New Orleans' Fleur-de-lis Spirit

by Kristine Hansen

Not long after the hurricane, business owners, musicians, politicians and Average Joes and Janes were sporting fleur-de-lis pins in a spirit of camaraderie and commitment to the city's survival and rebirth. "You'd be watching the news and the anchor people would have a fleur-de-lis on their lapels," says Ann Freibert, group business development representative for Riverwalk Marketplace, a General Growth Properties center that's situated near the French Quarter and the now-infamous New Orleans Convention Center. Riverwalk had 140 stores and restaurants in operation before Katrina hit, slamming into the center that stands alongside the Mississippi River. Along with many other buildings in the area, the center suffered extensive damage.

Riverwalk reopened only a few days before Thanksgiving, in time for the 2005 holiday shopping season, but only 30 percent of its retailers were open for business. By early spring, though, the specialty retail program was approaching 60 percent leased, "and the mall will likely approach 75 percent, if not 80 percent, by September," says Freibert, adding affirmatively: "We are definitely moving forward."

Items featuring the fleur-de-lis are now the best-selling products at one cart, the Fleur D'Orleans, but the fleur-de-lis spirit in New Orleans is more than symbolism, Friebert says. She recalls some "merchants who were with me years ago who called and said, 'I want to help rebuild the city.'" In many cases, she says, specialty retailers have been more enthusiastic and quicker to recover than large retailers and chains. "The specialty retailers are the ones making the decision [to re-open] quickly. They don't have to go up the chain of command, as in a corporation. They're a lot more entrepreneurial."

Staffing shortage

The biggest challenge for retailers of all kinds these days isn't completing store renovations, as one might assume, but finding and hiring employees. Many have relocated to other areas and have no plans to return. The city now has about half of the 500,000 households it had before the storm flooded about 80 percent of its parishes. Even though some employees chose to stay in the area, many have pressing responsibilities like securing long-term housing, rehabilitating homes or helping friends and family members with a variety of challenges.

Of the 15 employees that Can Abiloglu and Tufan Pir had before the storm, only two have returned to work for the two companies they jointly own, CA Trading and Pir Enterprises. Before Katrina, they operated 10 RMU or in-line locations (as many as 20 during the holiday season) that sold clothing, jewelry, handbags and other accessories in several New Orleans-area shopping centers, including Riverwalk.

The two employees who did return now help run the one in-line and six RMU locations the company was able to reopen by early May. Abiloglu, who is spending much of his time in Houston, TX, where he opened another specialty retail location soon after evacuating New Orleans, says he continues to look for employees to help him build the New Orleans business back up to pre-storm levels. The task isn't easy. It's not as if these and other business owners in the area can look to neighboring communities for employees. The storm cut a path of devastation that reached more than 100 miles from its eye, causing a tremendous storm surge and catastrophic damage in Lousiana, Mississippi and Alabama. Some estimates put the total impact of the storm at more than $100 billion, making it by far the costliest disaster in US history. (For comparison: Hurricane Andrew, which leveled parts of Florida in 1992, caused about $15 billion in damage.)

In order to rebuild their businesses, "We've had to find employees from other states," Abiloglu says. "We lost all the product in the hurricane." After the storm it took the men almost a month to calculate their losses. It was weeks before they could even get inside Riverwalk. "We didn't know what we lost, because the mall was closed," he recalls. Eventually they were able to survey the damage and determine they had lost everything. It wasn't until January 2006, almost five months after Katrina, that they were able to enter their offsite warehouse space.

Assessing the loss

Not far from Riverwalk, The Shops at Canal Place, an upscale center managed by Madison Marquette located downtown on Canal Street, reopened to shopper traffic in mid-February. The center wasn't flooded during the storm, but high winds did wreak havoc, according to Director of Marketing Carla Adams. By April the center was 90 percent occupied, and shopper traffic and sales are looking up every month, Adams says. On the downside, Kenneth Cole and Saks Fifth Avenue are still closed, scheduled to reopen in the fall.

Overall, retailers "have been pleasantly surprised by sales. It's really been very positive," she says. Taking into consideration what the city's been through, "customers are gracious and thankful, and appreciative that the stores are open."

On Decatur Street, a main thoroughfare to the French Quarter, which fared better than much of the city during and after Katrina, Jax Brewery features four floors of stores, kiosks, attractions, restaurants and cafés. The 58,000-square-foot building, designed and constructed by Dietrich Einsiedel in 1891 and formally named Jackson Brewery, was once the largest independent brewery in the South and the nation's tenth-largest single-plant brewery.

Before Katrina, the center had four carts and seven kiosks. As of mid-May only five specialty retailers had returned to sell jewelry, home décor accents and New Orleans memorabilia. "In the big scale of things we were fortunate, but we did have a lot of work to be done," says Sales and Leasing Representative Sydney Anderson. The 115-year-old building suffered significant water damage that impacted the escalators, elevators and roof, but compared to some other shopping centers Jax made out well.

The New Orleans Shopping Centre on Poydras Street remained closed as of early June. Owned by Hertz Investment Group of Santa Monica, CA, the center faces "a significant amount of restoration and repair work to be conducted prior to restoring tenant occupancy," according to a Web site the company established to provide updates to the public. So far, retailers have been granted access only "for a limited time to retrieve critical business necessities."

In total, about 30 percent of the 11 million square feet of community- and neighborhood-center retail space in the New Orleans area was flooded, according to Reis, Inc., a New York City-based information-services firm. After the devastation, the company surveyed retail real estate owners and investors, and reported that New Orleans' retail sector "faces the greatest uncertainty, relative to apartment and office [sectors], because of its dependence both on residential and office populations for business. The physical damage has been extensive, given retail stores' proximity to a lot of residential areas that were flooded."

Reis surveyed 10 percent of retail real estate business owners and "confirmed that most tenants have not returned and that lease payments are on hold. Two-thirds of the respondents Reis was able to contact claimed their properties were irreparably damaged and were uncertain as to whether any rebuilding would take place. Others said, 'Call back in two to three years.'"

New rent structures

Part of the reason why specialty retailers are returning to Riverwalk lies in management's decision to adjust rent structures to reflect post-storm realities. In lieu of rent, specialty retailers pay 12 percent of sales. "We're really interested in making the center whole again," and getting entrepreneurs back on their feet, says Freibert. "We're absolutely not interested in crippling the retailers'" ability to rebuild.

At Jax Brewery, management waived rent until February, when the center officially fully reopened and is "watching on a regular basis to see if there are any concessions that need to be made," Anderson says. Unsure of what the holiday season will bring for Jax and the city as a whole, she adds, "People across the United States need to understand that in the French Quarter, if tourism doesn't come back, it will die."

If specialty retailers have their say, that won't happen. "I have some merchants who have been with me for years," who are committed to rebuilding, Freibert says. "We have a core group of people who are very interested in new concepts, [in] pulling this mall back" to its previous high-traffic glory. She has one specialty retail tenant who sells collectible pens and who recently convinced two other retailers to relocate their businesses to Riverwalk. That's the fleur-de-lis attitude that will play a big part in Riverwalk's future growth.

Although some retailers are still "a little shell-shocked and don't know what to make of all this," Freibert hopes that before the end of the year, Riverwalk "will be back to normal sales [levels]." She hopes that more than 80 percent of the RMUs will be filled by November. "If we pick up another 5 to 10 percent, that would be wonderful," she says. "I think we're going to look pretty good, pretty full, by the holidays." No decision has been made yet, she adds, as to when the pre-Katrina rent structures will return.

For retailers who want to take part in Riverwalk's rebirth, a new beginning means new RMUs created by Stak Design of Carrollton, TX. Forty-four new units were scheduled for delivery in mid-September 2005, but when the hurricane hit, the order was put on hold. In April they finally arrived.

Rob McCoy, a principal at Stak, said attention was given to making sure the new RMUs reflected the look and feel of the French Quarter in terms of color and architectural detail. Some of the units are now operational in Riverwalk's outdoor open-air selling space. The exterior units can display merchandise on all sides. For the interior units, McCoy says, he faced a bit of a design challenge: "The units had to be custom designed to tie into narrow corridors and low ceiling," so merchandise is accessible from one side.

There's no doubt that bigger changes are in store for Riverwalk down the line. But for now the new RMUs mirror the fleur-de-lis attitude of renewal and hope for getting the specialty retail industry's health back to where it was. "We certainly had a setback," Freibert acknowledges. "No one expected Katrina to do the damage it did. But everything considered, I'm really happy at the direction we're going. I guess everything in time will get fixed. I'm always optimistic."

New Orleans Statistics

Kelly Schulz, vice president of communications and public relations for the New Orleans Convention & Visitors Bureau, says that since Katrina, New Orleans has lost more than $2 billion in tourism revenues. Every three months the area loses another $1.2 billion in overall business buying.

Conventions
(*Includes those held and booked as of May 2006)

• 2003: 920
• 2004: 953
• 2005: 656
• 2006: 234*

Convention Attendees (in millions)
(*Includes estimated attendance for those booked as of May 2006)

• 2003: 1.0
• 2004: 1.2
• 2005: 0.8
• 2006: 0.4*

Hotel Nights Sold (in millions)

• 2003: 1.6
• 2004: 1.5
• 2005: 1.0
• 2006: 0.5

Rooms Available and Occupancy Rate

• June 2005: 38,000 rooms, 62% occupancy
• March 2006: 28,000 rooms, 75% occupancy

Daily Flight Departures
Louis Armstrong International Airport

• June 2005: 150
• October 2005: 24
• May 2006: 101