COMMERCIAL REAL ESTATE REPORT
February 2002 Volume 10, Issue 1
SRSA COMMERCIAL REAL ESTATE, INC.
Bar ry Sp izer, CCIM Steve Reisig, CCIM Don Schwarcz Cath y Alb a, CCIM Kirsten E arly
Mar tin O. Miller I II
SRSA MAKES BIGGEST SALE OF THE YEAR ASSE MBLAGE BY SRSA
Due to the hard work of a team of SRSA
brokers, including Kirsten Early, Don
Steve Reisig, CCIM and Barry Spizer, Schwarcz and Steve Reisig, Historic
CCIM combined to broker the largest Restoration, Inc. (HRI) was able to
commercial real estate sale of 2001 in assemble 16 properties along
the state of Louisiana. It was the sale Tchoupitoulas Street near Jackson Avenue
of the entire Louisiana industrial to create a site of approximately 15 acres.
portfolio of First Industrial Property Subject to City Council approval, SRSA has
Trust. The sale included 14 office arranged for HRI operating as “Riverview
warehouse buildings containing 549,839 Retail Development,” to sell the site to Wal-
sq. ft., 5 bulk industrial buildings Mart, so they can build a new Super Wal-
containing 755,231 sq. ft. and 3 office Mart on the site.
buildings containing 120,593 sq. ft.
located in New Orleans, Baton Rouge HRI was selected by HUD to redevelop the
and Shreveport. The 22-building St. Thomas low-income housing project.
portfolio sold to a partnership led by Many of the old structures have been torn
Sealy & Co. for $63,250,000. down and will be replaced with a less dense
residential development. This will include
The sales also included 54.96 acres of vacant land in James Business Park. Applying apartments, condos and townhouses both
a value of approximately $3.6 million for the land, the sales price for the buildings subsidized and in the moderate-income
equates to $41.84 per square foot and represents a 9.78% going in cap rate. The range. To make the project work, the
buildings were 86.6% occupied at the time of sale. developers felt a commercial retail phase
was critical, as it would provide jobs for the
The portfolio included 15 buildings in James Business Park, located just west of the residents as well as tax dollars to assist in
Louis Armstrong New Orleans International Airport. Also included in the portfolio was the financing.
the Jefferson Business Center in the Elmwood Business Park in New Orleans, five
buildings in the Industriplex in Baton Rouge and the Gatx/Honda warehouse in While controversy has surrounded the
Shreveport. The James Park buildings included Service Center #24 and James project due to its proximity to the prominent
Distribution Center, the only two new spec multi-tenant Class A industrial buildings lower garden district residential area and
constructed in the New Orleans area in many years. the Magazine Street shopping corridor
(mostly antique shops and restaurants), it
IN MEMORIUM appears the project will get approved. Wal-
Mart has agreed to shrink the size of the
store and to design it to blend in with the
All of the employees of SRSA Commercial neighborhood. Additionally they have
Real Estate would like to honor the agreed to preserve a historic warehouse
memory of those who lost their lives in the structure on the site.
horrific terrorist acts of September 11th.
Life in America will never be the same.
Those events have certainly shaped the
commercial real estate industry, with the The total assembled property acquired
loss of the World Trade Center twin towers contains approximately 10 acres and cost
Being in the office building business, we $4,355,076 or just over $10 per square
truly understand the brave acts of the foot. The highest priced parcel was the
property managers, tenants, policemen, 39,000 square foot warehouse located at
fireman and rescue workers who saved so 1900-1928 Rousseau Street, which sold for
many lives. We mourn for the families $1,250,000.
who lost loved ones
While it may be tough to believe there is anything positive in all of this, the outcry of
patriotism and the way it has brought families closer together is certainly good to see.
We are proud of how our citizens have responded to this tragedy.
It’s nice to see American flags flying from so many homes and businesses. As a
tourist city, it’s good to see people traveling again and coming to New Orleans. We
look forward to a great 2002, but WE WILL ALWAYS REMEMBER the events of
one of the largest shopping center managers in the
SPIZER/REISIG WIN F. POCHE WAGUESPACK region.
Marrero Shopping Center is a 125,000 sq. ft. center
Barry Spizer, CCIM and Steve Reisig, CCIM were the anchored by Winn Dixie and Rite Aid. It is adjacent to
recipients of the 2000 F. Poche Waguespack Award West Jefferson Medical Center. The MacArthur Center
given by the Commercial Investment Division of the is approximately 120,000 sq. ft. and is anchored by
New Orleans Metropolitan Association of Realtors. The Family Dollar. It is located at MacArthur Blvd. and
award is given to the salesman with the highest General DeGaulle Drive. Mike Hilferty, CPM, heads
volume of sales and leases in the marketplace for the this company for SRSA and manages both centers.
year. Spizer and Reisig led the division with volume of
over $47,619,000 each in 2000. They also received Additionally, SRSA manages Independence Mall in
awards for the largest office building sale, the largest Metairie, as well as Northside Plaza, a 145,000 sq. ft.
office lease and the highest volume of office building center in Slidell. Northside is currently undergoing a
sales and lease transactions in 2000. major renovation which includes construction of an out
parcel building for Verizon and the conversion of a
vacant Winn Dixie into two big box spaces and some
small shop space.
SPIZERELECTED NATIONAL CCIM PRESIDENT
Barry Spizer, CCIM was elected
national president for the CCIM
Institute of the National
Association of Realtors for
2003. In that position, he will
lobby congress with Martin
Edwards, CCIM, president of
the National Association of
Barry Spizer Steven Reisig Realtors and will serve on the
Realtors Commercial Alliance with the leaders of SIOR,
ULI, IREM, Counselors of Real Estate and heads of
GSCC OVERSEES BOYS TOWNCONSTRUCTION Cushman & Wakefield, CB Richard Ellis, Grubb & Ellis
and others. Additionally, Spizer will help build local
SRSA’s construction subsidiary, Gulf South CCIM chapters, oversee the further development of
Commercial Construction handled the construction the Site To Do Business and continue to see that the
management for two projects for Boys Town, one on CCIM Institute offers the premier commercial real
Behrman Highway on the Westbank and the other on estate education in the industry.
Haynes Boulevard in New Orleans East. The
Westbank home was completed in September as a NORTHPARK ON THE GROW
girl’s shelter. The facility in New Orleans East will
include five residences, a classroom building and an This past year has been an exciting year of growth for
office building. Total cost of the two projects will be NorthPark Business Park in Covington, LA. SRSA
approximately $6 million dollars.
G S C C , headed by Carl Howat,
worked closely with the architect,
Williams and Associates, and the
contractor, Spartan Building Co., to
insure the project came in on time
and within budget. S R S A ’ s Cathy
Alba, CCIM represented Boys Town
in the acquisition of both parcels.
SRSA MANAGES OVER 500,000 SQUARE
brokered the sale of one of the lots fronting Highway
FEET OF SHOPPING CENTERS 190 to TGI Fridays restaurant, which is now opened.
Additionally, the Marriott Courtyard Hotel was
SRSA’s property management subsidiary, SRSA Gulf
expanded to 150 rooms plus more meeting space. The
South Management, has increased its shopping
center management portfolio to over 500,000 sq. ft.
With the additions of MacArthur Center and Marrero
Express Building was also expanded, with the help of
Shopping Center, both on the Westbank, we are now
GSCC, to 20,000 sq. ft. to handle their growth on the
In the office park, the Northpark Corporate II Building was formerly the site of the Real Superstore. The
increased its occupancy to almost 90%. New tenants $6,750,000 price equates to $14.10/ sq. ft. based
include LLOG Exploration, Rehab Dynamics and solely on the land, but Sam’s did reuse part of the old
GSA/Food & Drug Administration. structure.
2001 was the year for controversial uptown New
SALES DROP BACK TO 1999 LEVELS Orleans real estate deals. In addition to the
controversial Wal-Mart deal (see page 1), the Regional
After solid sales years in 1997, 1998 and 2000, total volume Transit Authority agreed to sell its Magazine Street Bus
of commercial real estate sales over $500,000 have fallen off to Barn property to Arabella Station, LLC (Neil Hixon and
under $500 million. The 2001 numbers are almost identical to Chris Sarpy) for $4,500,000. After much debate and
those of 1999, which still exceeds all of the years between protest from the neighbors, the developers decided to
1990 and 1996. In the year 2001, the New Orleans market had scale back their project to only include a Whole Food
230 transactions totaling $465 million. The largest sale of the Company store and a residential use. As a result of
year was the sale of First Industrial’s Louisiana portfolio for having to scale back the project, the price was
$63,250,000 (see page 1 for details). reduced to $3,000,000 or $20/sq. ft. for the 150,000
sq. ft. site. Don Schwarcz of SRSA Commercial Real
New Orleans Commercial Real Estate Sales Estate represented Whole Food in their lease with the
1997 1998 1999 2000 2001 developers.
Office $337.5 $216.3 $51.8 $218.9 $62.9
Retail $89.9 $154.4 $152.2 $106.3 $105.6
The other noteworthy retail sale in 2001 was the sale
Industrial $96.3 $87.4 $75.5 $73.8 $131.8 of the Gentilly Wood Shopping Center on Chef
Apartments $42.0 $68.7 $29.9 $46.1 $70.3 Menteur Highway. The center was sold to Greentree
Hotel $279.0 $72.2 $24.3 $49.8 $28.8 Realty, LLC (Thor Equities) for $5,600,000. The
Land $43.7 $46.3 $54.7 $89.9 $48.3
138,000 sq. ft. center sold for $40.58/sq. ft. and was
Miscellaneous $35.6 $101.9 $38.3 $27.2 $17.7
fully leased at the time of sale.
Total Sales Volume $924.1 $747.2 $426.7 $612.0 $465.3
Number of Sales 201 248 230 231 230 LAND
NOTE: All numbers in millions except number of sales. Totals based on sales over
$500,000 in the Greater New Orleans.
Source: SRSA Research Department One of the largest land sales in 2001 was the sale of
19.5 acres located at Dickory and Mounes in Elmwood.
East Jefferson Properties sold the site to Cottonwood
OFFICE Apartments (Favrot & Shane) for $6,156,820. That
equates to a value of $7.24/sq. ft. for the land, which
While it was not a record year in office building sales, there was zoned GO-1.
were still three significant office buildings which traded in
2001. The largest sale was the AAA Building on Causeway Following the St. Thomas assemblage for Wal-Mart
Blvd. in Metairie. The 124,000 sq. ft. property was sold by (see page 1), the third largest land sale was for the
WBK Partners (Koll Bren Fund) to a partnership of Jeffery site adjacent to the Energy Centre office building. It
Feil and LNR Property Co. (Lennar Partners). The sales price included everything remaining in the square between
equates to $72.18/ sq. ft. and a going in cap rate of 10.75%. Loyola and Rampart and Poydras and Lafayette. The
The building was 95% leased at the time of sale and was site was sold by Nineland LLC to SIP-NO Ventures
anchored by American Auto Association (AAA). (Shorenstein Company) for $3,850,000. Shorenstein is
the owner of Energy Centre and currently have a new
The Metairie Tower office building on Metairie Road also sold 450 space-parking garage under construction on the
in 2001. B.F.Saul Real Estate Investment Trust sold the site.
property to G.L.Metairie Towers, LLC for $7,200,000. The
91,000 sq. ft. building sold for $79.12/sq. ft. and a 10.56% TOP FIVE SALES FOR 2001
cap rate. It was 92% occupied at the time of sale. RANK PROPERTY TYPE PRICE
Riverside I & II was the other major office sale in 2001. #1 First Industrial Portfolio Industrial $ $63,250,000
Northwestern Mutual sold the buildings to Riverside #2 Hidden Lake Apartments Apartment $15,000,000
#3 AAA Building Office $8,950,000
Investors, LLC (Select Properties) for $6,100,000. The 89,834 #4 Winn Dixie Airline Retail $7,305,736
sq. ft. property sold for $67/ sq. ft. and a 13.2% cap rate. The #5 Metairie Towers Office $7,200,000
Source: SRSA Research Department
buildings were 99% leased at the time of sale.
RETAIL OUTLOOK 2002
In the retail area there were also some noteworthy 2002 is certainly shaping up to be a very interesting
sales. The 10.993-acre site at Airline Drive and Cleary year. Whether or not there will be some hangover from
Avenue adjacent to the on ramp to the Earhart the events of September 11th and the national
Expressway was sold by Joseph Canizaro to Sam’s recession is hard to tell. While there are certainly some
Business Trust to build a Sam’s Warehouse store. It signs of life, with good activity early in the year, it is
hard to be overly optimistic. Our forecast for 2002 is
much like 2001, a good year but not a great year. While we know our real estate market has changed as a
result of September 11th, we also can see how we have
In the retail area, we have Target coming into our started to pick up the pieces. We just witnessed the greatest
market with multiple stores. They have secured sites in Super Bowl ever in New Orleans and are getting ready to
Metairie (at Clearview Shopping Center), the Westbank embark on a fabulous Mardi Gras season. Tourists and
conventions have returned to the city and the hospitality
on Manhattan Blvd. and in Slidell. Best Buy has also started business is strong again. We are about to elect a new mayor
opening stores in our market with more to come in 2002.
(who is not a career politician) and who is determined to bring
Driven by this retail activity, look for new centers to be
businesses to New Orleans. And we will soon have an NBA
developed in Mandeville and Slidell, as well as on the
basketball team to play in our new arena (the Charlotte
Westbank. Also look for the completion of the redevelopment
Hornets) and a significant infusion of cash into the New
of Northside Plaza in Slidell in 2002.
Orleans Medical Center (Tulane and LSU Medical schools).
There are a lot of good positive things happening in our city
We also have some major fallout in the retail sector. Service
and we hope to ride that momentum to a successful 2002 in
Merchandise and K-Mart’s problems will create some vacancy
the commercial real estate industry.
in the marketplace. Additionally there are other retailers who
are struggling who could also be closing stores in 2002.
If you have a property to sell or money to invest, the
professionals at SRSA are ready to help you. We specialize
The office market has been most dramatically effected by the
in t he a cq ui si ti on a nd s al e o f c omme rc ia l r ea l e st at e
economic slowdown. Major corporate office space users have
a nd c an h el p you get the job done. With our investment
been in the cutback and layoff mode, creating more office
sales experience (over 75 years), we can analyze investment
vacancy than we have seen in years. Metairie, a traditionally
opportunities and assist you through the process to a
strong sub market, has been hit with over 200,000 sq. ft. of
successful closing. If you have a property to manage, let the
sublease space. With few new tenants moving into the market,
professionals at SRSA Gulf South Management assist you in
that space will be tough to fill. As a result, rates in Metairie
maximizing the value of your asset through its efficient and top
have fallen by $1-2 per square foot, providing space in Class A
quality management services. We can now also handle your
buildings for under $20 and in Class B buildings in the $15-17
construction needs through Gulf South Commercial
Construction. Please give us a call at (504) 831-2363 and let
us put our skills to work for you or check us out on the Web
The CBD office market is equally tough with large blocks of
sublease space adding to normal vacancy in the office
towers. Look for 1010 Common to fill up with the addition of
two large state offices and for Plaza Towers (the building the
state is moving out of) to sell and be converted to a hotel or
residential use. While that trend has been good to the CBD in For More Information Contact
recent years, it is slowing down due to the difficulty in getting
financing for a hotel conversion project.
SRSA Commercial Real Estate, Inc.
1031 TAX FREE EXCHANGE
3850 N. Causeway Boulevard
SRSA has investment specialists who understand 1031 tax-
free exchanges. If you have little or no basis in your property Suite1970
and cannot sell because you do not want to pay high capital
gains tax, speak to us and let us assist you with a replacement Metairie, Louisiana 70002
property. Cathy Alba, CCIM and Barry Spizer, CCIM both
successfully completed 1031 exchanges for their clients this Phone: (504) 831-2363
Fax: (504) 831-0481