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Photo courtesy DepositPhotos.
Downtown New Orleans hosts 125,000 visitors, residents, and employees per day; reports 88% office market occupancy; is home to 17 new retailers in 2023; and has close to $800 million in residential and commercial construction that is either ongoing or in the pipeline, all according to the Downtown Development District Q2 2023 Market Report, released this week.
The Downtown Development District (DDD) of the City of New Orleans was created by the Louisiana Legislature in 1974 (LA Rev Stat § 33:2740.3) as the nation’s first assessment-based Business Improvement District – providing economic development and public space services to the downtown area bounded by Iberville Street, Pontchartrain Expressway, Claiborne Avenue, and Mississippi River.
Office vacancy sits at 12.1%, trending below national average
The Downtown New Orleans office market boasted a vacancy rate of 12.1% in Q2 2023, compared to 12.7% in Q1, trending lower than the national office market vacancy rate of 17.8%, according to CBRE. The average asking rent per square foot in downtown New Orleans is $21.03, compared to $20.50 in Q1.
Some notable moves within the market included JECohen purchasing the first two floors of the New Orleans Cotton Exchange (221 Carondelet), and Terry Dental Aesthetics opening a newly-constructed private dental practice on the ground floor of The Standard Condominiums in the South Market (1011 Julia St.).
Retail rents are on the rise in downtown New Orleans. Rents rose by 17.13% from $28.25 to $33.09 in Q2. The retail vacancy rate is 11.81%, compared to 15% in Q1.
Seventeen new retailers in the first half of 2023 have opened in downtown New Orleans, with five opening in the second quarter – Barrow’s Catfish (1200 Poydras St.), Big Little Kitchen (833 Howard Ave.), Dahla (611 O’Keefe Ave., Unit 10), French Truck Coffee (700 Canal St.), and Shaw Art Studio (600 Carondelet St.).
Hotels report 70% occupancy
Downtown New Orleans has 671,213 hotel rooms with a Q2 occupancy of 70.7% (68.63%, Q1). The average daily hotel room rate is $216.99, compared to $223 in Q1 (Source: CoStar).
Both Homewood Suites by Hilton (901 Poydras St.) and Le Meridien (333 Poydras St.) unveiled multi-million-dollar renovations this quarter, while Hilton New Orleans Riverside (2 Poydras St.) is getting ready to undergo a $3.7M renovation itself.
Multifamily rent averages close to $2,000 per month
According to the latest data, the average multifamily rent for the New Orleans metro area is $1,333 while downtown New Orleans is up to $1,992 per month. Vacancy rate sits at 5.8%, compared to 7.1% in Q1. There are 6,300 total residential units in downtown New Orleans.
Notable significant projects in the pipeline include a new mixed-use property at 827 Carondelet, which plans to deliver 34 new apartments and is currently seeking entitlement.
In April, plans were announced to convert what was previously The Children’s Museum at 420 Julia St. into a mixed-use complex that expects to deliver a 43 room hotel, ground-floor retail, and 70 new apartments. The owners at 1515 Poydras are still planning to convert about 300,000 square feet of office space into multi-family housing.
Downtown foot traffic averages 125,000 per day
In Q2, downtown New Orleans averaged 125,000 in foot traffic per day. Canal Street leads the way with an average of 31,702 people per day, followed by Convention Center Blvd. at 17,305; Poydras Street, 15,590; and Loyola Ave., 7,633.
Hotel occupancy received a boost in Q2 from popular spring events such as the New Orleans Jazz & Heritage Festival (hotels reported 83% occupancy for first Saturday), French Quarter Fest, Crescent City Classic (12,425 runners), graduation weekend (176,000 visitors) and Jammin’ on Julia (2,100 attendees).
In June, the Audubon Aquarium celebrated its $41 million renovation of the aquarium and insectarium on the riverfront. The National World War II Museum receives more than 776,000 visitors per year. The Ogden Museum of Southern Art recently celebrated its 20th year.
The New Orleans Ernest N. Morial Convention Center reports that Q2 brought 153,068 visitors to New Orleans, staying an average of 4.9 days and spending an average of $1,294 each. The Convention Center recently received a 2023 Venue Excellence Award from the International Association of Venue Managers – the first time the NOMCC has been honored with this distinction in its 38-year history.
Downtown reports close to $800 million in potential construction
The $325 million transformation of Harrah’s New Orleans into Caesars New Orleans is ongoing and slated for completion by 2024. It is one of 12 current commercial and residential projects under construction in downtown New Orleans.
There are also six “entitled” and 11 “seeking entitlement,” according to the DDD; all 29 projects total more than $796 million in potential downtown New Orleans commercial/residential investments (for complete list, visit pages 23-24 of DDD Report).
Two private security firms hired to enhance safety
The DDD has enhanced security measures by initiating the deployment of two private security firms, Vets Securing America and Pinnacle. As a result, approximately four to eight trained law enforcement and armed security officers are now patrolling the downtown area.
The DDD negotiated a Cooperative Endeavor Agreement with the City, in which DDD funds the costs of a Code Enforcement Agent and Title Inspector dedicated to downtown and focusing on quality-of-life code issues such as sanitation, sidewalks, graffiti and rodents.
In addition, the DDD continues its work on a “Clean Up to Get Down Campaign” – sending out flyers to remind nearly 3,000 residents and businesses of the District’s appearance and cleanliness standards. The DDD has also put out requests for proposals for sidewalk cleaning and public space maintenance contracts. In the 2023 state legislative session, the DDD was awarded $4.75 million to undertake open space improvements, enhanced enforcement, and general beautification.
Through a Cooperative Endeavor Agreement with the DDD, the City of New Orleans Department of Public Works began engineering survey work on the Downtown Stormwater Management Upgrade Plan. Nineteen blocks will undergo system upgrades, and the foundation has been laid for repairing other infrastructure, including traffic signalization and lighting.
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