When real estate professionals think of the New Orleans industrial market, oil companies, the Port of New Orleans (recently rebranded Port NOLA) and distribution companies come to mind. That thought is currently undergoing an evolution, REBusiness Online reports.
In an article for the national real estate website, Burden Edmonds of Beau Box Real Estate writes that historically industrial areas of New Orleans are being absorbed seemingly daily by an insurgence of retail and entertainment-based business. “As traditional retail in American shopping and strip malls is on the decline,” he writes, “developers are rushing to buy warehouses for physical entertainment and nontraditional uses.”
High-profile industrial properties are in huge demand, Edmonds writes. Drive Shack, a competitor of popular Topgolf, is developing a $29 million venue at the old Times-Picayune newspaper site owned by Howard Investors LLC, which is owned by group of developers such as Joe Jager, Barry Kern and Arnold Kirschman.
Port NOLA used to be home strictly to cargo ships and tankers, but is now expanding to fill the need of cruise ships. Norwegian, Carnival and the newly announced Viking Cruise lines all now use it as a docking port. The $2 billion port master plan encompasses the growth needs of the cruise ships, as well as the recently announced deepening of the Mississippi River’s main channel to 50 feet. But as Edmonds notes, Tchoupitoulas Street warehouses that once served the port are being turned into cross-training gyms and breweries.
“New Orleans is now facing is a shortage of true industrial land,” Edmonds writes. “Raw dirt that costs over $7 dollars per square foot is not feasible to build a warehouse for most developers to support market rates. However, that land is viable for retail and special venue tenants. The New Orleans market already has high lease rates due to the shortage of dry land. The market has high barriers of entry as it features the Mississippi River, Lake Pontchartrain and outlying marshlands.”