NEW ORLEANS-Although investor interest in the Crescent City’s office market historically has been limited to high-net worth individuals and private companies, the pool of potential investors has deepened in recent months.
“Many US-based institutional investors and foreign investors that would previously only look at major markets are now looking for stabilized assets and yield in secondary markets such as New Orleans,” says Evan Stone, managing director of Jones Lang LaSalle’s Capital Markets.
Stone and Jack Crews are currently marketing one of the city’s trophy assets, One Shell Square, a 1.25-million-square-foot office building owned by MetLife. The 51-story tower is located in New Orleans’ CBD.
“One Shell Square has already generated a lot of interest from investors,” Stone tells GlobeSt.com. “We’ve seen the typical high-net worth individuals, but for the first time in many years, we see institutions and foreign investors from the Middle East and Germany also showing interest.”
Stone contends that New Orleans, along with other secondary markets, offers these investors the opportunity to purchase institutional-quality assets – and in some cases, trophy assets – at very attractive prices. “Compared to Washington DC, for example, New Orleans assets trade at an 8.5% cap rate versus a 4.5% cap rates,” he points out, adding that New Orleans properties did not experience erosion during the most recent downturn.
“New Orleans, like most secondary markets, is very stable,” Stone notes. “The concern, from an investor standpoint, is the fact that these markets historically haven’t attracted a deep pool of investors. But, we’re seeing a shift, at least as it relates to New Orleans.”
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