News Summary
New Orleans’ office market is hit hard as both the Hancock Whitney Center and 400 Poydras Street face default on their debt, causing Hertz Investment Group to lose control of these assets. High vacancy rates, particularly following Shell Oil’s planned relocation, threaten to worsen the situation, pushing occupancy levels below 80%. The CMBS delinquency rate has surged, reflecting broader challenges in the commercial real estate sector. Future developments may include mixed-use conversions, but the outlook remains uncertain amid economic struggles.
New Orleans is facing significant concerns over its office market as both the Hancock Whitney Center, Louisiana’s tallest building, and the 400 Poydras Street building have officially entered default on their debt. This situation, which emerged on Monday, October 6, 2025, has resulted in Hertz Investment Group, the Los Angeles-based owner of these properties, losing day-to-day control due to distressed commercial mortgage-backed securities (CMBS) loans.
The Hancock Whitney Center, completed in 1972, is a 51-story structure that is currently facing a critical decline in occupancy. Shell Oil, a major tenant occupying a substantial portion of the building, is preparing to vacate its offices as it transitions to a new headquarters in the River District. This move is expected to be completed in early 2027 and could leave over 500,000 square feet of vacant space in the Hancock Whitney Center, which currently accounts for approximately one-third of the building’s tenant base.
Defaults on the mortgages for both the Hancock Whitney Center and the 32-story Poydras Tower began in July 2025. At their peak in 2024, the Hancock Whitney Center was 82% leased, while 400 Poydras had a leasing rate of 89%. Now, both properties require fresh equity from new owners to address their financial concerns.
Office Market Challenges
The office leasing activity in New Orleans has remained sluggish, with persistently high vacancy rates driving down property values and tax revenues. Overall, the CMBS delinquency rate reached a record high of 7.29% in August 2025, with the office sector experiencing an even higher delinquency rate of 11.66%. This situation reflects a nationwide trend in the commercial real estate market, where defaults have surged, particularly among buildings financed through CMBS.
The economic struggles of Hertz Investment Group, led by William “Zev” Hertz following the death of founder Judah Hertz in 2021, have intensified due to the post-pandemic decline in office demand. Other office properties under Hertz’s ownership in cities such as Pittsburgh, Richmond, and Cleveland have also defaulted, leading to several facing potential foreclosure risks. In December 2024, bondholders compelled the liquidation of portions of Hertz’s U.S. property portfolio, further exacerbating the firm’s challenges.
Potential Future Developments
As the Hancock Whitney Center faces mounting vacancies, some commercial real estate experts speculate on a potential future that may involve partial conversion of the building into mixed-use space, offering alternative uses and revenue opportunities. However, the overall outlook for the New Orleans office market remains bleak, with Class A office occupancy currently falling below 80%. This decline raises concerns over future property values amid increasing operational costs.
Despite these challenges, there are glimmers of optimism in the market, as demand for Class A office space remains stable. Some businesses continue to renew leases or expand their footprints in the area. Furthermore, ongoing developments and transactions in downtown New Orleans suggest a level of investor interest, with commercial transactions surpassing $200 million so far in 2025.
Over the last two decades, the New Orleans downtown landscape has experienced a 15% decrease in total office space, a consequence of the aftermath of Hurricane Katrina and changing market dynamics. The city’s response to the evolving office market will be crucial as it navigates these economic challenges and seeks to adapt to shifting demand patterns in the post-pandemic era.
Deeper Dive: News & Info About This Topic
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- Google Search: New Orleans real estate market
- New Orleans City Business: Office Market Maintains Occupancy Rates
- Google Scholar: New Orleans office market
- REBusiness Online: Shell’s Move Exemplifies Flight to Quality Trend
- Encyclopedia Britannica: New Orleans
- WWLTV: One Shell Square to Become Hancock Whitney Center
- Google News: New Orleans office buildings
Author: STAFF HERE NEWORLEANS WRITER
NEW ORLEANS STAFF WRITER The NEW ORLEANS STAFF WRITER represents the experienced team at HERENewOrleans.com, your go-to source for actionable local news and information in New Orleans, Orleans Parish, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as French Quarter Festival, New Orleans Jazz & Heritage Festival, and Essence Music Festival. Our coverage extends to key organizations like the New Orleans Chamber of Commerce and Greater New Orleans, Inc., plus leading businesses in energy, healthcare, and education that power the local economy such as Entergy, Ochsner Health, and Tulane University. As part of the broader HERE network, including HEREShreveport.com, we provide comprehensive, credible insights into Louisiana's dynamic landscape.
