23-story New Orleans office building sold to out-of-town investors

Two Monroe businessmen and real estate investors, the brothers Eddie and Joseph Hakim, have purchased one of New Orleans’ most visible office buildings: the green granite high-rise at 1615 Poydras St. currently named for its anchor tenant, DXC.

The Hakims bought the 23-story building from its longtime owner, businessman and philanthropist Frank Stewart, late Friday. The price was not disclosed.

It’s the second Poydras Street high-rise for the Hakims. In 2013, they bought the 20-story Orleans Tower, formerly the Amoco Building, for $16 million and breathed new life into the aging tower, located across from City Hall. They renovated it and raised its occupancy from about 45% to more than 80% today.

The DXC Technology building at 1615 Poydras St. in New Orleans is seen Dec. 30, 2023.


The Hakims are planning, for now at least, to follow the same playbook at 1615 Poydras, which has lost tenants in recent years and is currently only about 50% occupied.

“We believe the path to success is to maintain office use and continue to build on office use like we did at the Orleans Tower,” said Jeff Lahasky, who is Joseph Hakim’s son-in-law and helps manage the family real estate assets. “That would be the first route we would like to go, and if something over time leads us to a different opportunity that would be mutually beneficial, we would be open to it.”  

‘They believe in office’

The sale of the DXC building marks a bright spot for the local office market at the end of what has been a challenging year. In New Orleans, as in other cities around the United States, large office towers are still struggling to recover from pandemic-era restrictions that cleared out cubicles and sent workers to work at home.

Occupancy in Central Business District high-rises is averaging about 80%, which is better than in many larger cities but still lower than pre-pandemic levels. Sales of large buildings have been hampered by sluggish occupancy and high interest rates.

The DXC Technology building is seen Saturday, Dec. 30, 2023, at 1615 Poydras St., across the street from the Caesars Superdome.


But the sale of the DXC building suggests investors with deep pockets see potential in the market, said Evan Stone, a broker with Dallas-based Goodwin Advisors. Stone marketed the DXC building along with Matt Taylor of Property One.

“It shows faith by a long-term investor that already has a stake in the ground on Poydras Street,” said Stone, who has handled the sale of several local office towers. “They could have bought in any other city and any other product, but they believe in the New Orleans CBD and they believe in office.”

‘A good deal’

When it was built 40 years ago, 1615 Poydras was one of the sleekest office towers on a bustling corridor of shiny new high-rises overlooking the Superdome. Erected by Freeport McMoRan CEO Jim Bob Moffett, one of the city’s most assertive business leaders at the time, it served as that company’s headquarters until 2007, when a merger led to Freeport’s relocation to Phoenix.

New Orleans businessman and philanthropist Frank Stewart is seen Sept. 25, 2019.


Stewart and his partners acquired the building in the early 2000s for $30 million, according to records at the Orleans Parish assessor’s office, which recently valued the building and land at $27.5 million. In 2017, they refinanced the building, borrowing $34 million from Miami-based Starwood Mortgage Capital, according to court records.

Now 89, Stewart has been trying to downsize his real estate portfolio in recent months and has spent much of 2023 quietly marketing 1615 Poydras for sale. Those efforts got a boost in late September, when Stone’s firm listed the building publicly.

No asking price was specified, but an online flier said the building was less than 52% occupied and being marketed “in cooperation with the lender … at debt amount.” In real estate terms, that meant Stewart and his partners in Stewart Capital were working with their lender to sell it, even if at a loss, in hopes of avoiding a default on the mortgage.

It is unclear how much Stewart and his partners still owed on the building at the time of the sale.

Lahaksy would not discuss what the Hakims paid for the building, but he said the family got a good deal on it. “We feel like we bought the building at an attractive basis and we have opportunity to make improvements that will enable us to recognize a return on the investment,” he said.

Thinking outside the box

Since 2017, the building has been named for DXC Technology Co., the Ashburn, Virginia-based firm that opened a regional office in the high-rise amid great fanfare and a promise of up to 2,000 jobs. The company hired only a fraction of its promised workforce and has since downsized its footprint in the building.

The ribbon-cutting ceremony for DXC Technology Co.’s New Orleans regional office at 1615 Poydras St. on May 23, 2023, attracted, left to right, New Orleans Mayor LaToya Cantrell; Louisiana Gov. John Bel Edwards; Terrell Boynton, director and general manager of DXC’s Digital Transformation Center; Jim Smith, DXC’s executive vice president of customer advocacy and joint ventures; building owner Frank Stewart; and Louisiana Economic Development Secretary Don Pierson.

DXC continues to honor its lease on the building, which runs through 2031, but is currently trying to sublease four of its six floors, according to online real estate listings. Lahasky said the family has not had any conversations with the company but that meeting with DXC to discuss the lease will be a priority.

While some investors and real estate observers remain wary of the office market, Lahasky said the Hakims see potential that others often overlook and are making a long play.

“They think outside the box,” he said. “They’re looking more at long-term, generational smart business decisions. So they’re willing to do things and take chances others are not willing to take.”

This article was originally published by a www.nola.com . Read the Original article here. .