In New Orleans, the early months of the year bring the annual Mardi Gras festival and often the Super Bowl, a spectacle the city has now hosted 11 times. But this year the Crescent City is able to watch another event unfold, one that hasn't occurred since 1989: The construction of a high-end office building.
National real estate investment and development firm Cypress Equities has started work on 1600 Convention Center Blvd., what city officials call the first new ground-up, Class A office property in the city limits since the year the Berlin Wall fell and the World Wide Web launched. While the world has changed around the area's long-hibernating office construction market, the headaches of building remain: Fluctuating borrowing costs, property demand and even short-term disruptions can mean a tough building start.
The beginning of construction last month coincided with preparations for this past weekend's Super Bowl festivities, with road closings and traffic congestion. Those weren't concerns when energy giant Shell signed its 12-year lease in 2023 to occupy most of the eight-story, nearly 124,000-square-foot building along the Mississippi River. But plans can change — and even a building fully leased to one of the world's largest publicly traded companies was still seen as risky to investors, with office demand down across the country since the pandemic hit in 2020.
"We probably couldn't have picked a more difficult time to get this done," Dallas-based Cypress Equities CEO Chris Maguire told CoStar News. "The summer before the lease was signed, there was a hike in interest rates and office was in the tank, which made it very challenging for us" to assemble the financing.
Obstacles aside, this new construction hints at a commercial development awakening in the city. The Urban Land Institute named New Orleans as one of the top "movers and shakers" as the city rose 25 spots to rank No. 42 in the standings of its 2025 “Emerging Trends in Real Estate” report on the most promising markets for investor demand.
Cypress Equities is teaming up with New Orleans-based Lauricella Land Co. to develop the building. Capro Capital, a Las Vegas-based real estate private equity firm, is providing the project's equity. The Shell-leased building is also the first office project to get underway within the River District, a 39-acre mixed-use neighborhood adjacent to the New Orleans Ernest N. Morial Convention Center, according to city documents.
The last Class A office building developed, in 1989, in the city of New Orleans was Benson Tower, according to Greater New Orleans Inc., a regional economic development group. Even so, some long-time real estate professionals say they believe the new building is the first office of any kind built within the city limits since Benson Tower.
Shell was looking
It was Shell's real estate brokers who approached Cypress Equities to orchestrate a real estate lease in the office building at the River District, Maguire said. Shell's existing office space housing the headquarters of its Gulf of Mexico operations at 701 Poydras St. in New Orleans was built in 1972.
"Like in a lot of markets, New Orleans is seeing a flight to quality and part of it is being in an attractive environment where employees want to be with a lot of amenities," Greg Riera, a senior vice president and leasing director at JLL in New Orleans who isn't involved with the Cypress Equities project, told CoStar News.
New Orleans has seen its office demand take a hit in recent years despite what CoStar's market analytics shows is one of the nation's lowest vacancy rates. The Big Easy's rate of 7.6% is largely because of a lack of new office construction and years of demolitions of old buildings, according to CoStar's latest market report.
Even with a major tenant lined up, and the only speculative part of the office building being a small restaurant space on the ground floor, the developers still faced lender concern. "It's very hard to finance a product type that is out of favor and it's difficult to get the right people's attention," Maguire said. "Without the Shell lease, it would not have gotten financed."
Maguire said the project will set a new standard for modern office space in New Orleans: "It's amazing to me that no one has built a new office building in 35 years. I'm glad we could be the ones to do so."
Shell's departure from the Poydras Street building is expected to leave a void in the city's central business district office market even though the company is moving less than a mile away, Riera said. The vacancy rate in New Orleans' CBD is about 15.5%, higher than the greater area's average, according to CoStar data.
Affordability advantage
New Orleans remains an affordable place to live and do business compared to other markets on the Gulf Coast, according to ULI.
"Revered as the birthplace of jazz, New Orleans is known primarily as an entertainment and culture destination but is also a major hub for the oil and gas industry," ULI said in the report.
But, like other major U.S. cities, New Orleans has been grappling with the shift in preferences for office space and a vacancy rate that has inched upward in recent years despite there being no new construction, JLL's Riera told CoStar News.
New Orleans, with a population of more than 360,000, is part of the bigger region made up of seven parishes totaling nearly 1 million residents. But the area's population has dwindled in recent years and the region is expected to lose residents at an accelerating pace through 2029, according to ULI.
The city was hit by Hurricane Katrina in August 2005, killing more than 1,390 people, making it one of the deadliest hurricanes in U.S. history and causing more than $125 billion in property damage and flooding caused by breached levees.
Natural disasters and demographic challenges "underpin investors’ hesitancy to bet on NOLA," ULI said. And employment and tourism in New Orleans have yet to recover to pre-pandemic levels.
River District
The New Orleans Ernest N. Morial Convention Center Authority selected a team in 2021 to revitalize a stretch of vacant land along the river into the River District. Plans include mixed-income housing, offices, a hotel, bike paths and green space.
The River District is expected to be "New Orleans' most promising real estate development since the Superdome," said Louis Lauricella, manager of River District Neighborhood Investors, the team overseeing the district's development, in a statement.
Shell's building will set the tone for the rest of the River District, said Lauricella, who is also the managing executive of Lauricella Land Co.
Gensler designed Shell's office building with a glass curtain wall, keeping New Orleans' history and culture in mind. The architecture was inspired by the Mississippi River's shipping industry with faceted metal panels and a palette of bronze, metal, glass and concrete.
The building's first floor is designed to have a 6,407-square-foot restaurant space open to visitors of the River District and the adjacent convention center as well as Shell's employees and guests. The office building comes with a rooftop garden and views of the river and downtown New Orleans.
Maguire, who is also the CEO of Dallas-based SRS Real Estate Partners, declined to disclose the development costs of Shell's office building, but said construction prices and construction material costs remain elevated. Cypress Equities doesn't typically tackle build-to-suit office development but "are happy to entertain" projects as they come "across our desks," Maguire said. "This was a little bit of a one-off project for us."
Cypress Equities primarily develops retail-driven mixed-use projects throughout the United States with a focus on high-growth markets in the nation's Sun Belt. The company recently teamed up with Walmart to buy a mall in Pennsylvania with potential plans to redevelop the 1.2 million-square-foot property.
"We are agnostic on where we go, but we want to follow growth and that's been in the Sun Belt and the smile of the United States," Maguire said. "This is where retailers are growing."
For the record
Louisiana-based Broadmoor LLC is the general contractor of Shell's new office building. New Orleans-based Integrated Logistical Support Inc. is the project's civil engineering firm.