Luxury condos planned for downtown New Orleans after building on Tulane Ave. sold for $38 million – | NutSocia

A group of Covington-based investors has purchased a $38 million 166-unit apartment building in the Central Business District and plans to convert it into luxury condos that could also be used as short-term rentals.

The deal for the 10-story California Building, located at Tulane Ave. 1111, located near Duncan Plaza and downtown hospitals, is at least the second major sale of a high-end apartment complex in downtown New Orleans this year, following the $120 million sale of Canal 1535 -330-unit building on Canal Street in May.

It follows several other downtown projects in recent years aimed at providing housing associated with the Medical District, including a $55 million renovation of the Warwick Hotel at Duncan Plaza for Tulane University medical students and faculty and a $100 million student housing complex being built near University Hospital.

Preston Dellinger – whose company Servio Capital bought the California Building from Metairie businessman Craig Boes – said the planned redevelopment of the former Charity Hospital building, as well as other recent investments in the BioDistrict, made the 1950s building an attractive investment for him and his partners.


1111 Tulane Avenue in New Orleans on Monday, October 31, 2022. A Covington-based investor group spent $38 million to purchase the building. (Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate)

“There are many doctors and medical professionals in the area and Tulane Medical Center is expanding its footprint,” Dellinger said. “The charity facility is undergoing a renovation and we’re only a few blocks from the Superdome and the French Quarter so it’s a good location.”

Another important factor in the deal: the building is earmarked for hotel use, so all units can be rented out as short-term rentals.

Without this zoning, no more than 25% of the units could be used for short-term rentals.

“We have buyers looking for second and third homes, and we also have buyers looking for Airbnb investments,” he said. “Being able to buy right off Bourbon Street in a building that’s 100% short-term-legal makes this really attractive.”

‘to assert oneself’

The California Building was originally developed as an office tower. Boes acquired the property in 2013 for $9 million and says he spent nearly $35 million converting it into luxury apartments with retail space on the ground floor.

Boes said his nearly $44 million investment in the building “would have worked really well if COVID hadn’t hit and if tourism and conventions got back on track.”

Still, he said the building is “standing the test,” with occupancy — a mix of long-term and short-term tenants — averaging more than 95% in recent months.

As renovations to the Boes property were only completed in 2019, the new owners will not need to do any additional work before selling the units. Apartment sizes range from 720 square feet for a studio to over 3,500 square feet for a penthouse.

Studio units will cost nearly $300,000, while penthouse units will cost about $1.5 million, Dellinger said.

So far, 20 of the 166 units have been sold.

Inherent Risk

According to local real estate experts, the luxury housing market has rebounded in recent years since it stalled in the early 2010s. Still, by their nature, large-scale condo deals are inherently more risky than multi-family deals — when multiple owners share a chunk of the same building.

“You need to sell every single unit as quickly and smoothly as possible to get all the new owners coming together,” said Wesley Moore, commercial surveyor at Cook Moore Davenport and Associates. “As a developer, you don’t want to be stuck with 10 or 20 units that are less marketable.”

According to Bush Benton, a business surveyor at Stegall, Benton, Melancon and Associates, planned investment in the area and zoning that allows for short-term rentals should make the area attractive.

“This area of ​​Tulane is getting a little shot in the arm,” Benton said. “It’s always been a bit iffy, but it’s starting to improve.”

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