Can New Orleans keep its downtown renaissance alive?
New Orleans developer Michael Valentino can stand in front of his latest investment and look in both directions on Canal Street to chart how far one of the city’s main thoroughfares has faired since the levees failed 10 years ago. He’s part of a group seeking to redevelop the former Canal Street Hotel, a shuttered 1960s-era inn at the corner of Canal and South Claiborne Avenue.
A turn toward Lake Pontchartrain, and he can see the promise of what the next decade may bring — the gleaming facades of a $2 billion medical complex that city boosters hail as New Orleans’ next great talent magnet. Toward the river, several refurbished hotels and former office buildings now boasting high-end luxury apartments tower above the sidewalk.
“There’s never been a period like the period we’re experiencing right now,” said Valentino, who has developed hotels in the French Quarter.
That confidence, triggered by federal recovery dollars and various development incentives, can only carry a full head of steam for so long. Downtown is booming. Property values are rising. Wealth is accumulating.
“It’s exciting and it’s scary at the same time because it’s happening so fast,” Valentino said.
So how does New Orleans bottle its present good fortune? The development of the Warehouse District and Central Business District into livable neighborhoods began decades before Katrina, but never at the pace it’s achieving now, observers say.
“Was it the storm? Was it natural progression? Who knows?” said Larry Schedler, a real estate broker who specializes in multi-family apartments. “The hardest thing, as a neighborhood gets popular (is) can you keep building (apartments) at the price where the people can, where the market can, afford it?'”
Developers, economists and business advocates singularly agree that attracting and creating jobs that pay workers middle-class salaries is vital to New Orleans’ chances to continue its renaissance trajectory.
THE COST OF DOWNTOWN LIVING
According to the Downtown Development District, apartments are renting around $2 a square foot. In other words, an 800-square-foot apartment can rent for $1,600 a month — more than double the average rate across the rest of the city.
“We’ve seen a really nice recovery, and a lot of the things look better than they ever have before. But at this point, it’s really about this next generation of jobs because the neighborhoods we’re describing, the rents are big rents,” said Mark Maddera, a commercial mortgage banker in New Orleans. “And you need a good salary to do that.”
Profiles of downtown dwellers reflect that. Of the 3,460 residents living in apartments in the Central Business District, most are renters with average incomes close to $72,271, according to data the New Orleans Business Alliance compiled. Seven out of 10 residents there have a college degree.
“On Julia Street, we’ve had a lot of younger people moving into the apartments,” said Jack Stewart, a historian and longtime resident of the downtown district. “We hope that we can still afford to live here with the values and the taxes going up. I don’t know. I think that’s going to level off. It can’t keep going up.”
Data show the average age of CBD residents has been increasing quickly – from 36.5 years in 2010 to 38.5 years in 2015 — a signal that the apartment market may be growing more appealing to empty nesters or white-collar professionals who eschewed having children than young professionals.
Nonetheless, the citywide job market has grown at an average annual rate of 2.5 percent since 2009, according to the alliance, from 226,984 total jobs in 2009 to 260,695 total jobs this year.
Jobs in specific fields — health care, digital media and technology, and bio-innovation — appear to hold the most promise, especially with the opening of the new hospitals and the citywide focus on incubating technology companies and other small businesses linked to the industry, experts say.
Add to that the $16 billion Greater New Orleans Inc. thinks will be spent in the petrochemical industry, which could translate to 57,000 new jobs around the region, said Jana Sidkar, the economic development organization’s director of workforce and retention. Add as well, she said, coastal restoration and water management, emerging fields with billions of dollars in backing from the federal government and restitution from the BP oil spill.
The task now is to train people in such a way that their skills translate across job sectors.
“Oversimplified, but the same people who build our roads are going to build our coasts,” Sidkar said.
PROSPERITY AND INCLUSION
But not all is rosy. There are signs of concern in the marketplace. The income gap between wealthy and poor residents is broad and widening. For example, the median income of a downtown household is $42,246 — markedly less than the average income of $72,271. This is because a quarter of households there make less than $15,000 a year and another quarter makes more than $100,000, according to the business alliance’s data.
Unemployment, especially among African-American men in a majority black city, is very high, and the demand for skilled workers in growing industries could one day outstrip the limited local supply.
“If we want this revitalization to continue and we want the downtown retail to remain here, and if we want to get the Apple Store, and if we want there to eventually be new construction of commercial (properties), it’s totally dependent on having a mobile and accessible middle class,” said Michael Hecht, GNO Inc. executive director.
“When people talk about the recovery so far, the number one critique of it to the negative side is yes, the economy is booming, but the income disparity has not yet been addressed and not everybody is partaking in the revitalization,” he said. “I think we are very clear in saying that if that is not addressed over the midterm, then this recovery is not going to be sustainable.”
That sentiment plays into a bevy of recent policy decisions made by economic development groups and even within City Hall. Mayor Mitch Landrieu unveiled his “pathways to prosperity” last year, a nebulous call at the time to fill the job market that has begun to take shape in real programs meant to channel native New Orleans students into skilled training.
GNO Inc. has its “world of work” initiative, a marketing campaign aimed mainly to increase awareness among high school counselors that a middle-class career for their students may not hinge upon a college degree.
“Part of the resistance (among counselors) is: ‘We know a college degree. We know what access that provides people. So show me. Show me the people, the numbers, the quality training that ensures I’m actually sending somebody on a pathway to the middle class, to a good job, to something that self-sustains me, that’s going to be here in 10 years,'” Sidkar said. “There’s much less skepticism now.”
New Orleans at the anniversary of that terrible storm is at a crossroads, one that doesn’t go unnoticed in the wealthiest, densest and most developed part of the city.
“The tragedy of Katrina and now the emerging triumph is: The best way to honor those who lost their lives, those 1,800 or so is, by building the economy that their survivors can thrive (in) and feel good about,” said Quentin Messier, New Orleans Business Alliance’s executive director. “That’s how you honor the tragedy.”