By Chris Thorn
Featured in Shopping Center Business - June 2008
One of the largest post-Katrina commercial projects is about to break ground in Slidell, Louisiana, just north of New Orleans. Bayer Properties is developing Fremaux, a more than 400-acre mixed-use project that will feature retail (including Bayer’s signature lifestyle center, The Summit), multifamily, office and hospitality space in a number of phases. The development, which is located between Fremaux Avenue and Old Spanish Trail off Interstate 10, also will include a major hospital facility and a new campus for the University of New Orleans. The robust nature of Fremaux is quite different from Birmingham, Alabama-based Bayer originally envisioned when the company entered into a joint venture for the property during the first week of August 2005. Katrina devastated the New Orleans area at the end of that month.
“After the storm hit, we were prepared to give the land back,” says Jeffrey Bayer, president and CEO with Bayer Properties. “And then the phone started ringing with retailers. Their interest had increased exponentially.” Bayer returned to the drawing board and tripled the amount of planned retail to accommodate the demand, which was spurred by a couple of factors.
First, the number of residents exploded on the Northern Shore area of Lake Pontchartrain. “There is about 5 years of projected growth that happened in a matter of months,” Bayer says. The area immediately became under-retailed due to the population growth.
Also, corporate tenant management bought into the national fear of the area as the companies were worried about future storm damage and ensuing complications.
“Some people are shell-shocked about coming back to these areas although it took many years for this storm to happen,” Bayer says. “This has happened with the retailers.”
Slidell, itself, experienced mostly wind damage to properties but there was still some area flooding. The Fremaux property was the only site that didn’t have any flooding.
“Because of that, and our reputation to build a quality project, retail senior management has been convinced to put a store in our center,” Bayer says. “Some won’t go anywhere else in the market.”
The first phase of retail, which breaks ground by the end of April, will be an 800,000-square-foot lifestyle center that is anchored by a combined 360,000 square feet including two department stores, a movie theater and a major bookstore. The remainder of space will feature specialty retailers that fill a current void in the market. After increasing the project’s size and the scope to match local growth, The Summit Fremaux transitioned into a regional draw.
“By building a well-designed, aesthetically pleasing venue,” he says. “We’ll pull people from a much larger footprint, which has allowed us to upgrade the level of specialty retailers.”
But it is not just the retail portion that has grown.
“The whole concept changed post-Katrina,” he said. “We’re seeing all kinds of interest in areas like residential and office that we didn’t think about doing as much originally.” To help with the demand, Bayer brought in New Orleans-based Corporate Realty to help lease the project. “Because of their efforts, we are seeing opportunities that come directly from affiliating with them.”
The current office plan calls for 60,000 square feet of second floor space above the first phase of retail. Depending on the interest generated, the company could move forward with a 100,000-square-foot, free-standing office building.
“We’re already seeing the signs of office users, who have in many cases, decided to return to the area from other parts of the Gulf Coast,” he says. “They want to be on the Northern Shore.”
More components of phase I include a hotel, a 300-unit multifamily rental complex that is on the highest end of the submarket and the first phase of the University of New Orleans’ eastern campus. The UNO Research and Technology Park, which will occupy 25 acres, will help service the I-10 “technology corridor,” which includes such organizations as the nearby Stennis Space Center and the NASA Michoud Facility. “The University of New Orleans had wanted to do a second campus,” Bayer says. “The storm accelerated that plan to geographically diversify after the damage occurred to their existing campus.”
One other unexpected potential addition to the Fremaux plan is a major hospital. Bayer currently is in discussion with two hospitals about building a major campus on the project, which will be finalized by late summer. Two catalysts for this change are the increased localized population that lacks adequate care and the disastrous state of existing medical buildings. Some former hospitals and medical space are being converted to office and residential now because they had deteriorated past the point of repair for the original uses.
“The healthcare system was pretty devastated,” he says. “The hospitals picked us because of the critical mass we’re creating in this area.”
And Bayer is doing some heavy lifting to configure Fremaux to capture the momentum. The company is building a boulevard to run the length of the project as well as rerouting a canal that is part of the floodway system. Bayer also has been waiting for the new Fremaux interchange off I-10 northeast of the project to be completed as they didn’t want to build without having the increased access.
Overall, the first phase of the project is mapped out but Bayer plans to let the momentum drive future construction.
“We made the decision not to get too far ahead of ourselves. You never know what you’re going to run into,” he says. “After upgrading the infrastructure and allowing time to march on, we’ll end up building another 300,000 to 500,000 square feet of retail.” The company also plans to diversify the residential space, which will be up to around 1,500 units, depending on the office users and the hospital. Both of these components will influence the housing demographic as well as the daily users of the site and serve as indicators for the appropriate residential direction. Plans will include for-sale single-family, multifamily and condominiums among the housing inventory.
The first phase of Fremaux will reach completion in the fall 2009 with retail, office, multifamily and hospitality space open for users.
“We think it is important that the project has a regional critical mass that will create some of its own opportunities,” he says. “People realize that there is a void in the market with sales per square foot to be had because of the total dislocation. We are in the region’s new bullseye.”