The largest new hospital development in the United States is the New Orleans 70 acre $2 billion combination of a new Veterans Administration hospital and, just on the other side of South Galvez Street, the new University Medical Center that will replace Charity Hospital which was rendered obsolete by Hurricane Katrina and time.

University Medical Center is 6 Teaching Schools

The University Medical Center will be anchored by LSU, Tulane, Dillard, Xavier, SUNO, Delgado, and other healthcare training schools throughout South Louisiana and will combine academics and science to provide comprehensive treatment and trauma services as well as graduate medical education programs for future generations. Featuring the most advanced technology available, diagnostic and treatment areas of the new, 424-bed UMC, operated by a non-profit governing board, will encompass a wide range of services focused on creating healing environments that support patients and their families.

 Map of VA and UMC Hospitals

map street tulane avenue hospitals

map street tulane avenue hospitals


Situated on 34 acres on a square bounded by Canal Street, South Galvez, Tulane Avenue and South Claiborne Avenue, the University Medical Center will be the cornerstone of a commercial real estate biomedical district that will attract the world’s top medical professionals while delivering high quality health care, advanced research and Level One trauma care.

University Medical Center Competitive Advantage

In addition to the inpatient services and trauma care, the University Medical Center will host a cancer program including radiation therapy and a chemotherapy clinic; outpatient surgery; outpatient imaging; and rehabilitation services. Treatment areas are being designed to maximize collaboration with the adjacent Veterans Affairs Medical Center by creating efficiencies through the location of adjacent diagnostic services and parallel outpatient services. The University Medical Center is sized to meet projected patient volumes and reasonable growth that accommodates the clinical needs as well as the medical education needs of the state. Filled with natural light, the facility will be easily accessible for patients walking, in wheelchairs, and in beds because of an intuitive layout that includes an easily understood signage system.

The new University Medical Center will be built with structural steel and designed to meet flood-resistant construction standards. First floors of hospital and medical office buildings that house critical functions will be built 22 feet above sea level, well beyond the five-foot Base Flood Elevation for the hospital site. Storm-proofing technology, including robust emergency electrical backup power, will allow the medical center to withstand up to Category Three hurricanes as well as tornadoes, nuclear or biological accidents, physical attacks, fires, chemical, biological and radiation hazards, all while remaining in operation for up to a week with virtually no outside support or backup supplies.

Communication systems for the University Medical Center will consist of active electronic patient record systems that are part of dynamic Local Area and Wireless Data networks that include a variety of telephone, teleconferencing, and nurse call systems. The electronic records system also will connect to Louisiana’s new statewide electronic patient records system, which is in its initial deployment stage.

The combined University Medical Center and VA medical centers are expected to generate an annual $1.26 billion economic impact and create more than 19,700 permanent jobs in the New Orleans area.

Beyond its economic impact, however, the University Medical Center will serve as an important referral center for patients from community hospitals throughout the region. The only hospital in South Louisiana with a Level 1 Trauma Center, the University Medical Center will take on the most severely injured patients. With treatment centers for complex and high-risk patients, the University Medical Center will treat complex disease states with sophisticated healthcare services. Highly trained specialists will provide healthcare unavailable anywhere else in South Louisiana.

 UMC Run By Non-Medical Financial Contributors

The University Medical Center is run by an entity called the UMC Management Corporation with 11 members from mostly political sectors. Only 2 of the 11 board members are in the health industry, with the balance on the board due to large financial donations to the nominating entity. For example:

Here is the list of board members:

Governor’s Selection

T.A. “Tim” Barfield

Louisiana Secretary of Revenue

Baton Rouge, LA


Donald T. “Boysie” Bollinger

Chairman/CEO Bollinger Machine Shop Shipyard,Inc.

Lockport, LA


Dr. Christopher Rich

Mid--?State Orthopedic & Sports Medicine Center

Alexandria, LA


David R. Voelker

Frantzen--?Voelker--?Conway Investments

New Orleans, LA


LSU’s Selection


Elaine D. Abell

Fountain Memorial Funeral Home and Cemetery

Lafayette, LA


Dr. Byron R. Harrell

Baptist Community Ministries

New Orleans, LA


Stanley Jacobs


Jacobs, Manuel & Kain

New Orleans, LA


Robert “Bobby” Yarborough

Manda Fine Meats

Baton Rouge, LA


Tulane’s Selection:


Darryl D. Berger

The Berger Company

New Orleans, LA


Xavier’s Selection:

Alden J. McDonald, Jr.

Liberty Bank & Trust

New Orleans, LA


Delgado's Selection:


Mr. Harold Gaspard

Dean, Allied Health Division

Delgado Community College

New Orleans, LA

Technology has taken a giant leap forward the last few years by expanding the traditional tool of demographic research into an analysis of lifestyles and consumer spending behavior. The old school strategy was to look at population count and income and age to determine a good location for a business, but new school tools such as Leakage Factor, Retail Gap Analysis and Tapestry Lifestyle Analysis take decision making to a higher level and reduce the risk of failure.

This report examines how these new technologies help to make better real estate decisions. Recently, I was asked to market 10 acres of land in New Orleans which was zoned RM-4, the highest density available for multi-family use, but feedback from neighborhood associations and the city council representative showed opposition to new apartment development so I utilized the technology of the Site To Do Business Database on the website to generate sophisticated information on the best use of this 10 acre tract. I was able to examine the lifestyle of the residents in the area and how they spent their money to determine what businesses are needed.

When we analyze the target area population, we look at demographics within a radius: usually 3 miles, 5 miles and 10 miles; however, a better approach is to examine drive times. Drive time analysis provides more useful information when there are natural boundaries to an area; for example, north of New Orleans is Lake Ponchartrain and east of New Orleans is a wetlands area and Wildlife Preserve. The map below is an example of 5 minute (blue), 10 minute (brown) and 15 minute (green) drive times from the target 10 acre site, located in the eastern part of New Orleans.

Demographics - Old School

Within these drive times, we can examine the population density, per capita and household income, home ownership and age brackets. This helps us determine if higher end businesses such as Brooks Brothers might thrive from a higher income population or if Dollar Generals are needed to serve a lower income population. For multi-family, we can examine how many people rent and are in their 20’s, the prime apartment renting age. For example, in the 5 minute drive time from the target 10 acre site, population from 2000 to 2009 declined from 67,717 to 32,391 but is expected to grow to 45,693 by 2014, with renter housing growing from 22% to 32%.

We can further break down the population into income brackets, since a high weighting in one bracket might skew the average annual household income of $40,743. The household growth rate from 2009 to 2014 is among the highest in the U.S. at 7.28%.


The forecasted annual population growth rate from 2009 to 2014 within a 5 minute drive time is 7 times the state and national average (see chart below, Trends 2009-2014).

The 2009 Household Income Pie Chart shows the percent of the population according to income brackets, and The 2009 Population By Race Shows five race categories as well as multiple categories.

We can compare the percent of population by age to the national average. In the target area, we have a lower than average percent of 35-54 year olds but a higher than average percent of under 24 year olds.

Drive times provide a snapshot but we also need to examine future growth of population and income. Within the 5 minute drive time, the population is estimated to grow from 35,217 in 2010 to 45,824 by 2015, and the median household income in 2010 was $43,486. Within a 10 minute drive time, the population is estimated to grow from 114,408 in 2010 to 146,207 by 2015.

Traffic Count

The 2008 traffic study by the Louisiana Department of Transportation ( showed Interstate 10 traffic in New Orleans East at 34,000 cars per day, and 2010 estimate from Datametrix ( is 30,000 cars per day.

Demographics – New School

The Market Potential Index (MPI) is a new tool that measures the relative likelihood of the adults in households in the specified trade area to exhibit certain consumer behavior or purchasing patterns compared to the United States as a whole.  An MPI of 100 represents the U.S. average, and a number higher than this means a higher propensity to spend in that category, compared to the national average.

Two conclusions can be drawn from consumer spending data. First, the MPI exceeds 100 on seafood, chicken or turkey in both the 5 and 10 minute drive time, meaning a higher than average propensity to spend on these items. Second, the population is high enough to support at least four supermarkets, using the assumption that a 50,000 square foot supermarket needs a population of approximately 8,000 residents.

We can zero in on how much money residents spend annually in specific categories and a future grocery store needs to know how much money is spent in the Food at Home category.  Within a 5 minute drive time, total amount of money spent on food at home exceeds $39,000,000, and within a 10 minute drive time exceeds $111,000,000, but we also drill down in the data to determine what types of items a supermarket could sell to have a competitive advantage. For example, within a 10 minute drive time, there is $38,000,000 spent on snacks for food at home.

Leakage By Industry Subsector- 5 Minute Drive Time

Using industries categorized by NAICS code, we can examine where demand exceeds supply which shows a need for a business to fill a void. We can determine supply by estimating sales to consumers by establishments, while excluding sales to businesses. We forecast demand, or retail potential, by estimating the expected amount spent by consumers at retail establishments. Supply and demand estimates are in current dollars. The gap between demand and supply is called the Leakage Factor, which presents a snapshot of retail opportunity.  This is a measure of the relationship between supply and demand that ranges from +100 (total leakage) to -100 (total surplus). A positive value represents ‘leakage’ of retail opportunity outside the trade area. A negative value represents a surplus of retail sales, a market where customers are drawn in from outside the trade area.

Developed in cooperation with Canada and Mexico, NAICS represents one of the most profound changes for statistical programs focusing on emerging economic activities. The system was developed using a production-oriented conceptual framework, grouping establishments into industries based on the activity in which they are primarily engaged. NAICS moves down in detail from Sector to Subsector to Group then to Industry. This is an improvement over the previous method, the 1987 Standard Industrial Classification (SIC) system.

The chart below shows the Leakage Factor by NAICS Subsector for the target area. The highest Leakage Factor shows new businesses needed are:

  1. Miscellaneous Store Retailers-florists, office supply, pet shops
  2. Furniture Stores
  3. Sporting Goods Stores
  4. Clothing Stores
  5. Food Stores


Retail Gap by Industry Group- 5 Minute Drive Time

The Leakage Factor shows what businesses are needed by the percent that demand exceeds supply, but also shows the dollar amount of the unfulfilled demand. This can be used to forecast sales for a business coming into the area. The Retail Gap represents the difference between Retail Potential and Retail Sales. Retail establishments are classified into 27 industry groups in the Retail Trade sector, as well as four industry groups within the Food Services & Drinking Establishments subsector. These data are based upon national propensities to use various products and services, applied to local demographic composition.  Usage data were collected in a nationally representative survey of U.S. households, and forecasts for 2010 and 2015 are prepared by ESRI. Table Six shows industry groups with the highest sales (Retail Gap) in the target area are:

  1. Grocery Stores
  2. Food & Beverage Stores
  3. Clothing Stores
  4. Furniture Stores

Grocery Store Sales By Zip Code

Retail Marketplace Reports are available by theme, such as grocery store sales, and we can drill down to county, city, zip, census tract and block group (the smallest unit of measurement of census data). Themes can get very specific, even down to a map of the population that used aluminum foil the last six months. The map below shows grocery store sales by zip codes south and west of the target area are above $28 million and since there is only one Winn Dixie store in that area, we know the market will bear additional stores. We can use information on expected sales to right-size building square footage and land area.

Tapestry – 5 Minute Drive Time

Tapestry identifies neighborhood segments and describes the socioeconomic quality of the immediate neighborhood.  The Index is a comparison of the percent of households or population in the area, by Tapestry segment, to the percent of households or population in the United States, by segment.  An index of 100 is the U.S. average. The top two Tapestry Segments are:

 Family Foundations

Family is the cornerstone of life in Family Foundations communities. A family mix of married couples, single parents, grandparents, and young and adult children populate these small, urban neighborhoods located in large metropolitan areas, primarily in the South and Midwest. This market represents stability. Hardly any household growth has occurred since 2000; these neighborhoods experience little turnover. The median age is 39.0 years; the median household income is $46,308. Most households are single-family structures built before 1970, occupied by owners. Many residents are members of church boards or religious clubs and participate in fund-raising. Basketball is a favorite sport; residents play it, attend professional games, watch games on TV and listen to games on the radio. They watch courtroom TV shows, sports, and news programs on TV and listen to gospel, urban, and jazz radio formats.

 Metro City Edge

Metro City Edge residents live in older, suburban neighborhoods of large, metropolitan cities, primarily in the Midwest and South. This market is home to married-couple, single-parent, and multigenerational families. The median age is 29.4 years, and the median household income is $32,291. Nearly half of employed residents work in the service industry. Most households live in single-family dwellings; 14 percent live in buildings with two to four units, many of them duplexes. Homeownership is at 54 percent, and the median home value is $78,213. Prudent shoppers, residents buy household and children's items at superstores and wholesalers. They enjoy watching TV (especially sitcoms and courtroom TV shows), going to the movies, visiting theme parks, roller skating, and playing basketball. They read music, gardening, and baby magazines and listen to urban and gospel radio.

Tapestry – 5 Minute Drive Time

The Top Tapestry Segments Pie Chart shows that the Family Foundations segment is the highest rank in the target area at 21.80% of the population, and we can compare that to the national average at .80% in the table and chart below. The top two segments include lifestyle traits such as playing basketball and watching courtroom TV, so we can tailor our advertising around that media rather than newsprint.


Our use of technology has delivered important information that will assist us in determining the best businesses for the target 10 acre site while reducing risk of business failure. We have progressed from simply knowing the population count, age and income to knowing detailed information about who lives in the target area, how they spend their money and what businesses are missing that could satisfy that demand. We have been able to conclude the target area has the highest unfulfilled demand for furniture, sporting goods, clothing and food stores, and we have been able to forecast the total sales of a future grocery store and can plan our capital expenses such as store size accordingly. We know what makes the nearby residents unique and where they spend more of their money compared to the average consumer, so we can also lower our inventory costs by stocking the goods with the highest demand. We can also reduce our advertising costs and reduce waste by targeting the media that our customers will use. These new school tools are available to anyone facing a real estate decision, not just the Walmarts of the world, and all you have to do is simply collect the data from a reliable online source and put some thought into the needs of the customers you will serve.



“A sum given by the buyer to the seller in connection with a contract to sell is regarded to be a deposit on account of the price, unless the parties have expressly provided otherwise. If the parties stipulate that a sum given by the buyer to the seller is earnest money, either party may recede from the contract, but the buyer who chooses to recede must forfeit the earnest money, and the seller who so chooses must return the earnest money plus an equal amount. When earnest money has been given and a party fails to perform for reasons other than a fortuitous event, that party will be regarded as receding from the contract.”

Need To Know #1: After the due diligence period, the earnest money should become non-refundable, but if the purchaser subsequently wants to cancel and the if the deposit is called earnest money in the purchase agreement, the purchaser can get out of the contract by forfeiting the earnest money. If the purchase agreement does not specify earnest money but uses the term deposit, the purchaser not only loses the deposit but can be sued for specific performance. The earnest money is deemed stipulated damages.

“If the terms of the sale provide for a deposit by the purchaser, this deposit shall not be considered earnest money and does not give the purchaser the right to withdraw from the sale by forfeiting the deposit. However, if the property is resold at the risk of the first purchaser, and a loss is occasioned by such resale, the party provoking the sale may proceed by rule against the first purchaser and the officer conducting the sale to have the deposit turned over to the plaintiff in rule, to the extent of such loss. ”

Need To Know #2: If the seller defaults, the penalty is twice the earnest money; if the buyer defaults, they simply lose their earnest money. The Purchase Agreement spells out what a default is.

If the purchaser wants to terminate the contract within the due diligence period and get the earnest money back, the broker or title company holding the earnest money will require a form to be signed by both the seller and the purchaser. The Louisiana Real Estate Commission states that a broker cannot give a deposit back to a purchaser without a signed cancellation of all parties to the contract. If all parties do not sign the cancellation then a dispute situation arises and the Louisiana Real Estate Commission procedure must be followed; however, the Real Estate Commission does not want to be the institution resolving disputes and the deposit is placed with a court and you will have to file a lawsuit to resolve the issue.

Need to Know #3: Make sure your purchase agreement spells out how the purchaser can get his earnest money back and in how many days and who has to authorize it, as well as conditions of a default.

After the title company accepts your earnest money, they provide the following services:

  1. Determines taxes due.
  2. Determines loan payoffs.
  3. Secures a title commitment, which is a promise to issue an insurance policy on the property.
  4. Explores all public records to discover all recorded documents relating to chain of title, including a property abstract. The chain of title is the history of ownership of the property and follows the property from one person to the next through each will or deed. In Louisiana, we sometimes research back over 100 years of data to make sure there are no ex-spouses still owning the property. The abstract includes deeds, mortgages, wills, lawsuits, liens, tax sales, and all the names of the owners, how long they owned it, and any recorded price they paid for it. The abstract also shows conveyances and encumbrances which can limit developing or changing the property.
  5. Reviews the lender’s requirements and prepares all the paperwork, including the HUD (Housing and Urban Development) closing statement which details the costs for the seller and purchaser.

Need To Know #4: Ask the seller for his title policy. It might provide your closing attorney with information that will save time and will also disclose what the seller paid for the property.

Need to Know #5: In Louisiana, the title insurance is paid by the purchaser, which might be different than other states like Texas where the seller pays the title insurance.

Need To Know #6: In Orleans Parish, property taxes are paid ahead, but in Jefferson Parish, property taxes are paid for the previous year. The taxes are always pro-rated.

Need To Know #7: During the inspection period, secure flood, hazard and general liability insurance that will be required by your lender before closing.

Need To Know #8:New Orleans charges a $325 transfer fee which is normally paid by the purchaser but can be detailed in the purchase agreement as to who will pay. Sometimes purchase agreements are vague as to closing costs so before you sign, revise it to itemize each closing cost and who pays what. Typical closing costs are:

  1. Commission-usually 6% of the sale price, paid by seller but may differ per the purchase agreement.
  2. Lender origination fee-usually 1% of the loan, paid by the purchaser as a cost of borrowing the funds.
  3. Appraisal fee-usually $2,000 to $4,000 for commercial property since it is more complex, paid by the purchaser as a cost from the bank to make the loan.
  4. Flood certification-usually $20, paid by the purchaser.
  5. Environmental Report-a Phase One costs $2,000 to $4,000, and includes research for a written report such as nearby environmental sites but no actual sampling of soil, air or groundwater. A Phase Two can cost $10,000 to $20,000 because it includes collecting samples and measuring for contaminants. A Phase Three includes remediation and can easily exceed $100,000 and take 1-3 years.
  6. Lender’s title insurance-usually $3.50 to $4 per $1,000 of insured value.
  7. Closing fee- usually $500 for the time of the closing attorney to prepare the paperwork.

Need To Know #9: There are two types of title insurance, lender’s and owner’s policies. Lender’s policies are required by every public mortgage lender to protect only the lender against problems, but do not protect a property owner. Buyers must separately purchase an owner’s policy which covers:

  1. Sudden appearance of unknown heirs claiming an interest in the property.
  2. Forged deeds or impersonations.
  3. Incorrect legal descriptions.
  4. Improper recording of deeds.

In summary, knowing these 9 things will help you avoid surprises, give you the upper hand in any re-negotiation you may have to undertake, and help you work toward a smooth closing which moves your project forward.

[1] LA Civ Code 2624  Art. 2624. Deposit, earnest money.

[2] LA Rev Stat § 13:4361 , §4361. Deposit not earnest money; rule to turn over deposit.


[4] Chapter 29 #2901 of the Louisiana Real Estate Commission rules and regulations.

Louisiana Commercial Realty

Commercial Real Estate Experts
Robert Hand, MBA, CCIM, SIOR
Licensed in Louisiana & Mississippi
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