Office Park / Commercial Development Approved in St. Tammany Parish in Mandeville

One of the first 200’ tall buildings in St. Tammany Parish will find its home at the interchange of I-12 and 1088 in Mandeville, Louisiana according to the St. Tammany Zoning Commission in a meeting on November 11, 2013.  The 161-acre plot of land owned jointly by the Azby Fund and Wadsworth Estates LLC originally received permit approval for a mixed-use Planned Unit Development which was going to include both business and commercial structures as well as a residential community.

 

Issues after Hurricane Katrina and the Recession delayed the development’s timeline multiple times, but both development companies are now ready to move forward with their construction.  Some of the proposed buildings will be 200’ tall (which is about 20 stories) amongst commercial and industrial venues as well as light retail that will front I-12.  Nothing in St. Tammany Parish comes close to this height at present but members of the zoning board felt that the I-12 / 1088 location would be the best possible location for such a structure because of its visibility from the Interstate.  The presence of such a prominent building right on the highway would literally “put St. Tammany Parish on the map.”

“Among the possibilities is a warehouse distribution center, such as Federal Express,” said Patrick Fitzmorris, assistant managing director for the Azby Fund. “The total build-out would take at least 10 to 15 years,” he said.  Other industrial components would include corporate headquarters from manufacturing businesses similar to the Folgers corporate location and warehouse that is being built in Lacombe.  The developers hope to attract the same type of industrial warehouse business  at their development.

One of the detractors of the project brought up the position that the development was not built to accommodate the large amount of parking needed for industrial warehouse locations.  However, Warren Treme, one of the principals of Wadsworth Estates, said work would begin right away to make changes to the residential infrastructure that was put in so that it can accommodate commercial uses including the parking needed for the complex.

With the installation of the interstate exit at 1088, traffic on Highway 59 has been reduced because of the “back door” access to all of the new homes and rentals available on Highway 1088.  With the inclusion of light retail at this commercial and industrial development, there may now be places for homeowners to shop as well as new jobs served up by those businesses that will lease commercially.

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NAHB Review and Forecast of Current Housing Market

According to the National Association of Home Builders’ (NAHB’s) Fall Construction Forecast Webinar (CFW) which featured three renowned industry experts: NAHB Chief Economist David Crowe, Mark Zandi, Chief Economist at Moody’s Analytics, and NAHB Senior Economist Robert Denk; the net Gross Domestic Product (GDP) is predicted to increase from 1.5% in 2013 to as much as 4% at the end of 2015.  The Webinar, a new addition to the dissemination of information to the real estate industry nationwide, was held to present views on the outlook for the US economy and the housing market more specifically.

All three participants had some of the same basic views on the economy and housing market in general.  In addition the GDP being on the rise, private corporations are showing phenomenal job growth and hiring and are starting, once again to operate in the black.  This factor along with the housing supply being more than the demand, “upside-down houses” regaining their value, and banks paying back the money from the bailout are all good news for the real estate industry.

On a psychological level, consumer confidence and builder confidence has increased to records highs not seen since 2007 in the 1st 2 quarters of the year.  Also, the tight-fisted approach of American households throughout the Recession has eased as there is, for the first time in 6 years, an increase in the purchase of durable goods – cars, furniture, “big purchases.”  These expenditures go hand-in-hand with consumer confidence.  Even though the growth is extremely slow, across the board, there has been an increase in employment as well.

Trying to get back to “business as usual,” builders are getting aggressive about starting new inventory and custom homes.  They are running into obstacles not seen in the last 20 or so years during the housing bust – a shortage of labor, increase materials cost, unavailable materials (no one is keeping any inventory in stock), and, of all things, a shortage of lots.  Still, overall, the good news is that the reason for these challenges is because builders are in need of a supply that will have to increase to meet the demand, which will mean an increase of business and profit for vendors and sub-contractors alike.

Robert Denk pointed out the discrepancies of statistics from state to state.  Not all housing markets in all states were affected “equally,” so in some regions, stronger and significantly weaker housing market growths skewed the statistics unevenly.  Here in Louisiana, the real estate industry slowed noticeably for 2 – 3 years while in other markets, real estate has still not made a full recovery.  2013 has been a particularly strong year in real estate in St. Tammany Parish with sales and homes on the market increasing even from the 1st quarter to the 2nd quarter.

The only constant deterrant to a full recovery of the real estate industry is the problem of loan qualification for any buyer.  The loan process can be arduous and painful for home buyers as well as those looking to refinance.  Since federal regulations were put in place, the process for lenders, trying to adhere to the new rules, has been bogged down and full of obstacles.  Until credit restrictions and loan qualifying rules are “figured out” or eased, home buyers will still struggle somewhat on getting financing for their new home purchase.

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Prices Continue to Rise / Normalize

While the housing market is “bouncing off of the bottom” and now heading rapidly back up, home pricing continues to soar since it really had no other place to go but up after the market crashed in 2008.  According to the S&P/Case-Shiller home price index, home prices recorded their biggest gain since February of 2006.  Home pricing was also 12.4% higher in July than in July, 2012.

Article after article has been written regarding how current home pricing, home sales, new home sales, building permits, and new home construction are seeing numbers they have not seen since before the Recession.  And the record dates to which they are referring are now going back to 2006 and 2007 when the real estate market was thriving and stable.  To finally see these numbers which are on the rise compared to normal real estate market trends has home buyers and builders both breathing huge sighs of relief.  Even cities with the biggest losses during the Recession are seeing a bounce back in home pricing this past year: Las Vegas prices: 27.5% growth; Los Angeles prices: 20% growth; San Francisco prices: 20% growth; San Diego prices: 20% growth; and Phoenix prices: 18.9% growth.

The NAHB (National Association of Home Builders) reported a steep increase in builder confidence in June, 2013, rising 8 points to top out at 52.  Any number higher than 50 means that builders think the market is doing well; any number below that indicates a poor market (according to builders). As with other statistics which have been reported lately, this is the highest level of builder confidence since April, 2006.

Another number which is really good for the housing market is that 2.5 million Americans’ homes are now, no longer “underwater.”  This significant number is good for the US economy because it means that with the sale or stabilization of equity of and in these homes, consumers will now have their money “freed up” to put back into the economy in the form of spending.

As of the latest quarterly economic report, US job growth has included a huge growth of jobs in the construction sector.  Putting builders, contractors, and sub-contractors back to work will also stimulate spending in the economy, not only in the form of spending with builder vendors but also in retail spending.  These numbers and figures as well as economic growth are just in time for holiday spending in the 4th quarter.

Despite the slow pace of economic growth, consumer confidence is on the rise, and our society in general seems to be grateful for the slightest signs of improvement after having our sometimes lavish and luxurious lifestyles put on a tight leash because of the Recession. Any signs of life will help stimulate the US economy.

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US Economic Growth Doubles in 2nd Quarter, 2013

The Gross Domestic Product (GDP) is a measurement of all goods and services produced in the United States.  Each quarter, economists and Washington D.C. measure the GDP comparitive to changes in the growth of the GDP each quarter.  These changes are assigned a percentage and reported to the market.  Much of the changes consumers see in investments come from these reports. After a dismal standing of only 1.1% growth in the first quarter of 2013, the GDP grew more than double that amount at 2.5% during the second quarter.  Initial estimates of a growth of 1.7% was offset by a lower amount of imports into the United States and a higher-than-expeted rate of exports of products.

All eyes are on a September 18th meeting of The Fed to determine if this quarterly growth is expected to continue.  The Fed has been buying up “Treasuries” (Treasury bonds) and mortgage-backed securities in order to boost the stagnant economy and keep interest rates low.  The plan was always that once the economy was “back on its feet,” the Fed would cut back and eventually stop the bond buying letting capitalism take over to create a normal, healthy market.  Since this is the first quarter to show growth since the Recession ended, many fear that scaling back on the bond purchases may be jumping the gun on predicting the resurrection of a healthy market.

Meanwhile, business seem to be pulling out of their hiring freezes, even if it is mostly part-time positions that are being filled.  Housing prices are going up, and construction spending grew at an annual rate of 12.9%, in its 4th consecutive quarter of double-digit growth.  Interest rates also have climbed slightly, but they are still much lower than they have been over a 10-year period.  AND, new home sales reports have shown an increase in new home sales over the past 6 months.

Government spending shrank almost 1% in the second quarter, and state governments spending also went down .5%.  However, the US economy overall is showing some signs of life, and this is good news for home buyers and consumers alike.

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Consumer Confidence Level Highest in 5.5 Years

With 70,000 more jobs than anticipated added in the United States in April and May, job growth rocketed to 195,000 jobs in June, 2013 exceeding the projected job growth of 180,000 by 15,000.  The U.S. unemployment rate is also at 7.6%.  Good news for the Greater New Orleans area is that many of the new jobs added were added in industries familiar to the city.  Nationally, entertainment, restaurants, and hotels added 75,000 jobs while retailers added 37,000.  The construction industry which has been growing in spurts over the last few months added 13,000 jobs, and a robust health care industry added 20,000 jobs.

These numbers combined with record-low interest rates have prompted the increase of new home purchases as well as the purchase of new vehicles.  Low interest rates and higher home values have given consumers an “edge” when it comes to qualifying for a higher-end, higher-priced new or previously-owned home.  Home buyers are getting “more bang for their buck” with these historically low interest rates.  Visible growth in hiring and selling, even if the jobs are part-time jobs as well as the real estate industry and low interest rates have led to a consumer confidence level not seen as high in 5 1/2 years.

Auto sales in the January-June period topped 7.8 million, their best first half since 2007, according to Autodata Corp. and Ward’s AutoInfoBank. Sales of previously occupied homes exceeded 5 million in May, the first time that’s happened since November 2009. New-home sales rose at their fastest pace in five years.  Manufacturers have had a slower recovery time than most industries, but sales were picking up in May with more orders to factories than in previous months.

One thing that will make a major difference in economic recovery will be the bond purchases handled by the Fed in order to keep interest rates low.  Everything is dependent on the overall growth numbers in the first 3 quarters of the year.  However, as of now, Americans are breathing a small sigh of relief that the end to the economy’s woes may soon be in sight.

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29% Increase in New Home Sales from May, 2012

Real estate in St. Tammany Parish and across the United States received some good news this month – home sales in May, 2013 increased by 2.1% from April, 2013 and 29% from May, this time last year.  The market right now is the “perfect storm” for new home buyers.  Interest rates are LOW, even with the slight increase to close to 4% up from 3.35% last month.  Also, the inventory of new homes for sale is limited due to builders just getting back into production after holding off building any new homes or starting any new projects because of the Recession.  Home prices are HIGH, and seem to be growing at a record pace.  You wouldn’t think that higher home prices would be a measure of success of the housing industry, but higher home prices mean increased equity, which makes it easier (if ever so slightly) for home buyers to qualify for a loan and to get a better interest rate. And, finally, the last part of the perfect storm model which seems to be influencing the real estate market nationwide is the drop in foreclosures.

Foreclosures seem to be finally leaving the market, allowing for depressed home prices to rise and for the market to start to grow.  In other words, we finally may be “bouncing off the bottom.”  With the increase in home values (higher home prices) of 10.3% compared to this time last year, many Americans have started to see their “underwater” mortgages move back into the black.  This means that they have now “freed” themselves to sell their homes and move up or sideways into a new home.  Real estate agents and builders can expect to see many contingency buyers over the next months – people trying to sell their homes to be able to purchase a new one.

The new homes sales pace of 476,000 was the best number of sales since July, 2008, right before the “bottom dropped out” of the market.  And according to Joseph LaVorngna, chief U.S. economist at Deutsche Bank, “Affordability remains near historic highs, despite the recent rise in rates and home prices.” Even with the rise in home pricing, home prices are still at “record affordability,” still below the pricing which occurred right before the housing bubble burst.  If the housing market is truly bouncing off of the bottom, then there is only one way to go buy up!

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New Orleans Emerges as a “Player” According to Forbes

While most people in the Crescent City grumble – both at home and “abroad” – that New Orleans, Louisiana is “just” a tourist attraction with no real business growth or potential, a recent audit by Forbes Magazine begs to differ with our sometimes disgruntled residents.  True, New Orleans is the only place where you can show a little or a lot of skin on one very particular street in the city regardless of what time of year you happen to be visiting.  The dedicated law enforcement officials of the NOPD did not earn their crowd control skills by watching DVD’s and holding weekly or monthly exercises.  We are the top city in the world for handling enormous amounts of, it has to be said, unruly tourists.

However, quietly growing in the background of all of this chaos has been a sector of up and coming professionals who do more than drink

copious amounts of alcohol and spend time on the afore-named street.  This sector of the Greater New Orleans area has earned a reputation for being one of the top growing entrepreneurial sectors in the United States.  Throughout each year, numerous conferences and seminars are held to attract new small business and entrepreneurs both on the northshore and southshore.

This quiet growth is now being recognized by Forbes Magazine.  Recently, the magazine / website did an article declaring that New Orleans, Louisiana has had a 28% job growth in the information technology business which includes companies that create software, handle data processing, video game developing and programming, and film production.  What is phenomenal is that New Orleans placed 3rd behind San Jose, CA (Silicon Valley) and San Francisco, CA.  To understand this momentous recognition, the other players on the list after New Orleans were Boston, Atlanta, and Detroit.  The city is so well-known for its entrepreneurial and information technology spirit that GE (General Electric) is moving its technology center to the Central Business District in New Orleans, bringing with it 3,000 new information technology jobs.

One factor that has greatly contributed to this unprecedented growth for the City of New Orleans is that this part of the country seemed to be one of the last cities to experience the Recession and one of the first cities to bounce back from it.  Business is so good in the Crescent City that real estate that is going on the market in the Garden District and now Uptown are selling within less than 24 hours because the demand for “affordable” and safe housing in the city of New Orleans is up due to new businesses opening up in the city and people relocating to the city for business.

Since Hurricane Katrina, New Orleans has started to quietly emerge as a contender for economics, real estate, new technology jobs, and film industry production.  With the designation Hollywood of the South, this city is starting to establish itself in the world market.  Perhaps in the future, it will be much more than just a tourist attraction.

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Historic District Created in Old Mandeville

With mixed reviews, a vote by the Mandeville City Council passed 5 – 0 to create a historic district inside a part of Old Mandeville.  As more and more parts of the Greater New Orleans area are “redeveloped,” many residents and homeowners see this as a “win” that will preserve a portion of the northshore of the City of New Orleans which was established in 1830.

The new historic designation means that homeowners or developers looking to build new construction or to make additions or renovations to their homes will have to run their plans by a hired committee which will ensure that all construction going forward will meet the standards of maintaining historic preservation of the area.

The area designated as the new historic district will be bordered on the south and north respectively by Lake Pontchartrain and Hwy. 190.  The

west border will be Galvez St., and the east border will be Jackson St.  All of the area and the homes within this “square” will be the new historic district of Old Mandeville.

Opponents of converting on of Mandeville’s oldest districts were mostly concerned that by putting an “extra hurdle” in the way of new construction, improvements, or renovations, that homeowners and business owners alike would have a harder time getting their plans approved and their projects started.  Another fear was that by the City Council voting to create a new historic district, it was an intrusion of the city government into the lives of the people.

Even though 13 public hearings have been held to discuss the possibility of creating this new historic district, Councillman Clay Madden expressed doubt that many citizens have no idea the ramifications of creating the historic district will mean them personally.  Madden feels there needs to be more education of the public about the district.  For instance, one qualification for a building or home to be considered historic is that it must be 50 years or older.  A survey was done in 2008 by historian Sally Reeves revealing which buildings qualified for the historic district classification.  The public will need to be educated as to the classification of their home before they are able to do any construction on the structure.

Overall, the majority of the people at the meeting in Mandeville were supporters of the historic district.  Since New Orleans is one of the oldest established cities in the United States, it is important to preserve the history and the architecture from an era that is now history and soon to become a mystery to future generations.

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