Retail is ‘Hot as a Pistol’ in New Orleans
The Crescent City is in a shopping frenzy as new stores move in.
Ask an economist what’s the best gauge of consumer confidence, and you can expect to hear something about retail sales. Brisk shopping activity reflects optimism in the population at large, analysts say.
Well, if shopping provides insights about consumers, then store openings surely say something about retailer attitudes, and judging by recent openings in the local area, retailers are bullish on New Orleans.
Recent years have brought a slew of additions to the local retail landscape, from openings by well-known national stores entering the market for the first time, to the development of new centers that are enabling expansions in high-demand areas.
“I haven’t seen the New Orleans economy this vibrant since the late (19)70s and early ’80s when the oil business was booming here,” says veteran retail analyst Don Schwarcz, a partner in SRSA Commercial Real Estate Inc.
A leading retail specialist in the region for several decades, Schwarcz has been impressed by the activity he has seen around town during the last 18 months. Among the “big deal” announcements he points to are plans by Swedish fashion retailer H&M to open its first Louisiana store soon in the former Hard Rock Cafe space in the French Quarter.
The H&M news came shortly before big national shoe retailer DSW Inc. announced the opening of a new store in the Elmwood Shopping Center.
On top of those openings, local shoppers soon will have access to one of the country’s biggest retailers when Costco Wholesale Corp., whose annual sales top $60 billion worldwide, opens at the site of the former Carrollton Shopping Center this fall.
“There’s an awful lot going on, and still more retailers are looking to come into New Orleans,” Schwarcz says.
He says part of what’s driving the activity is simply a “rising tide” of economic activity. “We have low unemployment, a lot of construction and the city is actually growing,” he says, contrasting the picture with that in many other U.S. cities.
But Schwarcz says retailers also are responding to the success of their peers, or of their own existing local stores. “They see that stores that opened here three or four years ago are really doing well, so they think, ‘Let’s go ahead with a couple more,’” he says.
The action includes movement by retailers that were already in the market as well as newcomers. Whole Foods Market, with existing stores in New Orleans and Metairie, will open a new store at a former Schwegmann’s grocery site at North Broad and Bienville streets, for example.
Vacant retail spaces in other areas also present opportunity. The closing of a Borders Bookstore on Veterans Memorial Boulevard created a big opening along one of the region’s busiest retail corridors, and a creative renovation turned the nondescript building into a fresh destination for shoppers and diners. Locally based Massey’s Professional Outfitters relocated to the ground level of the revamped building, while the second floor houses one of the first local restaurants by Atlanta-based pizza purveyor Mellow Mushroom.
Other names that have popped up along the high-demand corridor include Panera Bread, Bonefish Grill, Coyote Blues Fresh Mexican Grill and one of the largest Buffalo Wild Wings restaurants in that company’s 900-location chain.
While turnover helps keeping the local retail offerings fresh, new shopping structures are making a splash, too. At Bienville Street and Carrollton Avenue, for instance, Mid-City Market is under development by Stirling Properties LLC.
The long-awaited center will house a Winn-Dixie grocery store as well as a Pei Wei Asian Diner. Other expected tenants include Office Depot and Neighborhood Pet Market by Jefferson Feed, along with Felipe’s Taqueria, Pinkberry Frozen Yogurt and Five Guys Burgers and Fries, which will join dozens of other restaurants along the Carrollton Avenue corridor.
Stirling Properties also recently converted the former American Legion Building on Magazine Street into a Walgreens Drug Store, and turned a former Borders bookstore on St. Charles Avenue into a home for specialty grocer The Fresh Market.
In still other retailing news, Stirling Properties in January won City Council approval to proceed with Magnolia Marketplace, a two-level mall on South Claiborne Avenue, where most of the stores will face an elevated 480-space parking deck. T.J. Maxx and PetSmart are among the tenants expected to occupy the center, on a site that once was part of the C.J. Peete public housing complex.
Of the many retail stores and projects under way around the city, Schwarcz says one that he finds particularly interesting is right along the river. A proposal to turn Riverwalk Marketplace into an outlet mall holds a lot of promise, he says.
“In a city that gets millions of tourists a year, to have something that every tourist could walk to, particularly if it’s mostly higher-end outlets, that’s the best use I could think of for that property,” he says.
In yet another part of town popular with shoppers, Schwarcz reports that demand appears as vigorous as ever. While hundreds of shops line the quirky five miles or so of Magazine Street, any store that becomes vacant is quickly replaced by a new tenant.
Magazine Street is “hot as a pistol” among retailers, Schwarcz says, and he predicts it will remain so for some time to come.
Local Economic Indicators
Researchers at the University of New Orleans say retail sales are showing strength throughout the local area. Their latest Metropolitan Report shows these highlights of the retail sector and other business segments.
• Estimated sales of taxable items increased by 3 percent in 2011, to nearly $11.9 billion, as compared with the previous year.
• Taxable sales increased by 7 percent in the first half of 2012, as compared with the previous year’s first half.
• Employment growth in the metropolitan area has been strongest in these sectors:
•Management of enterprises
•Food services and drinking establishments
•Leisure and hospitality
• The construction industry in the local area has been driven primarily by non-residential contracts since 2007.
• The area is expected to have a small increase in local employment of about 3,300 jobs in the third quarter of 2013 and the number will rise again in 2014 by nearly 2,400.
• Segments that are expected to be the strongest include leisure and hospitality, health care and social assistance, and educational services.