One Man’s Loss is Another’s Treasure: How Wendell Pierce and Childhood Friend Troy Henry Saved 500K On a Brilliant Commercial Real Estate Development Decision and What They Faced Along the Way

In June 2006, Robert Armbruster purchased a 40,000 square foot of land at 1667 Tchoupitoulas for $1,100,000 financed by Gulf Coast Bank.  Just 2 blocks from the New Orleans Convention Center and even closer to the recently repurchased defunct Entergy Power Plant, $1.1 million appeared to be a good deal for the property at that time.  After a few years of not developing the property, Armbruster gave the property back to the bank.  In 2009, celebrity Wendell Pierce and his childhood friend, businessman Troy Henry were able to purchase the same property for $600,000 -saving an astounding 45% of the original price- an ideal example of how commercial real estate development can provide enormous opportunity, but not without substantial risk.

Addressing Zoning Dilemmas

The new buyers wanted to develop the site into a service station with the ability to sell gas to the abundant truck traffic on Tchoupitoulas.  With Second Line Stages housing hundreds of production trucks, and the surrounding wharfs frequently trafficking transportation containers on 18-wheelers, it was an ideal location for a gas station.  Prior to development here, the closest gas station was inconveniently located on the opposing side of Lee Circle, out of the way of the nearest entrance to Route 90 and the interstate.  Seems like a no-brainer; the only reason nobody ever thought of it was that at the time speculators were too busy planning the redevelopment of the power plant that would accommodate major tenants like Bass Pro Shops. Unfortunately for the development duo, the land is zoned “mixed use”, a category of industrial zoning that has a stringent “conditional use” restriction that requires approval by the New Orleans City Council.  In such an industrialized area, who would have guessed that a gas station wouldn’t be allowed?

Industrial Zoning

Breaking it down: the three major types of industrial zoning are mixed use, light industrial and heavy industrial.

The most lenient of the three, “mixed use zoning”, allows the following without conditional use restriction:

  • manufacture of medical and dental equipment
  • beverage blending, bottling and slaughtering of animals
  • millinery and manufacture of baskets
  • research labs
  • motion picture studio
  • public elementary school
  • child care facility
  • auto body shop
  • underground sewerage lift station
  • water tower

In comparison, “light industrial zoning” allows truck repair and vulcanizing shops, but allows truck stops only as a conditional use, which means it requires city approval and a site plan review.

Lastly, “heavy industrial zoning”, being the most limited of the three, allows trucks stops only as a conditional use. 

Commercial Zoning

Ultimately Pierce’s plans were still hindered under the given zoning for the property.  Hitting road blocks under all three industrial zoning categories, one would think commercial zoning would allow something as necessary as a gas station to such a busy area.  However, commercial zoning C-1A still only allows gasoline service stations as a conditional use.  Ironic, considering it allows something as archaic as “tinsmithing”.

How then, should one go about pursing such an endeavor without the hindrance of additional governmental approval?  Clearly, interpreting the zoning law can be extremely risky.  A commercial real estate broker will represent you in researching these issues ahead of time.  Most specifically, you want to look for one with advanced designations such as a CCIM, SIOR or an MBA.

After several years of planning, the property at 1667 Tchoupitoulas is currently being developed and gas will be available for purchase soon. 

Follow our website and social media accounts to remain updated on this and other zoning issues!

 

Sources:

www.louisianacommercialrealty.com

New Orleans Zoning Code (Sections 7.6, 11.54 and 15.2.12)

New Orleans Assessor’s Office

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