| October 2, 2004
NEW ORLEANS —
Downtown shopping mall New Orleans Centre and the 26-story Dominion Tower
office building were sold Wednesday to a Los Angeles-based investment group
for $36 million.
Hertz Investment Group purchased the Poydras Street properties, along with
an adjacent 2,000-space parking garage, from Simon Property Group of Indianapolis.
Combined, the properties represent more than a million square feet of commercial
real estate space right across the street from the Superdome.
Dominion Tower, located at 1450 Poydras St., contains roughly 492,000 square
feet of office space, while New Orleans Centre has 467,6200 square feet
of retail space. Both properties will retain their existing names, said
Hertz spokesman Andy Hilton.
“We are excited to close it,” Hilton said. “New Orleans
is a very attractive market to the Hertz Group. They are looking forward
to a long tenure in the city.”
Hertz officials want to bring more retail tenants to the mall, but they
are not ready to publicly disclose their plans for the shopping center.
“The plans are to invigorate the retail,” said Rick Richter,
a local attorney who represented Hertz in the sale. “They want to
improve the retail and to continue leasing the office tower and put some
life into the property.”
Hertz Investment Group has a history of buying underperforming properties
and turning them around. The company bought the 27-story Poydras Center
in December 2002 for $35 million. At the time, the property was 80 percent
leased; occupancy has grown to 90 percent, Hilton said.
Hertz owns more than 100 commercial properties across the country. With
more than 2,000 tenants, Hertz properties have an average occupancy rate
above 90 percent.
The Dominion Tower is 80 percent occupied; occupancy at the New Orleans
Centre is around 85 percent, Hilton said.
The three-level mall, which is home to anchor stores such as Macy’s
and Lord & Taylor, has struggled to add retail tenants in the past few
years. This summer, Lord & Taylor parent company May Department Stores
Co. announced plans to close its New Orleans location.
Hertz officials are in talks with May Department Stores about what do with
the company’s existing lease.
“Their lease goes through 2009,” Hilton said. “Hertz has
agreed to sit down with them and they are going to be figuring out what’s
best for both parties.”
The mall is also home to the Greater New Orleans Sports Foundation and television
stations WNOL-TV/38 and WGNO-TV ABC 26.
Simon Property Group purchased New Orleans Centre in August of 1996. Simon
spokesman Les Morris said the real estate investment trust sold the mall,
which first opened in 1988, because it didn’t fit in with its portfolio
of regional shopping centers.
“We don’t have much office space and we are not that prevalent
in New Orleans,” Morris said. “So it was an asset that didn’t
really fit quite well in our core holdings.”
Hilton said Hertz officials have been meeting with local businesses and
prospective tenants to develop a plan for the mall.
“The next step is to take the next 60 days and look at the project
as a whole and look to see what is best,” he said.
Hertz Investment Group founder and Chief Executive Officer Judah Hertz is
scouting other commercial properties in the local market. Before his latest
purchase, he had said his company had earmarked $100 million to invest in
the area.
“He has looked at New Orleans as a diamond in the rough,” Hilton
said. “He sees a lot of potential in New Orleans.”
Hilton did not name any specific properties Hertz is considering buying.
By Keith Brannon
The Biz Network
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