Nearly three years after announcing ambitious plans to revive a section of the Central Business District, The Domain Cos. has started construction on the first building in its proposed $200 million South Market District mixed-use development off the Loyola Avenue streetcar line. The Paramount at South Market, a five-story apartment, restaurant and retail building, is slated to be finished late next year.
The $48.4 million Paramount will occupy a full block bordered by Girod, Rampart, Lafayette and O’Keefe streets with 209 apartments and 22,000 square feet of retail space, including sidewalk cafes and units that would allow small business owners to live above their shops.
The big-picture plan for South Market District — a total of 600 apartments and 170,000 square feet of retail space consuming four blocks — remains a sketch on paper as developers work to secure financing for future phases of construction over the next two years. It’s on track to be the largest mixed-use development in New Orleans and possibly the largest in the state, according to local real estate analyst Wade Ragas.
“South Market will create the type of mixed-use district, with high-quality housing proximate to employment, public transportation, amenities and services, that is needed to support the growth and diversification of New Orleans’ economy,” said Matt Schwartz, principal of The Domain Cos., in a statement announcing the start of construction. “The retail, apartments and overall planning of the district is unlike anything that exists downtown today.”
What exists at the South Market site today are barren parking lots. But it was once a thriving commercial area at the end of the New Basin Canal – where the Union Passenger Terminal is now located – from the 1830s through the 1930s. But the canal was filled in the 1940s, and the area was soon razed for parking.
South Market District builds on the site’s commercial history, with a vision for becoming a shopping hub once again. The massive project also promises to add to sweeping changes to the Central Business District landscape, in anticipation of thousands of jobs expected to be created by the biomedical district.
In just the past few years, the planned Loyola Avenue streetcar line — a major factor in the developers’ decision to move forward with South Market — opened in time for the city to host the Super Bowl this year. The Hyatt Regency on Loyola finished a multimillion-dollar renovation; Rouses Market set up shop on Baronne and vacant buildings in the area have been converted to apartment homes. New investors in the vacant Plaza Tower skyscraper also announced plans to bring that troubled icon back to life.
South Market District is benefiting from a number of tax breaks and incentive programs for its share in the growth. For The Paramount, Oak Grove Capital agreed to a $38.3 million loan insured by the U.S. Department of Housing and Urban Development. The federal backing is provided through a program that supports rental housing in areas designated for urban renewal.
Iberia Bank issued $3.2 million letters of credit to meet HUD’s reserve requirements on the loan. Woodward Interests, an affiliate of South Market’s general contractor, Woodward Design and Build, provided equity for the project.
The city’s Industrial Development Board also approved a 12-year plan for payment in lieu of taxes that freezes the tax bill on the property during the first two years of construction and increases what’s due on the assessment over the following decade.
Most of a million-dollar project for sidewalk-widening, street paving and utilities work on Girod Street is being funded through public programs. The Downtown Development District will use $300,000 in capital outlay funds from the State Bond Commission and $40,000 from the Delta Regional Authority to fund the street work, while The Domain Cos. was granted $500,000 from the Louisiana Office of Community Development, all for the Girod Street work.
And in June, Gov. Bobby Jindal signed into law a piece of legislation created with the South Market District in mind. The legislation modifies the state’s Enterprise Zone business incentive program to include a project of South Market District’s size. The move expands the total possible tax credits for the development by over $500,000 to a total of as much as $3.5 million.
Meanwhile, developers continue to pursue financing for future phases of construction, including exploring new market tax credits, Schwartz said.
Developers are hoping to begin construction later this year on the next step — a $20 million building with 435 parking spaces and an additional 25,000 square feet of retail space. It would be built just across O’Keefe Avenue from the Paramount.
Schwartz said the company plans to begin announcing retailers joining South Market later this summer. He said the mix will include local and regional businesses and national chains – with an emphasis on the local and regional side for the first openings.
Girod Street will serve as the heart of the district featuring sidewalk cafes and shops in a pedestrian-friendly atmosphere, he said. The sidewalk will be widened from 7 feet to 20 feet by removing one lane of traffic.
“Once completed, it will really help create a sense of place along Girod as this urban center, in and of itself,” Schwartz said.
Ultimately, the plans call for two more projects along Loyola Avenue and Rampart Street that would bring the total number of apartments to 600 and total square feet of retail space to 170,000. The company says the luxury-style apartments will appeal to the growing work force in the biomedical and digital media industries locally. The designs on the buildings haven’t been finalized, Schwartz said, but they will likely be taller than the five-story Paramount.
The project won’t be derailed by a recent announcement that the nearby vacant Plaza Tower skyscraper will be opening its garage for public access again, Schwartz said.
The company earlier this year raised concerns to the Industrial Development Board about Plaza Tower parking impacting the viability of South Market.
“If Plaza Tower were to be redeveloped in a first-class fashion, I think it would be a boost for the area and for South Market,” Schwartz said recently. “Our focus is on executing a plan for South Market that creates lasting value on our sites and for the surrounding community. Ultimately, I think our plan for the district will support and help to attract additional investment in surrounding properties, Plaza Tower included.”
Jack Stewart, president of the Lafayette Square Association, said the borders of his neighborhood — the second oldest in the city — include the new South Market District. He said the neighborhood worked with developers and city leaders in agreeing to allow for sidewalk cafes in the area with extended restaurant hours.
The main concern, he said, was the late-night noise factor. While the South Market apartments can be built with new sound-proofing measures, people asleep in their historic homes nearby might be disturbed, he said. He said his neighborhood group agreed to South Market cafes staying open as late as midnight on weeknights and 2 a.m. on weekends. The cafes can also remain open until 2 a.m. on holidays or after any ticketed events at the Superdome or the Arena.
“We like the idea of having a nice, high-end, late-night zone that we can go over and kick off our heels … we just don’t want it every night, driving us crazy,” Stewart said.
The New Orleans Business Alliance, which worked as a liaison between South Market developers and city officials over the past two years, said an estimated $15.2 million in sales tax revenues are projected to be generated from the first two parcels over 15 years.
Rod Miller, the alliance’s president and chief executive officer, said his group attended a conference in May of the International Council of Shopping Centers, where they promoted New Orleans and available commercial spaces in the city — including the South Market District — to retailers. South Market, he said, fits the “renaissance” of downtown right now with more people choosing to make it their home.
“Downtown is hot, so people want to be downtown,” Miller said. “I think this is in alignment with the growth that downtown has seen and is continuing to see.”
The Domain Cos is a local development company first launched in New York by two Tulane University graduates, Schwartz and Chris Papamichael. Schwartz said the business partners returned to the city after Hurricane Katrina for development opportunities and now live in New Orleans while maintaining operations in New York.
Their other local projects include the Preserve and the Crescent Club, both mixed-income developments on Tulane Avenue.
By: Katherine Sayre