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A debt 'time bomb' looms for New Orleans' downtown office market
Posted on 3/21/24 at 7:42 am
Posted on 3/21/24 at 7:42 am
LINK
quote:
The office market in New Orleans, which for years has been one of the sleepier corners of American urban real estate, faces a $400 million "time bomb" of debt that could force big changes in how many of the city's iconic downtown buildings are used in coming years.
The city's skyscrapers, many of which are arrayed along a mile-long stretch of Poydras Street in the Central Business District, are in a precarious situation, say local real estate watchers, with eight of the 15 largest carrying an unforgiving type of mortgage that will soon need to be refinanced.
According to Trepp, a New York-based firm that tracks real estate debt levels in cities across the U.S., all but one of the loans will need to be paid off or refinanced by early 2026. And one New Orleans skyscraper, the 39-floor Energy Centre at 1100 Poydras Street, already is delinquent after its $56.5 million mortgage came due last October. The owner, Los Angeles-based Hertz Investment Group, said it is currently in talks with the lender to avoid foreclosure.
quote:
"These guys are getting super crunched," said New Orleans real estate broker Parke McEnery. When mortgages come up for refinancing over the next year or two, the owners could face a doubling or more in their interest costs, assuming they can even find willing lenders, he said.
"Then the time bomb explodes," said McEnery.
7
Posted on 3/21/24 at 7:45 am to WPBTiger
This could make the S&L crisis in the late 80s look like a popcorn fart.
Posted on 3/21/24 at 7:49 am to WPBTiger
This is everywhere. CRE is in dire straights.
This is one of those scenarios where deflation is ultimately necessary, but the initial pain will hurt severely due to the debt relied upon.
This is one of those scenarios where deflation is ultimately necessary, but the initial pain will hurt severely due to the debt relied upon.
Posted on 3/21/24 at 7:58 am to WPBTiger
Why didn't they lock in a 30 year mortgage back when rates where low?
Posted on 3/21/24 at 8:04 am to WPBTiger
Are these offices even at capacity? Who picked up the Shell lease on Poydras?
Posted on 3/21/24 at 8:11 am to WPBTiger
quote:
Energy Centre at 1100 Poydras Street
The “Premier Tenant” of that building is now Dudley Debossier. Just like the “Premier Tenant” of the PAN AM Building has for some time now been Morris Bart.
I’m not even trying to suggest the situation was much better when each building’s premier tenants were big defense firms - which each sort of supplanted. Just that it’s further evidence of how there’s really no chance of continuing to sustain such an office market in such a place long term from a general economics perspective.
Posted on 3/21/24 at 8:44 am to WPBTiger
Need to convert a bunch of empty office space into upscale condos/apartments. Attract some young professionals and people who want a condo downtown as a secondary residence. Demand for downtown office space will never be back to pre-covid levels
Posted on 3/21/24 at 9:53 am to WPBTiger
quote:
The owner, Los Angeles-based Hertz Investment Group, said it is currently in talks with the lender to avoid foreclosure.
Same company that the city of Lake Charles sued a couple years ago because of the abandoned building downtown.
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