Jeff project targets medical workers

Saturday, September 02, 2006

By Greg Thomas

The Houma House Apartments behind East Jefferson General Hospital will be demolished and converted into 248 condominiums that will be marketed primarily toward health-care workers.

Earl Weber and Stephen Schmidt bought the 270-unit apartment complex, located off Clearview Avenue , for $9.25 million on July 31. If all the condos sell, total sales will top $60 million.

The condos will sell for between $179,000 and $300,000, a price that Weber believes will attract nurses, doctors, young couples and retirees. The five-acre site is surrounded by nearly a dozen private medical facilities.

The 40-year-old Houma House apartments received about 2 feet of water from Hurricane Katrina. Apartments on the first floors of the five-building complex were gutted, but up until the sale some residents lived in the upper stories.

The complex's five buildings will be demolished in October to make way for two buildings that will house condominiums.

The first building will be a four-story structure with 24 units on the ground level and 72 units on the upper three floors.

To ensure that the majority of condos are protected from flooding, a second four-story building containing 152 units will be built atop 10-foot concrete podiums.

"It will never flood," Weber said.

The condo complex will have a Mediterranean design and will have a 5,000-square-foot club house with fitness center, sauna, billiards room and movie theater.

A landscaped pool area will have private cabanas with televisions and an outdoor kitchen.

"This is a resort atmosphere," Weber said.

But one key element is that the project will be built to a new, stricter building code, including 130 mph wind-resistant windows. It also will have a natural gas backup generator to run refrigerators and freezers in units during electrical blackouts.

There will be 56 one-bedroom condos beginning at $179,000, 152 two-bedroom units that will sell for about $260,000, and 32 three-bedroom units that will top out at "a little over $300,000," Weber said.

If all units sell at those numbers the wholesale price of the property will be between $60 million and $65 million. Weber declined to release development costs other than the purchase price of the Houma House apartments.

The complex will be called Metairie Palms. Sales will be handled by Metairie Palms LLC.

Tammy Esponge, associate executive of the Apartment Association of Greater New Orleans, said the project is badly needed to attract health-care workers.

"This will be a good working tool to bring back people in the medical field, not just for East Jefferson ( General Hospital ) but for all the medical buildings" that fill the area, including outpatient surgery clinics and MRI imaging firms, Esponge said.

But each conversion of apartments to condos has an effect on the apartment market, where tenants are seeing rising rents across the board post-Katrina. "How this will effect the rental market, I don't know," Esponge said. "Rentals are still in very high demand right now, but this is a good working tool to bring back people in the medical field. And it's something they can own and not rent."

She also said the entry level price was low and should create high demand.

Weber said that while exterior renderings and basic designs are complete, not all of the architectural work is done, but he already has 50 reservations from people to buy units.

Further, the area is zoned for multifamily so no variances will be needed from Jefferson Parish government.

The Houmas House conversion isn't the only condo project under way in the area.

The Camelot, a former 200-unit apartment complex between the Houma House and the hospital complex, also is being converted into condominiums by Patrician Management of Baton Rouge.

Jim Hatcher, a principal with Patrician, said the units are selling at $147 per square foot and units range in size from 800 square feet to 1,000 square feet, with some small 580-square-foot studios.

Interest has been heavy, but to Hatcher's surprise, "it's amazing we haven't had a lot of health-care people" make inquiries or reservations.

The project is still under conversion and was purchased in March for $8.3 million.

Mitchell Danese of Dorian M. Bennett Realtors is handling sales for Patrician.

Shaun Talbot of the Talbot Realty Group, a broker specializing in the condo market, said: "The medical market is key. That's important for both properties" to succeed.

Further, he said, for Weber to keep his prices at the level they are might be a challenge as building materials continue to rise. "That's a good price range but the key to the whole thing is what will his construction costs be. The challenge will be to keep the construction cost in line without dramatically increasing the condo prices."

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Greg Thomas can be reached at gthomas@timespicayune.com or (504) 826-3399