Real estate experts call move of 2 big businesses a devastating blow to the CBD

Published: Sep. 15, 2023 at 9:03 PM CDT
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NEW ORLEANS (WVUE) - Commercial real estate experts said two major companies in New Orleans moving out of the tallest building in the state would be a devastating blow to the CBD.

Many New Orleans businesses in the area depend on employees of other companies for a business lunch rush and shopping.

“It’s just hard to see the buildings be so empty and all the large corporations and businesses pulling out. It’s not helping everyone that’s staying,” said Paul Tufaro, owner of Empire State Delicatessen.

Harvey Gulf and now Shell plan to pull out of their building, the Hancock Whitney Center.

RELATED STORY: Shell plans new headquarters in New Orleans River District

“I’ve been here 19 years now, and I’ve relied on this building across the way, just the surrounding hotels and everything, to be able to pull my customer base from,” Tufaro said.

Tufaro said his saving grace is delivery through third-party apps.

“Things have been on the steady decline since the pandemic starting, since everything’s been moving to remote. It’s been one of those situations where we’re seeing a lot more businesses go than arrive, so it is causing a strain on small businesses down this way,” Tufaro said.

With two large businesses pulling out of the high rise, experts said there is a 40% vacancy at the Hancock Whitney Center.

“It’s going to take a long time to absorb that, that big of a footprint,” Louisiana real estate analyst Arthur Sterbcow said.

Sterbcow said he doesn’t foresee any large businesses of the same size moving into the region.

“Anything’s possible. But we have not been really attractive. Unfortunately, our tax laws are not as competitive,” Sterbcow said.

Sterbcow said the departures will impact property value for surrounding landlords. He expects some retail rates and rental rates in the region to stabilize or come down a bit.

“They’re probably going to appeal to the assessor and try to get their value of their buildings reduced, because buildings certainly are not worth what they were with a 40% vacancy,” Sterbcow said.

He said there are many reasons companies are moving out of downtown. Some need more or less space, or a different floorplan. He said cost plays a big role and so does crime.

Sterbcow told Fox 8 no matter where companies go, they’re faced with high and rising commercial insurance rates.

“They’re absolutely having a real tough time getting renewals on their office and retail spaces,” Sterbcow said.

Sterbcow said there’s a bright side to Shell relocating to the River District development, opening in late 2024 or early 2025.

“It’s been kind of derelict over there, just kind of empty, empty land. Now that’s going to come into commerce,” Sterbcow said.

Harvey Gulf previously told Fox 8 it had plans to demolish the former Texas Motel on Airline Drive and move there. The owner has since told that Harvey Gulf is moving in mid-2024 to the Galleria in Metairie and plans to redevelop the Airline Drive property, possibly building an indoor pickleball facility there.

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