A real estate analyst told WWL Tulane’s lease agreement involving old Charity Hospital has real potential to create a major economic boom in the city’s biomedical corridor, but it could mean some pain in the short term for New Orleans residents.
Tulane is set to pump 300 million into the historic New Orleans structure, a once world-famous trauma center that provided free and low-cost healthcare to the city’s poorest. Under the reinvestment plan, Tulane will take over a third of the structure and develop it into residential and commercial space in rooms, many of which once held the sick and injured.
“To be able to have an anchor tenant to take a third of the building before you even start, that’s tremendous economic benefit,” said real estate analyst Arthur Sterbcow. “But the only reason this made any sense was because of the tax laws with the Opportunity Zones that got passed last year.”
Opportunity Zones were established in the 2017 Tax Cuts and Jobs Act, and allow businesses to exempt some of their capital gains taxes for a period if they invest in low-income communities. The Claiborne Corridor is one of several zones in New Orleans.
Sterbcow warned Mid City and Central City residents that the project will result in higher rent prices in those neighborhoods, where housing supply is already strained.
“It is going to put some pressure on rental rates for locals in that area, you know when you press on a balloon it bulges someplace else,” said Sterbcow. “Housing is going to be a problem for the short term for that much new construction to come in.”
Sterbcow said the rent pressure will likely drive many locals out of those neighborhoods, and into other areas like the 7th Ward and New Orleans East, where rent prices are more affordable.
Overall Sterbcow said he is optimistic about the lease agreement’s economic impact, noting it could revitalize a portion of the city that has lacked investment for quite a long time.
“We’re going to see restaurants coming back, we’re going to see coffee shops, so yea we are going to see infrastructure come back, and probably some more apartment construction,” said Sterbcow who noted Tulane is starting to open the purse strings and get aggressive about investing in more and more city real estate deals. “Anything that causes that Tulane University and Charity entity to get back into commerce is a home run for the city.”
