It’s been three years since Baton Rouge developers Mike Wampold and his partner Lenny Lemoine acquired the 111-year-old Whitney National Bank building on St. Charles Avenue in the Central Business District with plans of redeveloping the historic structure into a mixed-use development anchored by a high-end, boutique hotel.
But the pandemic's effect on tourism, combined with rising construction costs and recent interest rate hikes have slowed their progress.
The iconic 14-story bank building at 228 St. Charles Ave. and six adjacent structures that were also part of the Sept. 2019 deal have been vacant since Hancock Whitney relocated its downtown offices to the 51-story Hancock Whitney Center on Poydras Street several months prior to the sale. No construction is underway at the site because no designs or plans have been finalized, though Wampold said the project is moving forward, albeit at a slower pace, while he and Lemoine search for a partner to co-develop with them.
“We had the world coming to us in late 2019 because it’s the best location in New Orleans, next to the French Quarter and surrounded by business,” Wampold said. “Then COVID hit and for two years, the hospitality industry and lending industry pulled their horns in. Everyone was tending to their own assets and issues.”
Wampold didn't disclose what he and Lemoine paid for the 111-year-old building when they bought the buildings, which total nearly 500,000 square feet on the block bounded by St. Charles Avenue, Camp, Gravier and Common streets. At the time, the sale price was recorded with the Orleans Parish Clerk of Court as $10 and "other valuable considerations."
But the estimated total cost of the redevelopment project, including the purchase price for the structures, is now well in excess of $100 million, Wampold said.
In recent months, the developers have been shopping for an equity partner to acquire a stake in the project and serve as a co-developer. They’ve had serious talks with several potential partners, but Wampold said nothing has panned out yet.
Plans call for turning four of the seven buildings — including the iconic Beaux Art-era building fronting St. Charles Avenue — into a boutique hotel totaling some 300,000 square feet. The hotel would likely cover the first several floors of the tower, with the remaining floors set aside for luxury multifamily residences or corporate apartments. The development would also include restaurants and retail on the ground floor.
The other three properties on the block would be redeveloped separately or sold.
“We’re open to any number of possibilities,” Wampold said.
A Super Bowl goal
Despite the challenges, Wampold said he is still moving forward with the project. The goal is to open a hotel by Jan. 2025, when New Orleans plays host to Super Bowl LIX in the Caesars Superdome.
When Wampold and Lemoine acquired the property, the city’s tourism industry was experiencing a banner year that would go down as the best on record. Meanwhile, interest rates were at historic lows.
COVID slashed those visitor counts, which are only now inching close to pre-pandemic levels. Interest rates have since risen more than 50%, with future rate hikes likely, commercial lending experts say.
Worse, inflation and supply chain disruptions have driven construction costs up as much as 50%, said Wampold, whose portfolio includes hotels, office buildings, apartments and mixed-use developments throughout the region.
Commercial real estate experts said that given the ambitious scope of the Whitney project and the change in market conditions, it’s not surprising it is taking longer than originally hoped to get the project off the ground.
“There is still plenty of activity but between interest rates, construction costs and uncertainty about the economy in general, investors are being a lot more cautious,” said Bush Benton, a commercial appraiser with Stegall, Benton, Melancon and Associates. “On larger projects, people are being more cautious.”