Daily Report

It looks like Louisiana just can't get its fill of restaurants. According to an analysis of an array of population figures, labor statistics and private industry data by Restaurant Management magazine, Louisiana is among the top 10 states for full-service restaurant growth. Sales at the nearly 3,000 full-service restaurants already operating in the state—excluding fast-food restaurants—are expected to expand by 3.3% in 2012. Louisiana Restaurant Association President and CEO Stan Harris says the state's favorable operating costs and abundant supply of fresh seafood and other local products heighten Louisiana's culinary distinctiveness, making it attractive to both in-state and out-of-state restaurateurs. But, of course, restaurants need customers if they're to survive and thrive. And as Darryl Reginelli—who recently opened his second Reginelli's pizzeria in Baton Rouge and hopes to have a third by the end of the year—tells Restaurant Management: "We might not be the powerhouse of some other states because we're not the wealthiest state, but folks here will spend on restaurants." Other states on the magazine's top 10 list are Arizona, Colorado, Florida, Maryland, Minnesota, Oklahoma, South Carolina, Texas and Utah. The list does not give the states a specific numerical ranking.

This week's poll question: In a typical week, how many meals do you eat at a restaurant, not including fast food?

A long-planned infill development at Spanish Town Road and North 13th Street consisting of 100 mixed-income apartments is set to break ground in the next 30 days, says Donnie Jarreau, a partner in the project called The Elysian. "The magnitude of this project will impact the area and bring other much-needed retail and residential development for the downtown and Mid City areas," says Jarreau, who initially began purchasing land for the development five years ago. Comprising 115,500 square feet over four stories, The Elysian will be a mix of one-, two- and three-bedroom apartments. The development will be completed about 13 months after ground is broken, Jarreau estimates. Elysian Development Partners is teaming with New Orleans-based Gulf Coast Housing Partnership on the project, which is also supported with funding from a number of state and local redevelopment and housing agencies. Jarreau says the development will meet green building certification standards and incorporate "pedestrian-oriented streetscapes, porches and balconies, a community room and fitness center, playground area, bike racks, outdoor gathering space and an outdoor kitchen." Milton J. Womack Inc. is the general contractor on the development, and Looney Ricks Kiss is the architect.

A new CVS pharmacy will be built on a 1.7-acre tract at Airline Highway and Pecue Lane, says Mark Hebert of Kurz & Hebert Commercial Real Estate, who helped broker the deal. The land—which went for roughly $1.8 million, or $25 per square foot—was sold by All Star Pecue Development LLC, whose registered agent is Matt McKay, president of All Star Automotive Group. It is a part of roughly 24 acres the development group purchased in May 2005 for $2.4 million. Besides about 2.5 acres that were donated to the city-parish for the relocation of Pecue Lane as part of its Green Light Plan, just one other parcel of land has been sold at the site. IberiaBank also paid about $25 per square foot for a 55,000-square-foot parcel in December, on which it plans to build a new branch. "They're not going to do any speculative building," says Hebert of the remaining acreage. "We've had inquiries on everything from grocery stores and apartment complexes to pediatric clinics." Roughly five acres of the land are being reserved for an All Star Automotive dealership, but Hebert says a franchise has not been signed and there's no timeline for that development. Hebert says he has no details on CVS's specific plans for the new pharmacy, as he represented only the seller in the deal. The land purchased is located directly across from the new Woman's Hospital campus, which is slated to become operational on Aug. 5. —Steve Sanoski

Several years ago, Starbucks built a multitude of coffee shops in the Baton Rouge area. Some were extremely successful, and some were not. Two were closed and put up for sale, and now they're both slated for redevelopment, having recently been sold. One of them, located at 9837 Bluebonnet Blvd., near the intersection with Burbank Drive, sold on March 27 to Dunkin Donuts for $875,000. The seller was The Ronald B. Sigel Revocable 2004 Trust, and the purchaser was Ashish J. Patel. Ben Stalter with Maestri-Murrell Real Estate Co. brokered the transaction. According to Stalter, the former coffee shop will be renovated into a Dunkin Donuts later this summer. The building encompasses about 1,750 square feet, and is situated on a lot that's roughly 100 feet (fronting Bluebonnet Boulevard) by 250 feet. The sale price works out to about $500 per square foot.

The other Starbucks that has sold is situated on Airline Highway near Harry Drive, adjoining a Wendy's restaurant. Starbucks sold that location on March 16 for $700,000, or about $400 per square foot. The purchaser was LES Federal Credit Union, and the seller was JLCR Partners/Airline LLC. Ty Gose with NAI/Latter & Blum Commercial Real Estate represented the seller, while Roger Clark with Labarre and Associates represented the purchaser. LES Federal Credit Union plans to convert it into a new branch. Renovations should begin sometime this summer.

(Appraiser Tom Cook owns Cook Moore & Associates. Reach him at 293-7006 or TCook@cookmoore.com.)

I read an interesting academic article recently in the Journal of Real Estate Research that implies a definite relationship between a building receiving LEED or Energy Star certification and higher rental rates. I have heard anecdotal claims over time about the benefits, but the numbers have been somewhat elusive since the green movement is still in the early stages. This article applied some research to the issue and concluded that the relationship is, indeed, there. While the ratios have fluctuated over time, the article suggests that "An Energy Star label increases rents by 2.5% and a LEED certification by 2.9%—averaged over all time periods in the analysis." Part of the rent premium was attributed to reduced energy costs, though the costs were difficult to project at the time the certifications were gained. Another reason for the green premium was the general sense of "doing the right thing," as well as being perceived as "eco-friendly" in the community. From the building owners' point of view, the authors say that sustainable buildings "are likely to have longer economic lives, a lower marketability risk, and a lower risk of technical and regulatory obsolescence."

Local real estate guru Karl Landreneau of NAI/Latter & Blum agrees. "We see rent premiums between 2% and 3% for LEED-certified buildings in our markets," he says. "Building owners make up-front investments in the technology and see a payback over time with the increased rents." Landreneau suggests anyone interested in the feasibility of green building do the research on websites such as GreenPointPartners.com and similar sites. The underwriting challenge for investors seeking to develop new properties or retrofit older properties with green technology is that lenders will likely size loans based on non-sustainable expense figures until the savings and/or increased revenues can be proven, meaning that owners will have to invest more of their own green into a green project. As more information becomes available and more studies are done, maybe our industry will be able to prove these claims earlier in the process.

(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Real Estate Services, and he can be reached at brian.andrews@acmla.com.)

Discounted facelifts: The Downtown Development District has launched a grant program benefiting homeowners in the DDD boundaries who make improvements to the facades of their homes. The Downtown Residential Facade Grant Program provides up to $500 to eligible improvements that are visible from the public right of way. The grants require a 50% match and do not have to be repaid as long as property owners meet the general requirements of the program. Grant guidelines and a pre-application form are available here.

On the down low: A report from CoreLogic says 2.39% of homes in the Baton Rouge metro area were in some stage of foreclosure in February—a decrease of 0.41 percentage points from February 2011 and a smaller dip of 0.03 points from January. The U.S. foreclosure rate in February was 3.41%, a drop of 0.18 percentage points on the year, while the Louisiana rate was down 0.51 points from February last year, to 2.48%. Baton Rouge's mortgage delinquency rate—the percentage of home loans more than three months past due—also dipped 0.22 points year-over-year to 5.75% in February. That's also lower than the U.S. rate of 7.24% and the Louisiana rate, which dropped 0.31 points on the month to 6.3%. See a CoreLogic map of February foreclosure rates in the Baton Rouge area by ZIP code here.

Home field advantage: A coalition of homeownership industry professionals will gather on the steps of the Capitol at 2:30 p.m. Wednesday to promote homeownership and kick off a partnership program between the Louisiana Home Builders Association and the National Football League Players Association's New Orleans Former Players Chapter. The groups' efforts are part of a nationwide charitable outreach program called "Touchdown for Homes," which brings together former NFL players and home builders to strengthen communities by constructing or renovating homes for local families in need, including U.S. military veterans. New Orleans was selected to be a participating city because it will play host to the 2013 Super Bowl. To learn more about the program and find out how you can contribute, visit the National Association of Home Builders website here.