Storm-Damaged New Orleans Tower Victim of Economy

Analysis: Future of office building a tall order in post-Katrina New Orleans

Just across the street from one of the success stories of New Orleans' recovery from Hurricane Katrina -- the rebuilt Superdome -- stands one of the biggest reminders of the task ahead nearly 40 months after the storm.

The former Dominion Tower, damaged by the August 2005 hurricane and little used since, has become a victim of another disaster -- the economic meltdown that's trashed the nation's financial infrastructure.

It's a familiar sight in camera shots of the New Orleans skyline taken for major sporting events. Mostly, commentators talk about the rebuilding that's going on around the area. The ex-Dominion building and the adjacent Hyatt hotel, also still vacant, are like the proverbial sore thumbs.

State officials, worried about the crash in oil prices that threatens state finances with a $1 billion-plus deficit and complications in tight bond markets, have abandoned a $45 million proposal to buy the building from its California owner and turn it into public offices and entertainment venues.

Hertz Investment Group now expects to go back to the private sector in search of tenants for the 600,000-square-foot structure. That process could take more than three years.

Occupancy rates in top-class downtown office buildings are at a reasonably high 91 percent. But with the city unable to attract a significant number of white-collar and office jobs since Katrina, the task could be a difficult one for Hertz.

Down the street, a banner hanging over a parking lot proclaims the intent of developer Donald Trump to build a new office tower. But that project, too, has seen little movement in recent months and it's unclear how the economic downturn ultimately will affect Trump's plan to build the mixed-use tower.

Sprinkled throughout the business district are high-rises and smaller office buildings that stand vacant, some seemingly untouched since Katrina flooded 80 percent of New Orleans.

With two bowl games -- and national TV audiences -- coming to New Orleans in the next few weeks, hospitality leaders hope visitors will have a good time at the Superdome and not notice the empty neighbor. Mostly, they won't.

And it's possible that, when financial conditions improve, the Dominion building and the Superdome Commission, which had taken an option to buy it, could cross paths again.

The idea of turning at least portions of the structure into an entertainment complex could dovetail well with the nearby Superdome and the New Orleans Arena, where the New Orleans Hornets of the NBA play.

New Orleans has had previous successes in finding new uses for troubled or outmoded property. A prime example is the site of the 1984 Louisiana World Exposition, built on an old riverfront wharf area, that planted the seeds for development of the massive Morial convention center and Warehouse District residential and entertainment district.

And in neighborhoods throughout New Orleans, post-Katrina pioneers and families glued to the traditions of areas they have called home for generations are at work rebuilding, and redefining the future.

In a brighter note for the downtown area, condos are sprouting in some former office buildings and the historic Fairmont hotel is undergoing renovation. The latter is expected to reopen in 2009 under new owners and with the name it carried for much of its existence, the Roosevelt.

Nearby, a $1 billion-plus plan to rebuild the Veterans Affairs hospital and a new state-run hospital also will bring change. The influx of medical professionals envisioned for the medical corridor could feed office buildings and residential conversions, and perhaps generate new retailing.

Such plans presumably would make the Hertz property more commercially attractive. Medical personnel would make ideal customers for the shops and restaurants that once operated in the building.

Toss in possibilities for clubs and other entertainment venues and the prospects brighten a bit more.

Like seemingly everything affected by Katrina, redevelopment of the former Dominion building will have to wait its time.

Still, when credit and real estate markets -- and the state's financial picture -- take a turn for the better, the Hertz property could prove to be a bargain for an investor with vision and patience.

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Remedies

It is difficult to maintain true perspective in large
affairs. I have criticised the work of Paris, and have depicted
in sombre colours the condition and the prospects of Europe. This
is one aspect of the position and, I believe, a true one. But in
so complex a phenomenon the prognostics do not all point one way;
and we may make the error of expecting consequences to follow too
swiftly and too inevitably from what perhaps are not all the
relevant causes. The blackness of the prospect itself leads us to
doubt its accuracy; our imagination is dulled rather than
stimulated by too woeful a narration, and our minds rebound from
what is felt 'too bad to be true'. But before the reader allows
himself to be too much swayed by these natural reflections, and
before I lead him, as is the intention of this chapter, towards
and ameliorations remedies and the discovery of happier
tendencies, let him redress the balance of his thought by
recalling two contrasts -- England and Russia, of which the one
may encourage his optimism too much, but the other should remind
him that catastrophes can still happen, and that modern society
is not immune from the very greatest evils.

In the chapters of this book I have not generally had in mind
the situation or the problems of England. 'Europe' in my
narration must generally be interpreted to exclude the British
Isles. England is in a state of transition, and her economic
problems are serious. We may be on the eve of great changes in
her social and industrial structure. Some of us may welcome such
prospects and some of us deplore them. But they are of a
different kind altogether from those impending on Europe. I do
not perceive in England the slightest possibility of catastrophe
or any serious likelihood of a general upheaval of society. The
war has impoverished us, but not seriously -- I should judge that
the real wealth of the country in 1919 is at least equal to what
it was in 1900. Our balance of trade is adverse, but not so much
so that the readjustment of it need disorder our economic
life.(1*) The deficit in our budget is large, but not beyond what
firm and prudent statesmanship could bridge. The shortening of
the hours of labour may have somewhat diminished our
productivity. But it should not be too much to hope that this is
a feature of transition, and no one who is acquainted with the
British working man can doubt that, if it suits him, and if he is
in sympathy and reasonable contentment with the conditions of his
life, he can produce at least as much in a shorter working day as
he did in the longer hours which prevailed formerly. The most
serious problems for England have been brought to a head by the
war, but are in their origins more fundamental. The forces of the
nineteenth century have run their course and are exhausted. The
economic motives and ideals of that generation no longer satisfy
us: we must find a new way and must suffer again the malaise, and
finally the pangs, of a new industrial birth.
This is one
element. The other is that on which I have enlarged in chapter 2
-- the increase in the real cost of food and the diminishing
response of Nature to any further increase in the population of
the world, a tendency which must be especially injurious to the
greatest of all industrial countries and the most dependent on
imported supplies of food.

But these secular problems are such as no age is free from.
They are of an altogether different order from those which may
afflict the peoples of Central Europe. Those readers who, chiefly
mindful of the British conditions with which they are familiar,
are apt to indulge their optimism, and still more those whose
immediate environment is American, must cast their minds to
Russia, Turkey, Hungary, or Austria, where the most dreadful
material evils which men can suffer -- famine, cold, disease,
war, murder, and anarchy -- are an actual present experience, if
they are to apprehend the character of the misfortunes against
the further extension of which it must surely be our duty to seek
the remedy, if there is one.
What then is to be done? The tentative suggestions of this
chapter may appear to the reader inadequate. But the opportunity
was missed at Paris during the six months which followed the
armistice, and nothing we can do now can repair the mischief
wrought at that time. Great privation and great risks to society
have become unavoidable. All that is now open to us is to
redirect, so far as lies in our power, the fundamental economic
tendencies which underlie the events of the hour, so that they
promote the re-establishment of prosperity and order, instead of
leading us deeper into misfortune.

We must first escape from the atmosphere and the methods of
Paris. Those who controlled the conference may bow before the
gusts of popular opinion, but they will never lead us out of our
troubles. It is hardly to be supposed that the Council of Four
can retrace their steps, even if they wished to do so. The
replacement of the existing governments of Europe is, therefore,
an almost indispensable preliminary.

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The Relation of the Old World to the New

The accumulative habits of Europe before the war were the
necessary condition of the greatest of the external factors which maintained the European equipoise.

Of the surplus capital goods accumulated by Europe a
substantial part was exported abroad, where its investment made
possible the development of the new resources of food, materials,
and transport, and at the same time enabled the Old World to
stake out a claim in the natural wealth and virgin potentialities
of the New. This last factor came to be of the vastest
importance. The Old World employed with an immense prudence the
annual tribute it was thus entitled to draw. The benefit of cheap
and abundant supplies, resulting from the new developments which
its surplus capital had made possible was, it is true, enjoyed
and not postponed. But the greater part of the money interest
accruing on these foreign investments was reinvested and allowed
to accumulate, as a reserve (it was then hoped) against the less
happy day when the industrial labour of Europe could no longer
purchase on such easy terms the produce of other continents, and
when the due balance would be threatened between its historical
civilisations and the multiplying races of other climates and
environments. Thus the whole of the European races tended to
benefit alike from the development of new resources whether they
pursued their culture at home or adventured it abroad.

Even before the war, however, the equilibrium thus
established between old civilisations and new resources was being
threatened. The prosperity of Europe was based on the facts that,
owing to the large exportable surplus of foodstuffs in America,
she was able to purchase food at a cheap rate measured in terms
of the labour required to produce her own exports, and that, as a
result of her previous investments of capital, she was entitled
to a substantial amount annually without any payment in return at
all. The second of these factors then seemed out of danger but,
as a result of the growth of population overseas, chiefly in the
United States, the first was not so secure.

When first the virgin soils of America came into bearing, the
proportions of the population of those continents themselves, and
consequently of their own local requirements, to those of Europe
were very small. As lately as 1890 Europe had a population three
times that of North and South America added together. But by 1914
the domestic requirements of the United states for wheat were
approaching their production, and the date was evidently near
when there would be an exportable surplus only in years of
exceptionally favourable harvest. Indeed, the present domestic
requirements of the United States are estimated at more than
ninety per cent of the average yield of the five years
1909-13.(4*) At that time, however, the tendency towards
stringency was showing itself, not so much in a lack of abundance
as in a steady increase of real cost. That is to say, taking the
world as a whole, there was no deficiency of wheat, but in order
to call forth an adequate supply it was necessary to offer a
higher real price. The most favourable factor in the situation
was to be found in the extent to which Central and Western Europe was being fed from the exportable surplus of Russia and Roumania.

In short, Europe's claim on the resources of the New World
was becoming precarious; the law of diminishing returns was at
last reasserting itself, and was making it necessary year by year
for Europe to offer a greater quantity of other commodities to
obtain the same amount of bread; and Europe, therefore, could by
no means afford the disorganisation of any of her principal
sources of supply.

Much else might be said in an attempt to portray the economic
peculiarities of the Europe of 1914. I have selected for emphasis
the three or four greatest factors of instability -- the
instability of an excessive population dependent for its
livelihood on a complicated and artificial organisation, the
psychological instability of the labouring and capitalist
classes, and the instability of Europe's claim, coupled with the
completeness of her dependence, on the food supplies of the New
World.

The war had so shaken this system as to endanger the life of
Europe altogether. A great part of the continent was sick and
dying; its population was greatly in excess of the numbers for
which a livelihood was available; its organisation was destroyed,
its transport system ruptured, and its food supplies terribly
impaired.

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ForexGen | Asia Stocks Rise as Bargains Sought; Oil Slips

Asian stocks edged up in quiet trade on Friday, as investors sifted through the remains of a record sixth consecutive month of falls for global equity markets, hoping to find some bargains as 2008 winds down.

Regional shares tacked on a sixth day of gains, though optimism was in short supply with deteriorating economic prospects for China and Japan as well as simmering political risks in India, where fighting raged on in Mumbai, and Thailand, where the prime minister has declared a state of emergency.

The yield on the benchmark 10-year U.S. Treasury note was near its lowest in 50 years, below 3 percent, with bond dealers anticipating a deep and lasting U.S. recession. The cost of insurance against a U.S. government debt default, an unthinkable event, shot to record highs on Thursday, as concern grows about the scale of programs to prop up the financial system.

Oil prices fell toward $53 a barrel, ahead of a meeting of OPEC ministers in Cairo to discuss the possibility of more supply cuts as global recession reduces energy demand.

"On a range of measures, there is undoubted value to be found in many of the worlds equity markets," said Sarah Arkle, chief investment officer with Threadneedle Asset Management.

"However, with economic and earnings expectations in a state of flux, there are also significant risks and translating valuation metrics into regional preferences is highly dependent on earnings and dividend inputs," Arkle said in a note on the outlook for 2009.

Japan's Nikkei share average (Osaka:^N225 - News) rose 0.6 percent with some stocks in the technology sector, such as Kyocera Corp (Tokyo:6971.T - News), pushing the index higher for a second day.

However, shares of Panasonic Corp (Tokyo:6752.T - News), the world's largest plasma TV maker, dove 11 percent after it slashed its net profit forecast for the current business year by 90 percent.

The MSCI index of Asia Pacific stocks outside of Japan (^MIAPJ0000PUS - News) climbed 1.3 percent, putting in on track for a sixth day of gains. The index was still locked in a steep downward trend that has knocked it down about 57 percent so far this year.

Hong Kong's Hang Seng index (HKSE:^HSI - News) rose 2 percent, led by China Mobile (HKSE:0941.HK - News), whose recent gains and been lower than the broader market.

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* Providing several ways for our IB's to charge commission.
* ForexGen IB can also charge commission for each lot the traders execute.
* Moreover, ForexGen IB is able to increase the spread for all or certain clients and have ForexGen Investments rebate the difference.

In case the IB does not increase the spread or charge their clients a commission, ForexGen rebate the IB a minor predefined amount for every client's executed lot.
Commission is paid out every month.

ForexGen | Dollar Falls on Discouraging US Economic Data

Dollar falls on discouraging US economic data as German consumer confidence shows improvement
The dollar fell against the major currencies Tuesday as new data showed that American consumers curbed their spending at a rate unseen in 28 years, while a survey showed German consumer confidence improving slightly despite the wider economic gloom.

The 15-nation euro bought $1.3022 in late New York trading, up from the $1.2877 it bought late Monday. The pound jumped to $1.5440 from $1.5115, while the dollar fell to 95.65 Japanese yen from 96.85 yen.

Both the Dow Jones industrial average and Standard & Poor's 500 index rallied for a third straight session Tuesday as investors were encouraged by government plans to help unfreeze credit markets. The U.S. Treasury Department and the Federal Reserve said they planned to provide $800 billion to aid consumer lending companies and to make mortgage loans cheaper and more available.

The dollar has tended this fall to move in the opposite direction from stocks. As equities plunged, the dollar has gained on the euro and the pound.

An updated reading on the economy's performance released by the Commerce Department showed the gross domestic product shrank at a 0.5 percent annual rate in the July-September quarter. American consumers slashed spending in the third quarter at a 3.7 percent pace. That was deeper than the 3.1 percent cut initially reported and marked the biggest reduction since the second quarter of 1980, when the country was in the grip of recession.

Also Tuesday, the Standard & Poor's/Case-Shiller U.S. National Home Price Index showed that home prices have tumbled to levels not seen since early 2004.

"This data shows the beginning of a technical recession which is likely to get worse before it gets better," said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon Corp. "We anticipate that the dollar is likely to continue to suffer over the next several trading sessions."

Germany's GfK research group reported a third consecutive small increase in its monthly index of German consumer confidence, despite the country's recent fall into recession. It said consumers' income expectations were boosted by falling oil prices and a recent industrial wage deal. Meanwhile, the country's Federal Statistical Office confirmed an initial estimate that the economy -- Europe's biggest -- contracted by 0.5 percent in the third quarter.

In other New York trading, the dollar bought 1.1878 Swiss francs, below 1.1988 francs late Monday, and fell to 1.2282 Canadian dollars from 1.2377.

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