comes from Hollywood, which has glorified urban living in shows like Friends,” he says. “And as more buildings are built the pie is getting bigger and new people are discovering downtown and the positive momentum is feeding on itself.”
Gibbs has targeted older buildings for many of his projects because they’re inherently attractive, with their architectural amenities, and because they’re available. A plethora of state and federal tax credits have also made then viable targets for redevelopment.
Since the nationwide recession, Gibbs has noticed an increase in the number of new residents coming to downtown. He believes the economic climate has leveled the playing field and made people focus on where they want to live, not just where they can make money.
“The benefit of a nation-wide recession is that people are being laid off at their jobs and it’s no longer so much about the buck but it’s more about people asking themselves, ‘Where do I really want to live?’”
The answer, he believes, is New Orleans.
“I love this city and I’m never going to leave,” he says. “We have so many unique intangibles and we’re going to work on some of the problems because once we start to fix them this place is just going to explode.”
On the Friday before Hurricane Katrina hit New Orleans, Eli Khoury signed a deal with the general contractor who was going to do construction on the former Krauss Department Store building he was planning to redevelop into condos. The project had taken a long time to get off the ground and was fraught with logistical difficulties. But Khoury was determined he had a good project.
You know the next part of the story. Storm came…flooded city….and when the waters finally receded and the figurative dust settled, construction costs on projects like Khoury’s had skyrocketed. Still, Khoury plowed ahead with his plans for the building.
Fast forward to September 2008 and the building known as 1201 Canal Street was finished—more than 18 months behind schedule and some $10 million over budget—but finished nonetheless. Today, nearly a year since its completion, Khoury is satisfied with his decision to move forward with the $70 million conversion. Of the 233 luxury units, 60% are sold and 95% of the upscale retail space is leased. The property boasts amenities seldom seen in New Orleans residential developments, such as valet parking, a concierge and a stainless steel, rooftop pool, and it is winning raves from industry experts.
“It’s a great project,” says Khoury, who recently moved there with his wife. “Downtown New Orleans is a great place to live because it’s very active—even after five o’clock when all the people who work there go home.”
Khoury is hoping to make the CBD even more active. Besides 1201 Canal, other downtown projects in the portfolio of his company KFK Group include the St. Joseph Condominiums on the edge of the CBD and 1205 St. Charles Condominiums, a 14-story, 221-unit high rise just a few blocks on the Uptown side of Lee Circle. He is also working on a $25 million adaptive reuse of the former Texaco building in the 1500 block of Canal Street. He plans to turn the 17-story high-rise into 108 luxury residences with ground-floor retail.
Elsewhere in the city, KFK Group is known for its redevelopment of the St. Elizabeth Condominiums, located in the former orphanage that was made famous when author Ann Rice lived there in the 1980s and 1990s. It is also currently redeveloping a Holiday Inn at the foot of the Westbank Expressway.
For Khoury, real estate development has been something of a second career. A native of Beirut, Lebanon, he came to Baton Rouge in the late 1970s to study petrochemical engineering at LSU. He put himself through college by working at Cuco’s, the Mexican restaurant chain, and climbed the ladder, eventually becoming president.
During his years at Cuco’s, Khoury gained experience in the field of real estate, acquiring, designing and adapting buildings for restaurants. So when he formed his own company in the mid-1990s, he was already well-versed in the industry. He was also familiar with the plethora of historic buildings in the older parts of New Orleans and the opportunities that exist for redeveloping them.
“Given that there’s no land in New Orleans it makes sense to renovate,” Khoury says. “We started out doing smaller projects in historic buildings and gradually as we have grown and big buildings have become available the size of our projects has grown.”
Not that it’s easy. It would be much simpler and less expensive for Khoury to do new construction than to deal with the myriad issues that can complicate the redevelopment of historic properties. So why does he do it?
Because Khoury believes it’s the right thing to do for a community that is so rich in historical landmarks. There’s also a market there for what he is able to deliver.
“Our clients are relatively sophisticated and they realize the value in these old buildings,” he says. “They know you can’t just build this stuff new and replicate that charm and feel.”
As he looks to the future, Khoury believes there is still a lot of untapped potential in the downtown residential market. The part of Canal Street where his projects are located is only now just beginning to show signs of coming back to life after decades of neglect and decay. The landmark Saenger Theater is undergoing a major renovation, and the nearby VA hospital is also slated for a $1 billion overhaul beginning next year.
“If you look at that portion of Canal Street it’s better and cleaner than ever,” he says. “We’re very bullish about what lies in store.”
Matt Schwartz and Chris Papamichael of Domain Cos.
Not six weeks after Hurricane Katrina had wreaked her havoc on New Orleans, Matt Schwartz and Chris Papamichael were in the city working on ways to rebuild. Mind you, some neighborhoods were still partially under water, and much of the country—even the state—had written off the Crescent City for good.
But Schwartz and Papamichael, native New Yorkers and Tulane business school alumni, recognized that Katrina’s devastation represented the opportunity they’d been waiting for since their initial dabble into commercial real estate development in the city the year before.
“We’d been looking for opportunities in New Orleans before the storm but the resources were not there,” says Schwartz, who speaks for the partnership. “But once Katrina hit, we recognized the need for what we do best, which is large-scale community development and recognizing that we had expertise and knowledge of the market, we felt we could play an active role in the recovery.”
Four years later, Schwartz and Papmichael’s The Domain Cos. is tackling redevelopment along one of the city’s once-mighty but long since abandoned thoroughfares: Tulane Avenue. They’re having considerable success, too. To date, they have acquired several large tracts of land up and down both sides of the avenue, which cuts a swath across the city from I-10 to the edge of the Central Business District. They’ve developed three new mixed-income developments, mixtures of condos and apartments in new buildings that offer affordable housing with high-end amenities.
Their first project, the Meridian, has 72 rental units and is 100% occupied. Their second, the Preserve, has 183 rental units and is 95% full. Their third, The Crescent Club, has an ambitious 228 rental units and is filling up.
Schwartz makes their vision for redeveloping this central artery about which locals long ago gave up caring for sound simple and logical. “We knew housing stock had been wiped out and we realized that housing would make a lot more sense closer to the downtown core,” Schwartz explains. “So we said where within downtown—or the shadow of downtown—would it make sense to go?”
They pulled out an aerial map of the city and the answer was obvious: Tulane Avenue, which in its 25 blocks touches almost every major thoroughfare and local arterial in the city, including Airline Highway, I-10, Carrollton and Claiborne avenues, Broad Street and Jeff Davis.
“The other thing that Tulane had was that there was no other area of downtown where you could assemble a large concentration of live/work/play spots,” Schwartz says. “So we saw a large opportunity to assemble our sites, which were very large and complex, and difficult to assemble and do so in an area where others could piggyback off of what we were doing.”
An important component of making the project work, of course, was the public financing that became available after Katrina. Schwartz and Papamichael’s projects are funded by a mixture of GO Zone tax credits and incentives, Community Development block grants and public bonds, as well as conventional financing.
“We’re business people first and we had to make sure that participating in the recovery made sense from a business perspective,” Schwartz said. “With the resources that were available we came to the conclusion that it definitely made sense.”
So far, The Domain Cos.’ properties have attracted a mix of middle-income professionals from the nearby hospitals and working-class employees of the vast criminal justice system at Tulane and Broad. They are all ages, though they skew toward the younger end of the spectrum, and they have come from outlying areas like Harahan and Kenner to be closer to where they work.
Now, that Schwartz and Papamichael have the “live” component down of their live/work/play model, they’re turning their attention to the other two parts of the equation. To that end, they’re developing a 5,000-square-foot retail complex across from The Crescent Club that will include a major bank branch, a wine and tapas bar, a dry cleaner and a sandwich shop. Schwartz knows how important those amenities are to creating a desirable living environment. He keeps an apartment in the Warehouse District in New Orleans and says that area, though close to his vision for urban living, lacks the shopping and entertainment venues that create a real neighborhood.
“There’s no grocery store and no drug store, the two most important things you need,” he says. “So we recognize the need for street-front retail along the Tulane corridor.”
As they look to the future, Schwartz and Papamichael have plenty of plans. Besides their work in New Orleans, they also have large-scale residential developments in Long Island, Staten Island, Brooklyn, and Ithaca, New York. But Schwartz says their plans continue to focus on New Orleans.
“We love New Orleans,” he says. “We both have a very personal connection to the city in terms of loving the food, the architecture and the culture and we see a lot of possibilities there for the future.”