Ten years after Hurricane Katrina flooded 80 percent of the city and displaced 400,000 of its residents, New Orleans has risen from the destruction to become one of the fastest-growing commercial real estate markets in the country. Home sales also remain strong. According to Southern Title online, in June 2015, 215 houses were sold in the city with a median selling price of $420,424.
General contractor Abry Brothers Inc. is celebrating 175 years in the region this year and CEO Greg Abry says Katrina had a profound impact on his business.
“Before Katrina, our work was about 90 percent residential and 10 percent commercial,” he says. “And the residential work was pretty much focused on Uptown, Lakeview and Metairie, doing things like stabilizing, adding foundations and putting in new pilings.”
When the storm hit, Abry says the company’s offices were flooded and trucks and equipment were destroyed. Joining with friends and colleagues, he says the company rallied soon after the storm to help their customers.
“We had people calling us from out of town asking if we could go in and gut their house,” he says.
Chris Perdomo is the owner of Augustino Brothers Inc. General Contractors. In business since 1995, Augustino Brothers handles both residential and commercial jobs. He says he, too, remembers the cleanup.
“Katrina literally brought our city to its knees,” he says. “We had to start completely from scratch to rebuild homes and businesses. Immediately following the hurricane, our company spent most of our time putting tarp on roofs and gutting homes and businesses. And that smell – that smell from the buildings stayed with me for months. It seemed to linger forever.”
Putting back the pieces
“Simply put, the neighborhoods with the most money came back the fastest,” Perdomo says. “The Uptown area from St. Charles to the river flooded and had wind damage not as severe as other areas, and came back quicker than other areas. We had a lot of contract work in Metairie and Kenner and from the Jefferson Parish line to the 17th Street Canal area.”
Abry says it was during the cleanup phase in the first few years following Katrina that his company’s footprint expanded. “We were doing a lot of leveling and fixing foundations for homes before people could renovate,” he says. “This really opened us up to other areas of the city. And then in 2009 the Road Home grant went through and even people who didn’t have insurance were getting money and we began to work in areas we’d never worked in before, like New Orleans East and the upper 9th Ward.”
Abry Brothers CEO Greg Abry, doing some quality control.
Photos courtesy of Abry Brothers Inc.
According to Road2la.org, the Road Home Homeowner Assistance Program, as of 2013 more than $8.9 billion had been distributed to over 130,000 Louisiana residents to help them rebuild and protect homes and rental properties.
Adding to the assistance was the State of Louisiana Hazard Mitigation Grant Program, which, to date has paid residents of the coastal area of the state over $621 million to elevate 9,595 homes.
“That grant alone could pay a homeowner up to $100,000,” Abry says. “Then you have another $30,000 from Road Home and $30,000 from flood insurance and that means homeowners could be receiving about $160,000 to elevate their home.”
Abry says the rapid cash flow generated a new booming business.
“Suddenly you had all these people doing home elevation — even somebody who was, say, an electrician,” he says. “We did some elevating during that time but we were selective, just working for people we knew. I didn’t want to give my whole business over to it because I knew the program would end at some point.”
In December 2013, the elevation programs ended, but their effects remained.
As homes reached higher, solar panels also started popping up around the city, both in neighborhoods and commercial establishments.
“Post Katrina, solar panels seriously increased in popularity in the metro area,” Perdomo says. “They’re a great way to not have to depend on traditional electricity. As an added bonus, both residential and commercial owners have the opportunity to sell energy back to the grid and receive significant tax credits.”
Perdomo says another noticeable change in the past decade has been spray insulation. “There has been a shift from the traditional insulation that is rolled out and installed to spray insulation,” he says. “The new stuff works really well.”
What’s old is new again
According to the U.S. Census Bureau, New Orleans is the fastest-growing city in America, but it doesn’t just represent the return of residents to a city that lost more than half its population. According to a study conducted by the Kaiser Family Foundation, one in nine current New Orleans residents were not living in the area prior to Hurricane Katrina.
And many of those, Abry says, are looking for that old New Orleans charm.
“What’s really exciting is to see all these people coming in from out of town and investing their money in fixing up older homes,” Abry says. “Thanks to them, these old neighborhoods in Central City and the Marigny that may have been bulldozed before the storm are really coming back.”
“If you think about it, Katrina was the worst and best thing that has happened to our city,” Perdomo says. “The worst, obviously, because of the destruction and loss that the city experienced, and on the other side, the best because it put us on the map, made people take notice of our city, and it became a chance for a fresh start.”
While commercial and residential sales have increased, the rental market has remained strong.
1st Lake Properties recently completed its first new construction on the Southshore — Bella Ridge in River Ridge.
Photos courtesy of 1st Lake Properties
Abry says that thanks to the federal historic tax credit program (which offers tax credits of up to 20 percent of qualified rehab costs), commercial developers have also been in the preservation business.
“We’re seeing tons of work Downtown on buildings that are at least 50 years old,” he says. “Old warehouses and factories are now becoming residential and retail spaces. For our part, we go in and replace foundations and do the shoring and structural repair.”
Abry says the company’s business mix is now quite different from pre-Katrina. “We’re at about 60 percent residential now and 40 percent commercial.”
Rentals Stay Strong
While New Orleans loves to celebrate the old, the new is always exciting.
For example, spurred by the city’s resurgence in the last 10 years, the New Orleans metro area has also seen the emergence of new national retailers, including Costco, Arhaus, Tiffany & Co., H&M and West Elm, and most recently, Trader Joe’s.
It’s in part because of the boom in new commercial construction — including the growing medical corridor on Canal Street, and revitalization of streets such as Freret and Oretha Castle Haley — and its resultant job creation, that Michele Shane L’Hoste, president of 1st Lake Properties, says the market for apartments has been and remains strong.
“We had 3,000 units that were damaged during Katrina,” she says. “Some endured minor damage, and some that were so damaged that they had to be gutted completely down to the studs…Now we have 65 properties and have a waiting list for most, if not all, of them.”
1st Lake Properties recently completed its first new construction from the ground up on the Southshore in River Ridge.
“The complex is named Bella Ridge, and it has all of the new amenities that tenants are looking for now – a resort pool, bike sharing, dog park, movie rentals, dry-cleaning dropoff and cabanas with food delivery,” Shane L’Hoste says. “The trend now is toward being able to provide upscale amenities to tenants.”
While it is true that Hurricane Katrina gave the city a huge, unforgettable black eye, New Orleans and the metro area have diligently fought back and rallied all of their resources to create a thriving city that has experienced unprecedented growth over the last 10 years.
“It feels good to be onto another phase of growth for our city,” Perdomo says. “The focus is on now and the future.”
Quick facts
According to Trulia (Trulia.com/real.estate/New_Orleans-Louisiana), as of June 2015, the most popular neighborhoods in New Orleans are as follows:
• French Quarter: average listing price $902,272
• Lower Garden District: average listing price $597,854
• Little Woods: average listing price $123,596
• Audubon: average listing price $990,421
• Central City: average listing price $242,570
