Expectations high for commercial property in New Orleans

New Orleans could see a boost in commercial development with the construction of a new hospital.

A pair of projects on Tulane Avenue in New Orleans could lead to an economic upswing for the commercial real estate sector.

Construction has started on a $2 billion medical complex in New Orleans' Mid-City neighborhood alongside a $10 million project to improve the look and feel of the neighborhood and surrounding streets.

Development of commercial sites has started to brew, but some real estate experts from the area believe that sellers are placing expectations too high.

Robert Hand, owner of Louisiana Commercial Realty, pointed to nearby service industry properties like the Patio and Capri motels.

Hand said that the Patio Motel, which has nearly 30,000-square-feet on one of the largest plots of land on Tulane Avenue, was forced to cut its original listing price in half in order to reach a deal. Originally listed at $1.2 million, Patio Motel owners dropped the price to $600,000 after the building was vandalized on two occasions.

New ownership plans to put nearly $3 million into the building and hopes to eventually turn it into a Quality Inn. The Patio Motel has been vacant since Hurricane Katrina.

Interest, but no worthwhile offers
Meanwhile, Hand said the Capri Motel, which is just blocks away from the new hospital construction site, received serious interest when it was listed on the market, but drew no offers close to the asking price. Capri Motel owners Tsui Yu Chang and Wen Chuan Chen ultimately took the property off the market after no offer was close to the $3.2 million asking price.

Commercial real estate agents are hoping to see low-rent motels sold and redeveloped along Tulane Avenue because of the seedy status that comes with them. The New Orleans Police Department stated the low-rent motels often attract crime.

"All these people were here long before the hospital was a gleam in someone's eye so it's not like they are desperate," Hand said. "And remember, many of these hotels like the Capri are family-owned businesses so it's an emotional decision as well. If they're going to sell they want enough money to buy a property somewhere else so they can put their family to work and have a livelihood."

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