Project Report

Real Estate Programming for

BioDistrict New Orleans

Prepared for
AECOM Design + Planning

Submitted by

Economics at AECOM,
An AECOM Technical Services, Inc Company
(AECOM)
October 2010
Economics Project No. 18438

303 E Wacker Dr., Suite 600

Chicago, IL 60601
312.373.7558 www.aecom.com
Table of Contents

I. Introduction and Executive Summary .....................................................................................3

Summary Estimates .................................................................................................................... 3
II. BioDistrict Demographics .........................................................................................................7
Member Institutions ..................................................................................................................... 9
III. Case Studies ............................................................................................................................11
Illinois Medical District (IMD) – Chicago, IL............................................................................... 12
Memphis Medical Center – Memphis, TN ................................................................................. 14
University of Alabama at Birmingham Medical Center District – Birmingham, AL .................... 16
Summary Tables ....................................................................................................................... 18
IV. Retail .........................................................................................................................................20
V. Residential ................................................................................................................................26
VI. Long-Term Stay Facilities and Meeting Space......................................................................29
VII. Office and Medical Office Space ............................................................................................34
VIII. Phasing and Target Locations................................................................................................36
IX. Incentive Options .....................................................................................................................38
Federal Incentive Options ......................................................................................................... 38
Historic Tax Credits ................................................................................................................... 38
New Markets Tax Credits .......................................................................................................... 38
State Incentive Options ............................................................................................................. 39
Local Incentive Options ............................................................................................................. 42
X. General & Limiting Conditions ...............................................................................................44

AECOM Project No. 18438

Table of Tables
Table 1: Population Change for BioDistrict......................................................................................... 7
Table 2: Population and Households for BioDistrict ........................................................................... 7
Table 3: Population Projections .......................................................................................................... 8
Table 4: Employment, Hospital Beds, and Patient Visits for the BioDistrict ....................................... 8
Table 5: New Orleans Health Care Employment................................................................................ 9
Table 6: Case Study Population and Households ............................................................................ 18
Table 7: Case Study Employment, Hospital Beds, and Patient Visits .............................................. 18
Table 8: Convenience and Food & Beverage Expenditure for the BioDistrict .................................. 20
Table 9: Office Worker Stats - Daily Retail ....................................................................................... 21
Table 10: Convenience Goods Office Worker Retail ........................................................................ 22
Table 11: Office Worker Stats - Daily F&B ....................................................................................... 22
Table 12: Office Worker Lunch Habits Detailed................................................................................ 23
Table 13: Retail Space Compared to Employment and Households................................................ 23
Table 14: Initial Retail Program (5-Years) - Net Demand ................................................................. 24
Table 15: Retail Sq. Ft. - Increments by Period................................................................................ 24
Table 16: Summary of Current and Future Rental Units in BioDistrict ............................................. 26
Table 17: Comparison of Employment Levels to District Households .............................................. 27
Table 18: Initial Residential Program (5-Years) - New Demand....................................................... 28
Table 19: Residential Units. - Increments by Period......................................................................... 28
Table 20: New Orleans Hotel Occupancy......................................................................................... 29
Table 21: Existing BioDistrict Long Term Stay Facilities .................................................................. 29
Table 22: Patients Visiting BioDistrict Hospitals from Outside New Orleans.................................... 29
Table 23: Long Term Stay Facilities in Surrounding Area ................................................................ 30
Table 24: Medical Long Term Stay Facilities Case Studies ............................................................. 31
Table 25: Comparison of Long-Term Stay Capacity......................................................................... 31
Table 26: Initial Long Term Stay Program (5-Years) - Net Demand................................................. 32
Table 27: BioDistrict and New Orleans Meeting Space.................................................................... 32
Table 28: BioDistrict Office Space .................................................................................................... 34
Table 29: Case Study Office Space.................................................................................................. 34
Table 30: Comparison of Medical Office Space Capacity ................................................................ 35
Table 31: Office, R&D, and Manufacturing - Increments by Period.................................................. 35

AECOM Project No. 18438

I. Introduction and Executive Summary
Economics at AECOM (formerly ERA) was retained to assist the master planning project team
being led by AECOM Design + Planning in development of the ancillary real estate program for the
proposed BioDistrict New Orleans. Over the course of this analysis, AECOM reviewed information on
the local market provided by GCR, incorporated analysis from CBRE regarding office, manufacturing,
research, and development space, developed a series of case studies of other comparable medical
districts, and relied on AECOM project experience with comparable projects elsewhere. The
combination of this data, information, and experience resulted in the program estimates reviewed in
this analysis and summarized in this introduction and executive summary of findings.

Figures developed by GCR and Associates indicate a potential BioDistrict institution-related full-
time and part-time employment in the order of 17,000+ at full development, with an additional medical,
R&D, and medical manufacturing potential of nearly 5,000 full-time jobs. Thus the direct potential
employment in the BioDistrict is estimated to exceed 22,000 full- and part-time jobs, before indirect,
induced, and construction economic impacts are taken into consideration. The significant increase in
employment as well as ancillary employment related to the core institutional functions create an
opportunity for additional market-driven real estate program throughout the area. Economics at
AECOM was tasked with evaluating the potential for added retail, residential, long-term stay, and other
commercial or office development. As well, when comparing the BioDistrict to comparable districts
elsewhere, given the level of employment and activity the BioDistrict is underdeveloped with respect to
amenities and spinoff development, indicating opportunity for added economic development and
supportive real estate uses.

Summary Estimates
As the integrated program table on the following page indicates, market-driven and institutional
development in the BioDistrict over the course of the 20-year planning period is estimated to be in
excess of 13 million sq. ft. Most of this development, nearly 7 million sq. ft., is anticipated within the
next 5 years. Given the significant level of development potential there is likely opportunity for
supportive, coordinated action with respect to major transportation, infrastructure, and overall
development activity.

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 Integrated Development Program – 20 Years

Increments - Square Feet

5-Year 10-Year 20-Year
Market Based Program
Residential 1,280,000 418,000 418,000
Retail 100,000 55,000 -
Med. Office, R&D, Mfct. 175,000 625,000 800,000
Long Term Stay 55,000 - -
Meeting Facility 10,000 - -
The Building Block 190,000 - -

Institutional Program(s)
VA Sites Research Building 152,000 - -
Res., Rehab & Trans. Lvng. 504,000 - -
Medical Facilities 1,182,000 - -
Hospital Infrastructure 201,000 - -
UMC Sites Medical Facilities 1,559,000 1,718,000 -
Hospital Infrastructure - - -
Other LSU Health Sciences Research Building - 200,000 -
Faculty Practice/MOB - 120,000 -
Academic Building 82,000 - -
Student Housing - - -
Hotel & Conference - 320,000 -
Other Tulane Health Sciences Research Building 250,000 330,000 -
Medical Facilities - - 300,000
Academic Building* - - 270,000
Student Housing* - - 350,000
Hotel - - 300,000
Ochsner - - -
Xavier Academic Building* 500,000 28,000 -
Student Housing 450,000 - -
Delgado Academic Building 65,000 - 150,000

Other Parking VA Parking Garage 2,000 cars - -

UMC Parking Garage 1,400 cars 1,400 cars -
500-2,000
Xavier Parking Garage - -
cars

Total Dev. Sq. Ft. (ex. parking) 6,755,000 3,814,000 2,588,000

Cumulative Dev. Sq. Ft. (ex. parking) 6,755,000 10,569,000 13,157,000
*Note: Includes some parking sq. ft.
Source: AECOM, Cannon Design, CBRE

AECOM Project No. 18438 Page 4

 Net retail demand on the site is estimated to come primarily from area residents and employees of
the major institutions nearby. AECOM estimates for a mix comprised mainly of convenience retail and
services, and out-of-home (non-grocery) food and beverage offerings. Specialty and destination retail
do not fit well with the proposed set of uses and functions for the site area and are an explicit target for
other areas of the city, most notably down Canal St. and towards the river. For convenience retail, we
envision offerings that are a combination of retail (personal care, drugstore, reading materials, etc.)
and convenience services (dry cleaning, daycare, etc.). Food and beverage offerings are expected to
skew towards lunch offerings such as quickserve and lower cost sit-down options (fast food, deli/
grocery, etc.). After the BioDistrict household count grows, additional offerings similar to these, as well
as a grocery store may be possible. While it may be possible to grow the quantity of retail beyond this
initial program in the future, this would likely require more significant, neighborhood-oriented anchor
tenants such as grocery, fitness center, or other big-box concepts.

AECOM estimates for over 1,200 residential units in the BioDistrict over the next 5 years and more
than 2,000 at full build out, mostly rental. The preponderance of these units are anticipated to come
from new employees for the major institutions in the BioDistrict, with a small number of households
from other residential growth in the BioDistrict projected by GCR. After the initial 5-year time period
when the area has been more fully developed and more services are available, AECOM estimates that
some number of the site employees may opt to live in owner occupied housing nearby their place of
employment. This proportion is estimated to be in the 2%-3% range, equating to an additional
potential of roughly 500 – 700 additional owner occupied units in the BioDistrict. For the purposes of
this analysis AECOM distributes these units over years 5 to 20. Given the large number of proposed
but undeveloped residential projects in and around the site area, it is unclear at this time how many of
these units would need to be in new, as yet unproposed developments. Nevertheless this does
provide a range of the order of magnitude of residential offerings related to the redevelopment of the
BioDistrict.

In comparing the BioDistrict to other medical districts with long-term stay offerings, the BioDistrict
falls within range of comparable development elsewhere – which makes it unclear that there is a
pressing need for new facility space. However, as noted in this analysis, the type of offering currently
available through the Clarion Inn and Suites (the only current long-term stay offering in the BioDistrict)
does not fit with comparable offerings related to medical districts. Overall, AECOM finds that between
90 and 120 units could be supportable in the BioDistrict given the level of expected visits from out of
the area which is consistent with the case studies indicating an average of 110 units per comparable
development in medical related long term stay facilities.

AECOM’s experience elsewhere with similar medical districts indicates that most conferences and
related spaces for medical districts are needed for meetings of 150 to 300 attendees on average;

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however, some conferences of 500 to 600 attendees could be possible if the space were higher in
quality and larger than that which currently exists. Using a planning factor of capacity for 400 persons
per meeting, ratios of 15 sq. ft. per person for the core banquet and divisible meeting space, as well as
1.5 to 2 times this figure for additional breakout and supportable meeting space, this would imply
potential for 9,000 to 12,000 sq. ft. of contiguous space in the BioDistrict. AECOM would not
recommend a facility larger than this at the current time, given the notable capacity of other hotels in
the market as well as the sizable convention center.

Medical districts with a stronger focus on servicing the local populations typically have fewer
opportunities for research and development, education programs, incubators, and specialty care and
are less likely to require greater capacity for office, medical office, and related manufacturing,
research, and development space. As the case studies in this analysis suggest, a successful
combination of these elements could significantly grow the amount of space demanded for medical
districts – up to 10 times that experienced in smaller medical districts and the range currently
experienced in the BioDistrict. To understand the additional range of potential new square footage
related to planned and future medical related operations CBRE provided the project team with
estimates based on their experience with similar developments elsewhere. The total potential of net
new demand related to the BioDistrict and not solely for the purposes of local health care service could
be in the order of 1.6 million sq. ft. Some portion of this net new demand could likely be
accommodated in existing and unoccupied buildings or spaces.

AECOM Project No. 18438 Page 6

 II. BioDistrict Demographics
The BioDistrict New Orleans is located near the Central Business District (CBD) and the French
Quarter, and extends out towards Carrollton Ave. This area has a population of 12,707 (excluding
correctional facilities), and a total of 4,667 households with an average household size of 2.33
persons.

Table 1: Population Change for BioDistrict

2005 2006 2007 2008 2009 2010

BioDistrict 18,791 5,806 8,804 11,062 14,266 16,050
Population in Prison 6,000 2,512 2,512 2,512 3,343 3,343
Residential Population 12,791 3,294 6,292 8,550 10,923 12,707
Source: GCR & Associates

While the population of the BioDistrict has returned to 85% of its pre-Katrina level, the present-day
population is situated in a housing type that differs substantially from the pre-Katrina housing stock of
the area. Whereas most pre-storm residents were situated in small 1-4 unit residential structures,
many current residents live within large multifamily structures that have been erected in the past two to
three years.

It is generally a low-income community, with a median household income of $25,327. This is less
than half the national median household income ($52,029), and $12,000 less than the New Orleans
median household income ($37,751). The New Orleans division between owner-occupied and renter-
occupied housing was approximately 50% for each according to the U.S. Census in 2008, however
within the BioDistrict, the distinction is skewed heavily towards renter-occupied housing, which makes
up 80% of all occupied units. The breakdown of the demographic data is outlined in the following
table.

Table 2: Population and Households for BioDistrict

BioDistrict
Population 12,707
Persons in Group Quarters (excluding correctional
1,864
facilities)
Households 4,667
Average Household Size 2.33
Median Household Income $25,327
Per Capita Income $16,209
Housing
Owner Occupied 20%
Renter Occupied 80%
Source: Census Bureau and GCR & Associates

AECOM Project No. 18438 Page 7

 Population projections were calculated for the BioDistrict by GCR to help predict growth and the
future market. Projections are always both a science and an art, and with the turbulent recent history
in the city it is difficult to accurately determine exactly how the population will change moving forward.
There is greater accuracy in projecting shorter timelines, so for the purposes of this report and the
BioDistrict Plan, a projection out until 2015 was used. Essentially, the population is projected to stay
relatively flat for the next five years, with estimates in the range of 15,900 to 16,721. The table below
compares BioDistrict population projections for 2015 with the projections for the City of New Orleans.

Table 3: Population Projections

2015
Area Moderate High
BioDistrict
Population 15,900 16,721
Households 4,623 4,872
New Orleans
Population 379,379 399,386
Households 147,618 155,403
Sources: Prepared by GCR

Because the BioDistrict Plan is focused on regenerating the job market – particularly with respect
to the biosciences industry - it is critical to understand the current employment landscape, and how the
major facilities in the BioDistrict project future employment. The projected future employment for the
major facilities for which data was available, and after the UMC (University Medical Center) and VA
hospitals are constructed, are given in the following table.

Table 4: Employment, Hospital Beds, and Patient Visits for the BioDistrict

BioDistrict
Employment
Major Facilities and Institutions 17,000 - 18,000
Private R&D, Medical Office, and Manufacturing 4,000 - 5,000
Total Employment 21,000 - 23,000

Hospital Beds and University Students

Total Students 7,600
Hospital Beds 1,000
Patient Visits
Outpatient 1,000,000
Inpatient 75,000
Source: GCR interviews
*Notes:
1) Figures are rounded
2) Total employment figures include full 20-year buildout
3) Figures do not include ancillary employment outside of major institutions (i.e. business suppliers that may co-locate)
4) Some figures from non-medical institutional employment are not available or included (ex. future, non-medical academic
programs)

AECOM Project No. 18438 Page 8

 The current health care industry employees in the region are 57,360, as outlined below. While the
best indicator of the true value this number likely understates the actual figure as a number of
jurisdictions do not meet the BLS’ standard for disclosure. For example, Jefferson Parish, with two
publicly owned hospitals is noted as “ND” meaning not disclosed. These are relatively high-paying jobs
in an industry which is estimated to have a low unemployment rate locally. Net new employment
directly for institutions in the district alone is estimated to account for an increase in the order of 10-
15% for these high paying jobs in the region.

Table 5: New Orleans Health Care Employment

Industry New Orleans MSA Employment

Health Care & Social Assistance 56,696
Testing Laboratories 538
Physical, Engineering, and Biological Research 107
Research and Development in Biotechnology 19
Total 57,360
Source: 2009 Bureau of Labor Statistics, Quarterly Census of Employment and Wages

Member Institutions

The BioDistrict hosts many centers of employment; the following are the primary medical and civic
institutions for which data was provided:

• Tulane University. All downtown Tulane operations, including the Tulane School of Public
Health and the Tulane Medical Center;

• Xavier University. A notable university in biological/life sciences and pre-medical education;

• Louisiana State University Health Center. Central Business District employees;

• City of New Orleans City Hall. Also included is the Criminal Justice Complex;

• Union Passenger Terminal. Intermodal facility served by Amtrak and Greyhound Lines;

• Future UMC Hospital. Planned for construction.

• Future VA Hospital. Planned for construction.

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 BioDistrict New Orleans

AECOM Project No. 18438 Page 10

III. Case Studies
In an effort to provide a more robust analysis of the potential programming for the BioDistrict,
AECOM used three case study medical districts of similar scale for comparative purposes. Within
each district, AECOM focused on data related to employment, beds, patient visits, retail, long-term
stay facilities, office space, and residential offerings as they related to the medical industry.

AECOM Project No. 18438 Page 11

Illinois Medical District (IMD) – Chicago, IL

The Illinois Medical District (IMD) is a 560-acre site on Chicago’s Near West Side, and is home to
over 40 medical, educational, and technological institutions. This section provides an overview of
information on demographics, major institutions, employment, and visitors.

Member Institutions

Although the IMD hosts over 40 member institutions, the following four are the primary medical
institutions:

• John H. Stroger, Jr. Hospital of Cook County. The county operates Cook County Hospital,
a teaching facility with one of the busiest emergency services in the Midwest and the nation;

• University of Illinois at Chicago. UIC’s Colleges of Medicine, Pharmacy, and Dentistry are
located in the District and UIC’s main campus is located just east of the IMD. UIC College of
Medicine is the largest medical school in the world;

• Rush-Presbyterian-St. Luke’s Medical Center. The medical center is a private medical

research and educational hospital;

• VA Chicago Healthcare System. This is one of the largest VA facilities in the nation.

The district’s other member institutions are a mix of public and private institutions, ranging from
private companies to professional associations. According to the IMD Commission, the IMD creates
50,000 direct and indirect jobs and upwards of $34 million in local taxes, making it an important
economic engine for the City of Chicago.

AECOM Project No. 18438 Page 12

AECOM Project No. 18438 Page 13
Memphis Medical Center – Memphis, TN

The Memphis Medical Center is the approximately 800-acre district located between downtown
and midtown Memphis, TN, and is home to many medical and biosciences research facilities. It is
located within walking distance of historic downtown Beale St., the state’s top tourist attraction.

Member Institutions

The main medical institutions that are included in this case study are:

• St. Jude’s Children’s Research Hospital. One of the world’s premier pediatric cancer
research facilities;

• Regional Medical Center at Memphis. “The Med” is a major regional healthcare provider
and one of the largest medical and surgical teaching hospitals for the University of Tennessee
Health Science Center;

• VA Memphis Healthcare System. Services nearly 200,000 veterans living in a 53-county

area near Memphis;

• Le Bonheur Children’s Medical Center. Teaching children’s hospital that is completing a

$340 million, 610,000 square-foot new hospital;

• Methodist University Hospital. The largest and most comprehensive hospital in the
Methodist Healthcare System;

• Memphis Mental Health Institute. A recently opened 103,000 square foot facility replaces
the original 1962 outdated building.

The Memphis Medical Center provides a good reference for the BioDistrict, as there is a similarly
coordinated effort by major stakeholders in the area to coordinate growth in the biosciences industry in
the area.

AECOM Project No. 18438 Page 14

AECOM Project No. 18438 Page 15
University of Alabama at Birmingham Medical Center District – Birmingham,
AL

The University of Alabama at Birmingham (UAB) Medical Center District is a 250-acre portion of
downtown Birmingham. The area directly to the southwest is home to the UAB campus, and the
Medical Center District it includes, is largely made up of facilities directly related to the UAB Health
System.

Member Institutions

The main medical institutions that are included in this case study are:

• UAB Hospital. A new 885,000 square foot, 11-story building opened in 2004. Houses a 900-
bed facility that is the centerpiece of the UAB Health System;

• The Kirklin Clinic. Specially designed outpatient care center with more than 700 physicians;

• Callahan Eye Foundation Hospital. Opened in 1963 as an eye hospital to serve anyone
regardless of ability to pay. Offers an ophthalmology residency program that has trained over
200 ophthalmologists. Became part of the UAB Health System in 1997;

• Cooper Green Mercy Hospital. County hospital which is run by Jefferson County Health
System. Recently underwent a $28 million extensive renovation;

• Children’s. Teaching hospital affiliated with UAB School of Medicine, and the state’s only
Level I pediatric trauma center;

• VA Birmingham Healthcare System. 313-bed tertiary care facility serving veterans in the VA
Southeast Network.

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AECOM Project No. 18438 Page 17
Summary Tables

Below is summary information relating demographics, employment, hospital beds, and patient
visits for the case studies. This data was leveraged along with current and projected BioDistrict data
to determine the potential size and scale of additional development. The following tables outline the
population information as well as the employment and hospital information.

Table 6: Case Study Population and Households

IMD Memphis UAB

Population 13,688 6,845 5,290
Persons in Group Quarters 1,815 984 1,434
Households 4,947 3,637 2,425
Average Household Size 2.40 1.61 1.59
Median HH Income $33,620 $12,606 $22,237
Per Capita Income $19,571 $13,149 $17,107
Housing
Owner Occupied 25% 7% 11%
Renter Occupied 75% 93% 89%
Source: ESRI 2009

Table 7: Case Study Employment, Hospital Beds, and Patient Visits

IMD Memphis UAB

Employment (Major Facilities)
Full Time 18,726 11,417 13,904
Part Time n/a n/a n/a
Student Workers n/a n/a n/a
Total 18,726 11,417 13,904
Hospital Beds 1,831 1,375 1,921
Patient Visits
Outpatient 2,166,747 869,942 2,053,247
Inpatient 81,935 55,831 64,281
Source: VA Website, Rush 2009 Annual Report, 2009 American Hospital Association,
IMD Website, Memphis Business Journal 2010, ESRI, UAB Facts & Figures 2010,
2009 American Hospital Association, VA Website
The BioDistrict has a population size more comparable to the IMD and larger than the Memphis
and Birmingham facilities. This is mainly due to the size of the BioDistrict with respect to the other
areas, as well as the amount of residential space within each. The UAB and Memphis districts are in
downtown areas with minimal residential space and a concentration of medical, retail, and other
facilities that attract daytime populations.

In terms of median household income, the BioDistrict falls in the middle to high-end of the sample
size. The Memphis Medical Center District is particularly low-income, at $12,606 median household

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income. Also of note regarding households is the percentage of owner vs. renter occupied units.
While similar to the IMD in Chicago, both UAB and Memphis skew heavily towards renter-occupied
housing, at 89% and 93% respectively.

This number of hospital beds – a metric that helps determine the size and scale of the hospitals in
the districts – is generally higher in the case study samples. There are nearly twice as many beds in
the IMD and UAB, and Memphis includes a proximate number of beds to these. The hospitals in these
case studies also handle nearly (Memphis) or greater than twice (UAB, IMD) the number of inpatients
than the BioDistrict is projected to accommodate. Again, this is not surprising given the greater
number of hospital beds to the BioDistrict. The number of outpatients in the samples varies as well,
from twice the amount projected in the BioDistrict (1,081,288) for the IMD and UAB, to 20% less for
Memphis (869,942). These numbers are highly dependent on the type of hospitals and facilities with
each district. The UAB, for example, is home to the Kirklin Clinic, a unique facility dedicated to
outpatient care with over 700 physicians.

These cases provide a variety of examples for comparative analysis for the BioDistrict and any
ancillary programming that will be a part of the BioDistrict plan.

AECOM Project No. 18438 Page 19

IV. Retail
This section focuses on the retail market within the BioDistrict, and what the possibilities are in
terms of expansion and development of certain types of retail to support the workers and households
within the BioDistrict. In the following analysis, the comparison between the case studies reveals that
the BioDistrict has the lowest ratio of retail space to the projected number of employees and
households. Thus it is evident that there is likely an opportunity for increasing the retail space in the
BioDistrict.

Initially, AECOM determined the total current expenditure on convenience retail and food and
beverage within the BioDistrict based on median household income and the Bureau of Labor
Statistics’ (BLS) data on spending patterns. This calculation resulted in the base size and scale of
the market to be in the area of $70 million annually, as seen in the table below.

Given the mobility of retail spending AECOM also calculated the comparable level of spending in
a buffer area around the BioDistrict and found it to be an additional $128 million in spending on
similar items, goods, and services. While much of this spending will likely gravitate to established
retail areas in Lakeview, Mid-City, Uptown, West Bank, and Metairie, some portion of this spending
could be captured within the BioDistrict. Total spending for these two market areas is estimated at
roughly $200 million annually for convenience retail, food and beverage.

Table 8: Convenience and Food & Beverage Expenditure for the BioDistrict

BioDistrict BioDistrict Expanded

Category Total % of Retail Total % of Retail
Food $53,483,224 76% $150,585847 76%
Food at Home $34,956,605 49% $98,422,824 49%
Food Away from Home $18,526,619 26% $52,163,023 26%
Alcohol $2,922,581 4% $8,228,735 4%
Personal Products and Services $4,803,198 7% $13,523,747 7%
Tobacco Products $3,977,251 6% $11,198,235 6%
Miscellaneous $5,591,024 8% $15,741,927 8%
Total $70,777,276 100% $199,278,491 100%
Source: BLS, U.S. Census, GCR & Associates
Note: Based on Median HH Income for each Study Area

This market can be expected to grow as the population would expand as the BioDistrict plan is
implemented and repopulation continues throughout the area. Also, as the daytime population of
workers expands, there will also be an opportunity for the convenience retail market to grow.

AECOM DRAFT Project No. 18438 Page 20

 The offerings in the BioDistrict in terms of retail categories were also analyzed. When comparing
retail building total rentable building area (RBA), it became clear that when compared to other similar
medical districts, the BioDistrict has less available retail space. The next table outlines the retail data
within the BioDistrict, while the subsequent table shows the case study comparison.

Pulling from the International Council of Shopping Center’s (ICSC) office spending patterns
survey, AECOM reviews here estimates of normal spending patterns by daytime employees. Of all
office and professional workers, the ICSC estimates that some 1.1 shopping trips are made per
employee every week on average. Of those employees who do shop during working days (62%) the
average number of trips per week is 2.7. Altogether, some 34% of all trips are made in areas close to
the place of work.

Table 9: Office Worker Stats - Daily Retail

Av. Weekly Retail Trips (of All Office Workers) 1.1

Av. Weekly Retail Trips (of Shoppers) 2.7
Percentage of Workers Who Shop During Day 62%
Percentage of Workers Who Shop Near Work 34%

Spend Estimates Per Worker

Av. Weekly Av. Annual
Shoppers Goods $55.80 $2,678
Convenience Goods $40.10 $1,925
Total Retail $95.90 $4,603
Source: Office Worker Retail Spending Patterns - International Council of Shopping Centers

The ICSC estimates that the weekly level of expenditures on all types of retail goods (excluding
F&B) is in the area of $95 per week on average. After adjusting for holidays and other factors, the
average annual spend for workers on retail items is estimated to be $4,600 on all items. Of this figure
a slightly higher amount is spent on “Shopping Goods”, defined by the survey as apparel, home
items, and non-convenience retail items. The average weekly spend for such goods is estimated to
be around $55, or $2,700 annually after accounting for normal working schedules. For “Convenience
Goods”, which the survey defines as newspapers, cosmetics, snacks, etc., the average weekly
spending is around $40, or roughly $1,900 annually after accounting for non-working days.

Given that the market under consideration already has a notable amount of destination retail and
this is a key focus in other areas of the downtown – most notable towards the river on Canal Street –
convenience goods are used for the purpose of estimating non F&B retail demand from employees in
the BioDistrict. Convenience Goods are those more closely related to personal care and necessary,
every-day items. Estimates for such goods are shown in the following table. The other and groceries
categories comprise the most significant proportion of these types of goods at 26, and 23 percent,

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respectively. Other important categories include snacks, candy, and soft drinks, and personal care/
drug store retail.

Table 10: Convenience Goods Office Worker Retail

Type of Good Percent Av. Weekly Spend Av. Annual Spend

Cosmetics 6% $2.33 $112
Personal Care/ Drugstore 17% $6.99 $336
Newspapers & Magazines 8% $3.26 $157
Groceries 23% $9.33 $448
Snacks, Candy, Soft Drinks 19% $7.69 $369
Other 26% $10.49 $504
Total 100% $40.10 $1,925
Source: Office Worker Retail Spending Patterns - International Council of Shopping Centers
Note: Itemized estimates based on weighted average of responses

Another key spending category for office and professional workers is spending on food and
beverage. Some 82% of office and professional workers average 2.9 weekly lunch trips, nearly all of
which are near the working place. Average weekly expenditures on lunch are estimated to be in the
order of $25 or just over $1,200 annually. Some 34% of office workers have dinner and/ or drinks
near the workplace after the working day. On average such an expenditure occurs once every two
weeks with an average weekly spend of roughly $13 total, or some roughly $620 annually. These
figures are shown in the following table.

Table 11: Office Worker Stats - Daily F&B

Percent Av. Weekly Trips

Lunch 82% 2.9
Percentage of Workers Who Lunch Near Work 92% -
Dining/ Drinks 32% 0.6
Percentage of Workers Who Dine/ Drink Near Work 34% -

Spend Estimates Per Worker

Av. Weekly Av. Annual
Lunch $25.40 $1,219
Dining/ Drinks $13.00 $624
Total F&B $38.40 $1,843
Source: Office Worker Retail Spending Patterns - International Council of Shopping Centers

According to the ICSC survey data, around 25% of workers bring their own lunches from home on
average. Fast food and deli/ grocery lunch purchases during the day are some of the most frequent
lunch purchases, together accounting for almost 50% of lunchtime expenditures. Sit-down lunches
comprise almost 20% of lunchtime expenditures, and cafeteria and food court expenditures are a
modest proportion of estimated total lunchtime expenditures (together only an estimated 7% of the

AECOM DRAFT Project No. 18438 Page 22

total). All totaled, the average worker spends in the order of $1,200 annually on lunch, most of which
is nearby their place of work.

Table 12: Office Worker Lunch Habits Detailed

Type of Est. Percent Av. Weekly Spend Av. Annual Spend

Sit-Down 19% $4.71 $226
Fast Food 19% $4.71 $226
Deli/ Grocery 27% $6.85 $329
Cafeteria 3% $0.86 $41
Food Court 4% $1.00 $48
From Home 24% $6.14 $294
Other 4% $1.14 $55
Total 100% $25.40 $1,219
Source: Office Worker Retail Spending Patterns - International Council of Shopping Centers
Note: Itemized estimates based on weighted average of responses

According to data from CoStar – a national source for commercial real estate information – the
BioDistrict has almost half the amount of retail space when compared the IMD, the district with the
next highest amount of available square footage. Utilizing the CoStar data facilitated a comparison of
equivalent data across each of the medical districts. With the implementation of the BioDistrict plan,
there will likely be an influx of employees and households and the possibility for increasing retail
space in specific areas of the BioDistrict.

When compared to the expected level of employment in the BioDistrict, as well as the number of
households, it becomes even more apparent that there will likely be a need for growth in retail
offerings. The case study districts adequately support much greater ratios, in some cases upwards of
three times as high, as displayed in the table below.

Table 13: Retail Space Compared to Employment and Households

Retail/Employment Retail/Households
BioDistrict 108 390
IMD 172 653
Memphis 571 1,236
UAB 469 2,690
Source: AECOM
Note: Ratios based on Major
Facility Employment

AECOM estimated potential near-term demand over the next 5 years primarily from the existing
BioDistrict and the eventual employees on the site, as well as some amount of potential demand from
the buffer area surrounding the BioDistrict. The results and estimates are shown in the table that
follows. For out-years beyond the initial 5-year period, AECOM further considered expansion in the
population of the BioDistrict (largely from rental residential units for new employees), and expansion

AECOM DRAFT Project No. 18438 Page 23

in the population and household base for the area directly surrounding the BioDistrict. In addition, the
assumption was made that a grocery offering may be achievable in this out-year period.

Table 14: Initial Retail Program (5 Years) - Net Demand

Spending BioDistrict Employees BioDistrict Buffer

Food at Home $34,956,605 $0 $63,466,219
Food Away From Home $18,526,619 $35,017,000 $33,636,404
Convenience $17,294,053 $36,575,000 $31,398,591

Penetration BioDistrict Employees BioDistrict Buffer

Food at Home 0% 0% 0%
Food Away From Home 15% 35% 8%
Convenience 25% 30% 10%

Site Spending BioDistrict Employees BioDistrict Buffer

Food at Home $0 $0 $0
Food Away From Home $2,778,993 $12,255,950 $2,690,912
Convenience $4,323,513 $10,972,500 $3,139,859

Sales Per Sq. Ft. BioDistrict Employees BioDistrict Buffer

Food at Home $300 $300 $300
Food Away From Home $450 $450 $450
Convenience $300 $300 $300

Resulting Net Sq. Ft. BioDistrict Employees BioDistrict Buffer

Food at Home 0 0 0
Food Away From Home 6,176 27,235 5,980
Convenience 14,412 36,575 10,466
Source: AECOM

Summary estimates for the 5, 10, and 20 year increments are given below.

Table 15: Retail Sq. Ft. - Increments by Period

5-Year 10-Year 20-Year

Food at Home 0 49,000 0
Food Away From Home 39,000 2,000 0
Convenience 61,000 4,000 0
Increment Total 100,000 55,000 0
Cumulative Total 100,000 155,000 155,000
Source: AECOM

AECOM DRAFT Project No. 18438 Page 24

 New potential retail demand in the area is estimated to come primarily from area residents and
employees of the major institutions nearby. AECOM estimates for a mix comprised mainly from
convenience retail offerings and services and out-of-home (non-grocery) food and beverage offerings.
Specialty and destination retail do not fit well with the proposed set of uses and functions for the site
area and are an explicit target for other areas of the city, most notably down Canal St. and towards
the river. For convenience retail we envision offerings which are a combination of retail (personal
care, drugstore, reading materials, etc.) and convenience services (dry cleaning, daycare, etc.). Food
and beverage offerings are expected to skew towards lunch offerings such as quickserve and lower-
cost sit-down options (fast food, deli/ grocery, etc.). After the BioDistrict household count grows,
additional offerings similar to these as well as a grocery store may be possible. While it may be
possible to grow the quantity of retail beyond this initial program in the future, this would likely require
more significant, neighborhood-oriented anchor tenants such as grocery, fitness center, or other big
box concepts.

AECOM DRAFT Project No. 18438 Page 25

V. Residential
The residential rental market in the BioDistrict and the nearby area shows current demand to be
high for newer units in multifamily buildings due to high occupancy rates and the premiums that the
rental facilities are charging. Within the BioDistrict, owner-occupied housing only represents 20% of
all households, thus the rental market dominates the residential landscape and would likely be the
focus of any new residential developments. This is typical of the other medial districts reviewed for
the purposes of this analysis as these types of employees often gravitate to housing nearby their
places of work.

The following table outlines the number of units that currently exist, are in pending developments,
and have been in pending development for several years as reported in a 2006 ERA/AECOM report
on New Orleans completed for the Unified New Orleans Plan District 1 – Downtown.

Table 16: Summary of Current and Future Rental Units in BioDistrict

Housing Type Area Units

BioDistrict 906
Current Large Multi-Family Rental
Surrounding Area 1,692
BioDistrict 134
Pending (Since 2006)
Surrounding Area 1,575
BioDistrict 212
Pending (New)
Surrounding Area 1,068
BioDistrict 1,252
Total
Surrounding Area 4,335
Source: GCR Interviews, ERA Report 2006

There would be 5,587 total units that would be available within the BioDistrict if all of the pending
developments were to come online – which AECOM views as highly unlikely. These units would be
within the BioDistrict and the surrounding area (defined as the area between the BioDistrict and the
next major thoroughfare on all sides). The high occupancy rates of upwards of 90%+ in the current
large and newer multi-family facilities suggest that the influx of new residents in the BioDistrict may
capture a notable portion of the rental market, and most likely justify additional development at some
level – either in the newly proposed developments or developments not yet proposed. There is some
skepticism that the turbulent development market in New Orleans will affect the completion of some
of the pending projects. In particular, around 1,700 units that are pending have been on the horizon
since 2006.

When comparing the ratio of employment to the number of households within each district in the
following table, the BioDistrict compares favorably with the IMD and Memphis. UAB has much higher
employment with respect to the number of households, and could signify that there are other local
market residential patterns impacting demand for residential in that district. Because the ratio for the

AECOM DRAFT Project No. 18438 Page 26

BioDistrict is based on the completion of the pending developments, there is a need to expand the
existing rental market by at least what is already in pending development. If these projects do not
come to fruition, there may be a lack of housing that would need to be filled by new development
projects as part of the BioDistrict Plan.

Table 17: Comparison of Employment Levels to District Households

Employment/Households
BioDistrict 3
IMD 3
Memphis 3
UAB 5
Source: AECOM
Note: Ratios based on Major Facility
Employment

GCR and Associates provided detailed information on current residential offerings in a separate
report, and AECOM’s data is based on an aggregation of that data.

Forecast estimates provided by GCR show modest household growth in the BioDistrict into the
future, with most household growth in the buffer area surrounding the BioDistrict. This nearby
projected household growth is related primarily to the redevelopment of public housing into mixed-
income, affordable housing communities. Given the high propensity of medical district employees
seen in other similar districts to rent rather than own their own homes, the fact that such employees
gravitate towards their place of work, the performance of newer multifamily housing in the BioDistrict
showing robust pricing and occupancy levels, and increasing employment levels in the BioDistrict,
there is likely notable potential for residential offerings in the BioDistrict, particularly rental residential
in the near term. Estimates are shown in the table that follows.

AECOM DRAFT Project No. 18438 Page 27

Table 18: Initial Residential Program (5-Years) - New Demand
Rental Ownership
District Employees 75% 25%
BioDistrict Household Growth (2015) 75% 25%
Units Demanded
District Employees 14,250 4,750
BioDistrict Household Growth (2015) 75 25
Total 14,325 4,775

Penetration
District Employees 8% 0%
BioDistrict Household Growth (2015) 100% 100%

BioDistrict Unit Demand

District Employees 1,140 0
BioDistrict Household Growth (2015) 75 25
Total 1,215 25
Source: AECOM

AECOM estimates for around 1,200 residential units in the BioDistrict over the next 5 years. The
preponderance of these units are anticipated to come from new employees for the major institutions
in the BioDistrict. After the initial 5-year time period when the area has been more fully developed
and more abundant community and neighborhood services are available, AECOM estimates that
some number of the site employees may opt to live in owner-occupied housing nearby their place of
employment. This proportion is estimated to be in the 2%-3% range, equating to an additional
potential of roughly 500 – 700 additional owner occupied units in the BioDistrict. For the purposes of
this analysis AECOM distributes these units over years 5 to 20. Given the large number of proposed
but undeveloped residential projects in and around the site area it is unclear at this time how many of
these units would need to be in new, as yet un-proposed developments. Nevertheless, this does
provide a range of the order of magnitude of residential development related to the redevelopment of
the BioDistrict.

Table 19: Residential Units. - Increments by Period

5-Year 10-Year 20-Year
Owner Occupied 25 300 300
Rental 1,200 100 100
Increment Total 1,225 400 400
Cumulative Total 1,225 1,625 2,025
Source: AECOM
Note: Numbers may not add due to rounding

AECOM DRAFT Project No. 18438 Page 28

VI. Long-Term Stay Facilities and Meeting Space
New Orleans is a significant national tourist destination, and has a notable hotel stock, convention
space, and meeting space. With the development of the BioDistrict, there may be a need for these
ancillary resources to support the hospital and medical center visitors. However, as the table below
shows, occupancy is currently around 60% for New Orleans hotels, and adding to this market might
be unnecessary as well as difficult in the current environment. Nevertheless, long-term stay for
medical related visits generally requires a different offering and different price point than is currently
available in the New Orleans market.

Table 20: New Orleans Hotel Occupancy

2009
Occupancy 60.0%
ADR (Average Daily Rate) $132.69
RevPAR (Revenue per Available Room) $79.67
Source: PKF Hospitality Research (Excludes New Orleans East)

As opposed to strictly developing new hotel space, there may be a need for long-term stay
facilities that could be directly associated with the BioDistrict and that would not directly compete with
surrounding area hotels. There is currently only one long-term stay facility in the BioDistrict, and this
offering is notably different than comparable medical-related long-term stay facilities in other medical
districts reviewed as part of this analysis.

Table 21: Existing BioDistrict Long Term Stay Facilities

Hotel Name Address Rooms Low Rate High Rate
Clarion Inn & Suites New Orleans 1300 Canal St 157 $129.00 $399.00
Source: GCR & Associates, Inc.

AECOM worked to estimate the future demand for patients and families that may require long-
term stay facilities. Analysis started with estimates of medical visitors from outside of the
metropolitan New Orleans area, and that might use or require some sort of long-term stay facilities.
Based on interviews with current facilities in the BioDistrict, the following table illustrates these
estimates.

Table 22: Patients Visiting BioDistrict Hospitals from Outside New Orleans
Est. Percentage Outside Metro New
Hospital Orleans
Tulane Hospital 15-18%
UMC Hospital 12%
Source: Based on GCR interviews

AECOM DRAFT Project No. 18438 Page 29

 With over 1.1 million patients expected to the BioDistrict, this means that anywhere from 130,000-
200,000 could be coming from outside New Orleans based on these estimates. If some number of
these patients stay in the area overnight, there could be a new market for long-term stay facilities.
This is especially true if they are inpatients or are receiving longer-term care such as chemotherapy.
These types of scenarios generally mean that there will be family members that might accompany the
patient and require accommodation.

It is important to note that there are some other locations in the area surrounding the BioDistrict
listed in the following table. However, these facilities are also serving the Central Business District,
and may not provide the necessary proximity to the BioDistrict that would be required by hospital
visitors. Additionally, they have similar offerings and price points to the Clarion Inn and Suites in the
BioDistrict, which is unlikely to fit the needs of patients requiring long-term stay facilities.

Table 23: Long-Term Stay Facilities in Surrounding Area

Hotel Name Address Rooms Low Rate High Rate
Homewood Suites New Orleans French Qtr 901 Poydras St 166 $139 $189
Residence Inn New Orleans Downtown 345 St Joseph St 231 $139 $209
Marriott Execustay 925 Common 925 Common n/a $2,300/mo $3,200/mo
Gravier Place 837 Gravier Place n/a $1,200/mo $1,600/mo
Union Lofts 334 Carondelet 33 $1,730/mo $2,610/mo
Source: GCR & Associates, Inc.

AECOM conducted a series of case studies for comparable long-term stay offerings related to
medical districts in other parts of the country. The number of available rooms in comparable
developments range significantly from 10 to 270 in the selected developments, with an average of
roughly 110. While room rates range as well they are typically $65 to $110. Offerings are generally a
large unit (often equivalent to a studio apartment) which is combinable with other nearby unit(s).
Management is sometimes non-profit for this sort of offering. The need for these offerings is related
directly to critical-care, longer-term treatments (ex. chemotherapy), and stays range from a typical
minimum of 5 days to several months. Occupancy rates, especially from some of the smaller
facilities, can be high compared to that of a standard hotel operation.

AECOM DRAFT Project No. 18438 Page 30

Table 24: Medical Long Term Stay Facilities Case Studies
Low High
Name Location Rooms Rate Rate Medical District
Extended Stay Portsmouth Naval Medical
America Hotel Chesapeake, VA 132 $55 $75 Center
Main Stay Suites Houston, TX 92 $75 $199 Texas Medical Center
Cleveland Guest
House Cleveland, OH 231 $99 $124 Cleveland Clinic
Johns Hopkins Medical
McElderry House Baltimore, MD 40 $66 $85 Complex
IMD Guesthouse Chicago, IL 9 $40 $50 Illinois Medical District
Duke Tower Durham, NC 100 $69 $85 Duke Medical Center
Ronald McDonald University of Chicago
House Chicago, IL 22 $25 - Children's Hospital
Kahler Inn &
Suites Rochester, MN 271 $95 $135 Mayo Clinic
Source: Facility Websites, AECOM Interviews

The final point of analysis compares the capacity of long-term stay facilities in the BioDistrict with
that of the case study medical districts. The number of units in each district is compared with the
number of inpatients (who would likely drive long-term stay facilities), hospital beds, and employment.

Table 25: Comparison of Long-Term Stay Capacity

Inpatient/LTS Hospital Beds/LTS Employment/LTS
BioDistrict 474 6 110
IMD 671 15 153
Memphis 235 5 48
UAB 121 3 26
Source: AECOM
Note: Ratios based on Major Facility Employment

In all cases in the table above, the BioDistrict falls in the middle, which makes it unclear that there
is a pressing need for new facility space. However, as noted, the type of offering currently available
through the Clarion Inn and Suites does not fit with comparable offerings related to medical districts.
The table that follows indicates the order-of-magnitude needed for offerings that are well aligned with
medical district patients. Overall, AECOM finds that between 90 and 120 units could be supportable
in the BioDistrict, given the level of expected visits from out of the area that is consistent with the case
studies indicating an average of 110 units per comparable development. This assessment dovetails
with Tulane’s proposal for a 200-bed extended stay hotel, which CBRE reports is part of Tulane’s
plans for 2021-2031 that include a new hospital along Cleveland Avenue between LaSalle and S.
Liberty Street.

AECOM DRAFT Project No. 18438 Page 31

Table 26: Initial Long-Term Stay Program (5-Years) - Net Demand

Total Inpatient Outpatient Visits 1,156,000

Out-of-Area Visitors 165,000
Overnight Percentage Estimate 5% to 10%
Overnight Visit Range Estimate 8,250 to 16,500
Overnight Visit Estimate 12,000

Site Capture 15% to 20%

Site Visits Range 1,800 to 2,400
Length of Stay (Days) 15

Site Overnight-Days Estimate 27,000 36,000

Supportable Units (@80% Occupancy) 90 120
Source: AECOM

Potentially related to hotel and long-term stay facilities is the amount of meeting space that is
available in the BioDistrict for medical conventions, industry meetings, etc. These offerings could
also be developed in conjunction with office, medical office, or one of the major institutions in the
BioDistrict as well. As part of any major medical and life sciences focused district, these types of
meetings are common, and a major source of knowledge sharing that is essential to the growth and
development of quality of care. The BioDistrict has 6,852 square feet of meeting space within 7
hotels. But there is a much larger amount of meeting space in New Orleans – 791,101 square feet,
as well as the Convention Center on the riverfront.

As later phases of development are implemented, there may be justification for dedicated
meeting space directly related to the BioDistrict that could be more synergistic with the biomedical
cluster being targeted.

Table 27: BioDistrict and New Orleans Meeting Space

Total Hotels Total Meeting Space (Sq. Ft.)
BioDistrict 7 6,852
New Orleans 144 791,101
Source: GCR & Associates, Inc. and Smith Travel Research

AECOM’s experience elsewhere with similar medical districts indicates that most conferences
and related spaces for medical districts are needed for meetings of 150 to 300 attendees on average;
however, some conferences of 500 to 600 attendees could be possible if the space were higher in
quality and larger than that which currently exists. Using a planning factor of capacity for 400 persons
per meeting, ratios of 15 sq. ft. per person for the core banquet and divisible meeting space, as well

AECOM DRAFT Project No. 18438 Page 32

as 1.5 to 2 times this figure for additional breakout and supportable meeting space, this would imply
potential for 9,000 to 12,000 sq. ft. of contiguous space in the BioDistrict. AECOM would not
recommend a facility larger than this given the notable capacity of other hotels in the market as well
as the sizable Convention Center.

AECOM DRAFT Project No. 18438 Page 33

VII. Office and Medical Office Space
Adequate office, medical office, and related manufacturing space can be a critical component in a
medical district for general support businesses that serve the district, as well as for doctors’ offices
and research organizations that might be affiliated with local hospitals. Strong research and
teaching-hospital combinations are the core way to extend the economic impact of medical districts.
The BioDistrict has a large amount of office space, but has relatively low occupancy rates, implying
that net new demand may be better accommodated in existing buildings elsewhere in the BioDistrict.
The oversupply of space appears to be less prominent for medical office in the BioDistrict.

Table 28: BioDistrict Office Space

All Office Medical
Number of Buildings 77 15
Total Rentable Building Area (RBA) 7,356,396 467,452
Occupied Square Foot 4,938,649 421,055
Occupied Percentage 67% 90%
Total Average Rate (TAR) $14.74 $14.73
Source: Transwestern Commercial Services; data provided May, 2010

In comparison to the other case studies, the BioDistrict has much less medical office than the
IMD or the Memphis Medical Center, but not UAB. All of the case study samples have a significantly
higher occupancy rate than the area under consideration.

Table 29: Case Study Office Space

IMD Memphis UAB
All Office Medical All Office Medical All Office Medical
Number of Buildings 167 58 132 47 193 33
Total Rentable Building Area (RBA) 6,985,992 3,643,481 4,781,154 2,868,877 3,127,318 263,280
Occupied Square Foot 6,785,836 3,611,166 4,720,770 2,860,062 2,916,465 254,199
Occupied Percentage 97.1% 99.1% 98.7% 99.8% 93.3% 96.6%
Total Average Rate (TAR) $16.47 $14.91 $13.95 $14.04 $16.24 $10.36
Source: CoStar 2010 QTD

Finally, when comparing the ratio of medical office space to employment, the BioDistrict falls on
the low end. Importantly, the range is significant and likely reflects the difference in orientation of
services between the various medical districts. Medical districts with a stronger focus on servicing
the local populations and fewer opportunities for research and development, education, and specialty
care offerings are less likely to require greater capacity for office, medical office, and related
manufacturing, research, and development space. As the case studies suggest, a successful
combination of these elements could significantly grow the amount of space demanded for medical
districts – up to 10 times that experienced in smaller medical districts and the range currently
estimated for in the BioDistrict.

AECOM DRAFT Project No. 18438 Page 34

Table 30: Comparison of Medical Office Space Capacity
Medical/Employment
BioDistrict 26
IMD 194
Memphis 251
UAB 18
Source: AECOM
Note: Ratios based on Major Facility Employment

To understand the additional range of potential new square footage related to planned and future
medical related operations and development CBRE provided the project team with estimates based
on their experience with similar developments elsewhere. The total potential of net new demand
related to the BioDistrict could be in the order of 1.6 million sq. ft., some portion of which could likely
be accommodated in existing and unoccupied buildings or spaces.

Table 31: Office, R&D, and Manufacturing - Increments by Period

5 Year 10 Year 20 Year

R&D/ Institutional 50,000 200,000 500,000
Medical Office 25,000 25,000 50,000
Manufacturing 100,000 400,000 250,000
Increment Total 175,000 625,000 800,000
Cumulative Total 175,000 800,000 1,600,000
Source: CBRE

AECOM DRAFT Project No. 18438 Page 35

VIII. Phasing and Target Locations
The BioDistrict comprises a broad spectrum of activity in the Mid-City area as well as the fringes
of the Central Business District. Parts of this are distressed, some areas are reasonably well kept,
and the land uses themselves range from heavier industrial / utilities, higher-density office and
residential, and neighborhood density housing and retail. AECOM Economics has toured the area in
detail and has an understanding of the assets and liabilities of the target area. We have concluded
that the geographic extent of this BioDistrict is so large that, while the land plan must create a
seamless land use concept for the entire area, the somewhat soft marketplace will dictate a phased
implementation of development and clustering strategy. This development strategy must help solidify
some of the areas that are in transition, but more importantly, create magnet and core areas that can
be the basis or catalyst for redevelopment over time.

We have identified a number of development opportunities that would be feasible to pursue in

both the near- and mid-term. It is our recommendation that much of the initial community efforts –
particularly if there is a program to revitalize the lower-density housing with a targeted incentive
program – be focused between the I-10 corridor and Broad along the two or three blocks either side
of Broad. This area, too, could be a target for community-serving amenities like restaurants, as there
are several in this corridor that already have established their reputation and clientele.

Along Perdido and Gravier there are still large surface parking lots that would be excellent
locations to provide sites for both office buildings and parking garages. Likewise, close in there are
smaller lots along Canal closer to I-10 that have some stability now and would be appropriate for
smaller medical offices and infill development. There has been some discussion about the concept of
a meeting facility or medical mart. Close to the hospital activities and planned development in the
vicinity of Prier and Tulane are sites that could be centrally located to the core activity of the medical
district. Charity Hospital has also been mentioned as a potential site for a mixed-use development
which could include meetings and mart uses.

The area around Loyola / Perdido / Gravier would be a good location for mixed-use residential
development that could be combined with ground-floor retail and have a potential link to the
Superdome redevelopment plan. This area would help to reinforce the plans of the DDD for this area,
bring 24/7 activity to this part of the downtown, and allow residents to tap into the amenities of the
Warehouse District, French Quarter and Downtown and be part of the larger picture for the
Superdome plan.

A key decision concerning land use and development is Charity Hospital. It is centrally located
within the BioDistrict’s core and would be instrumental in creating a new image for the whole process.
However, there are issues related to historic designation and environmental remediation – particularly

AECOM DRAFT Project No. 18438 Page 36

related costs – that must be resolved with the State before any financially viable ideas can be further
developed.

Initial development initiatives should concentrate on the activities that make the area appealing to
potential employees, particularly affordable, well-located housing that has access to transportation
and amenities – as well as the development that will facilitate the business activity in the BioDistrict
such as medical office, support medical services and daytime retail.

AECOM DRAFT Project No. 18438 Page 37

IX. Incentive Options
This section includes selected incentive programs that may be applied in the BioDistrict.

Federal Incentive Options

Historic Tax Credits

Federal tax credits of up to 20% are available for rehabilitation of properties placed on the
National Historic Register.

New Markets Tax Credits

The federal government has funded the NMTC program since 2002, and currently, there is $3.5
billion allocated annually through the program. NMTC awards are given to qualifying banks and
finance institutions that, in turn, make them available for projects meeting certain criteria. NMTC is an
especially attractive opportunity in Louisiana because of the large number of State enterprises who
have received allocations after hurricanes Katrina and Rita. In addition, there is a State NMTC
program funded with $200 million. The NMTC investments are targeted for use by projects providing
the following in qualifying Low Income Community census tracts:

• Create or maintain jobs

• Increase wages

• Finance or assist Low Income Community businesses

• Finance or assist minority or women owned businesses

• Finance or assist community benefit businesses or community benefit real estate projects

• Facilitate wealth creation or asset accumulation

• Provide goods or services

• Create environmentally sustainable outcomes

• Finance real estate businesses which reduce rent or provide more flexible leases

NMTC financing can be used as equity for debt financing and is transferable. The credits can be
used on top of other sources of incentive financing. Many times, developers will piggy-back NMTC’s
on top of historic credits at both the federal and state levels. The credit is applied to the investor’s
federal income taxes. The amount of the credits is up to 39% at the federal level and additional 25%
from the State. Local banks or Community Development Entities with NMTC allocations include
Capital One, Whitney, Morgan Keegan, and others.

AECOM DRAFT Project No. 18438 Page 38

State Incentive Options

Louisiana businesses that create jobs in specific qualifying areas may be eligible for state
incentive options. The areas designated for EZ incentives usually exhibit high unemployment, low
income and/or substantial percentage of residents receiving government assistance. Administered by
Louisiana Economic Development’s Business Incentives Services, The Board of Commerce and
Industry is tasked with application approval. The requirements for approval include creation of five
net new jobs with 35% of the net new jobs meeting one of four Certification Requirements. Advance
Notification filing is required. More information regarding the following incentive programs is available
from Louisiana Economic Development.

Enterprise Zone

The Enterprise Zone (EZ) program provides Louisiana Income and Franchise tax credits for
Louisiana businesses that create jobs in specific qualifying areas. The areas designated for EZ
incentives usually exhibit high unemployment, low income and/or substantial percentage of residents
receiving government assistance. Administered by Louisiana Economic Development’s Business
Incentives Services, The Board of Commerce and Industry is tasked with application approval. The
requirements for approval include creation of five net new jobs with 35% of the net new jobs meeting
one of four Certification Requirements. Advance Notification filing is required.

• The benefits of the EZ program include the following:

• A one-time tax credit up to $2,500 for each net new job created

• Tax rebate for materials, furniture, fixtures, machinery, and equipment purchased and used
on the EZ site and delivered during the construction period

• OR a 1.5% Refundable Investment Tax Credit based on capitalized investment for new
projects/construction

Quality Jobs Program

This program provides a cash rebate to encourage “targeted businesses” to locate in Louisiana.
The rebate amount is equal to 5% or 6% of annual gross payroll for new direct jobs for up to 10 years.
In addition, businesses can also receive a 4% sales/use tax rebate on capital expenditures. Eligible
industries include the following:

• Biotechnology or Biomedical

• Micro-manufacturing

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 • Software, Internet, and Telecommunications

• Environmental Technology

• Food Technology

• Advanced Materials

• Manufacturing

• Oil and Gas Field Services

• Businesses with 50% of sales from out-of-state

In addition, businesses receiving Quality Jobs assistance must create jobs and offer basic health
plans to employees. The benefits of the program are similar to those offered under the EZ Program
and include payroll benefits, sales/use tax rebates, and investment tax credits. Businesses may not
apply for aid from both programs.

Restoration Tax Abatement

Designed to entice “expansion, restoration, improvement, and development of existing

commercial structures and owner-occupied residences”, the Restoration Tax Abatement program is
specifically targeted in Downtown Development Districts, Economic Development Districts, and/or
Historic Districts. Enterprise Zones and Economic Development Zones do not qualify. The benefits
offered include a 5-year deferred property tax assessment on renovations and improvements that
may be renewed for a second 5-year period. The tax abatement is transferable if the property is sold.

Industrial Tax Incentive Program

The Industrial Tax Incentive Program is designed by the State to entice manufacturers new to
Louisiana or expanding their operations within the State. The program offers property tax abatement
on new investment and capital additions for up to 10 years. The exemption applies to “all
improvements to land, buildings, machinery, equipment, and other property which is part of the
manufacturing process.”

Research and Development Tax Credit

The Research and Development Tax Credits are available to existing businesses with operating
facilities within the State to implement or continue R&D activities. The credits provided are
transferable but must be used in one of fifteen targeted industries. Benefits include tax credits up to
8% of state income and corporation franchise taxes. In addition, there is a Technology
Commercialization Credit and Jobs Program currently being debated in the Legislature.

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Industry Assistance Program

This program provides tax exemption to manufacturers who give preference to Louisiana
suppliers, engineers, contractors, and labor provided that the preferential treatment does not add
expense. The applicant must demonstrate that the tax credit will assist in maintaining current
employment levels and invest in their operation in the future.

Tax Equalization Program

This program is designed to attract, retain, and promote expansion of manufacturing companies,
headquarters, and warehousing and distribution enterprises to Louisiana. The benefit provided is the
equalization of the overall tax burden between Louisiana and a competing non-Louisiana site.

Other Louisiana Incentives

In addition to the incentive programs listed above, Louisiana offers the following programs for
small businesses and entrepreneurs:

• Louisiana Motion Picture and Incentive Program – The program offers state sales and use
tax rebates for motion picture productions which spend more than $1 million within Louisiana

• Louisiana Digital Media Incentive program – The program offers a similar structure and credit
level to the Motion Picture incentive program

• Louisiana Music Tax Credit – Incentive program offers tax credits up to 25% for music
performed, composed, or recorded by Louisiana musicians or music released or published by
a Louisiana-based company

• Microenterprise Development Program – provides economic literacy training, mentoring, and

financial counseling to underserved urban and rural communities

• Small and Emerging Business Development Program (SEBD) – provides new companies
with marketing and accounting assistance

• Bonding Assistance Program (BAP) – provides small and emerging businesses with
resources to help bid on private and public jobs

• Mentor Protégé Tax Credit Program – provides technical assistance to emerging construction
businesses by offering tax credits to Mentor companies

• Louisiana Contractors Accreditation Institute – provides construction management education

and assistance

• Hudson Initiative – educational program offering assistance for state procurement and public
contracts

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 • Urban Entrepreneur Partnership – national collaboration providing assistance to
entrepreneurs to foster housing, job creation, and entrepreneurial development and research

• Matching Grants Program – provides assistance to eligible economic development

organizations for marketing and recruitment in the form of Regional Awards and Matching
Grant Awards

Local Incentive Options

Façade grants

In current form, AECOM understands that grants are available up to $75,000 each. AECOM believes
that façade grant programs can be a useful tools in downtown redevelopment programs.

In addition to the grant/loan program, other cities have instituted façade donation programs. The
façade donation program would involve property owners donating their façades to local or state
historical preservation entities who would then be responsible for upgrading and maintaining them to
an agreed upon standard. This serves two main purposes: upgrade of the aesthetic appeal of the
area and preservation of valuable historical assets.

Tax Increment Financing (TIF)

Tax Increment Financing (TIF) is an incentive tool that has been used frequently in similar
development campaigns. Generally, TIF is used as a tool to spur development (especially retail
development) in depressed areas. The State of Louisiana has a unique TIF statute in that the
property tax rate in Louisiana is quite low. Normally, TIF would involve the capture of increased
property taxes for re-use in a designated area. Bonds are issued to provide a site, infrastructure, etc.
Development occurs, and the new property and sales taxes pay off the bonds. Tax revenues from
this point on go to the appropriate government sources. However, in Louisiana, because of the
smaller increment available from property tax TIF, sales tax TIF is also necessary. Sales tax TIF is
historically more volatile than property tax TIF. The main misunderstanding in the community
regarding TIF is that there is a diversion of current taxpayer dollars. This is not true. The current
level of property and sales taxes in the designated area is not affected. Only the increase in tax
levels causes a portion of the increased taxes to be captured within the district. In short, properly
designed and implemented TIF creates development where none would occur without it and
increases the tax base for use in the community.

The keys to effective TIF are design and implementation. Historically, TIF is most effective when
the following issues are addressed properly:

• TIF is used to spur development that would not occur without it

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 • TIF areas are small and targeted

• TIF zones are properly managed and audited

• TIF oversight committees are populated with non-political development advocates who,
ideally, do not have personal financial interests within or bordering the designated area

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X. General & Limiting Conditions
Every reasonable effort has been made to ensure that the data contained in this report are
accurate as of the date of this study; however, factors exist that are outside the control of AECOM
and that may affect the estimates and/or projections noted herein. This study is based on estimates,
assumptions and other information developed by AECOM from its independent research effort,
general knowledge of the industry, and information provided by and consultations with the client and
the client's representatives. No responsibility is assumed for inaccuracies in reporting by the client,
the client's agent and representatives, or any other data source used in preparing or presenting this
study.

This report is based on information that was current as of April 2010 and AECOM has not
undertaken any update of its research effort since such date.

Because future events and circumstances, many of which are not known as of the date of this
study, may affect the estimates contained therein, no warranty or representation is made by AECOM
that any of the projected values or results contained in this study will actually be achieved.

Possession of this study does not carry with it the right of publication thereof or to use the name
of "AECOM" or “Economics Research Associates” in any manner without first obtaining the prior
written consent of AECOM. No abstracting, excerpting or summarization of this study may be made
without first obtaining the prior written consent of AECOM. Further, AECOM has served solely in the
capacity of consultant and has not rendered any expert opinions. This report is not to be used in
conjunction with any public or private offering of securities, debt, equity, or other similar purpose
where it may be relied upon to any degree by any person other than the client, nor is any third party
entitled to rely upon this report, without first obtaining the prior written consent of AECOM. This study
may not be used for purposes other than that for which it is prepared or for which prior written
consent has first been obtained from AECOM. Any changes made to the study, or any use of the
study not specifically prescribed under agreement between the parties or otherwise expressly
approved by AECOM, shall be at the sole risk of the party making such changes or adopting such
use.

This study is qualified in its entirety by, and should be considered in light of, these limitations,
conditions and considerations.

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