When the Chase South Tower at 451 Florida St. opened downtown in 1968—at the time it was called the LNB Tower after the bank that built and occupied much of it—the contemporary, 21-story high-rise was the hottest office property in town.
Today, the 330,000-square foot building is still one of downtown’s iconic structures. But as Business Report details in its current issue, at just 76% occupancy, its vacancy rate is the highest of all the Class A office buildings in the downtown submarket. And now its future is uncertain as a foreclosure battle over the property is heating up in federal court.
At issue in the court case is more than $22 million the building’s New York-based owners, Florida Street Holdings, allegedly owe their lender, U.S. Bank.
The bank sued the group earlier this year for failing to pay its note since October 2015. In late April, U.S. District Judge Shelly Dick ruled in the bank’s favor and ordered the seizure and sale of the building.
But Florida Street Holdings isn’t going down without a fight. It appealed Dick’s ruling to the U.S. 5th Circuit Court of Appeals, and it separately filed documents in district court asking Dick to throw out her order as well as the bank’s complaint. The group has also brought in some big guns to bolster its Belle Chasse-based legal team: local law firm Cazayoux Ewing, which is headed by former U.S. Attorney for the Middle District Don Cazayoux.
“This could drag on for years,” says Branon Pesnell with Beau Box Real Estate. “That would be a shame because nothing is going to get done over there while it’s tied up in court.”
Leasing activity has slowed considerably this year, while new inventory has increased with the addition of the IBM building—and will further increase later this year when the first of the Water Campus buildings is completed.
The Chase South Tower—which lost the Camelot Club earlier this year and Taylor Porter law firm in 2014—is already at a competitive disadvantage. The new inventory will only make things that much more challenging, and the longer the court battle lasts, the worse it could get for the building, according to local real estate brokers, who say older properties have to be treated with a lot of TLC to remain desirable.
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