Shell will move to new offices in River District as planned neighborhood takes shape
Shell will relocate the headquarters of its Gulf of Mexico operations from its longtime home on Poydras Street to the planned River District neighborhood, a move that will keep hundreds of high-paying jobs in New Orleans and add a major corporate tenant to the new development.
During a news conference Thursday with Gov. John Bel Edwards, Mayor LaToya Cantrell and other elected officials, local executives from the London-based energy giant said they have leased a custom-designed office building in the development upriver of the Ernest N. Morial Convention Center.
When the mid-rise building is completed in early 2025, Shell’s 800 local employees will relocate there from the Hancock Whitney Center, the skyscraper that has housed Shell’s local operations since 1972 and until recently was known as One Shell Square.
Though much of New Orleans' energy industry has decamped for Houston over the years, Shell, which has its North American headquarters there, has kept a sizeable presence in the Crescent City. Agreeing to a 12-year lease in a building constructed to its specifications should quiet worries about losing another major employer, and may help economic development officials as they try to lure other companies to the metro area.
“We have been an integral part of the community and the working coast...and we are committing to stay here with a new building,” said Colette Hirstius, Shell’s Senior Vice President for the Gulf of Mexico.
The announcement also marks the first time in decades that a new office building will be constructed in downtown New Orleans, and suggests that the River District could fulfill its developers' vision for a neighborhood of businesses, residents, retailers and entertainment venues, as opposed to an area devoted to cruise ship passengers and conventioneers.
The nascent development is a joint venture between Lauricella Land Company and Dallas-based Cypress Equities in partnership with the convention center, which owns most of the 40 acres along the Mississippi River. The concept, in the works for more than a decade, finally saw progress over the past two years as the convention center board chose a developer and inked a deal.
“Shell, with its rich history in Louisiana, is just the type of anchor commercial tenant we had hoped for,” said Cypress Equities CEO Chris Maguire in a prepared statement.
Lauricella said nothing has been offered to the company, though he added, “it stands to reason Shell would be looking to gain some help.”
Gov. John Bel Edwards said the state was not putting up any money to make the deal happen.
“I am extremely excited about this announcement today, probably more so because we did not have to put up an incentive,” Edwards said.
Looking for a new home
Shell has been a corporate presence in New Orleans for decades, though it is smaller than at its peak. Still, while most of the other energy companies that called the city home relocated after Hurricane Katrina, Shell has maintained a significant footprint. It runs its Gulf of Mexico operations from the local office, a business that comprises about half of Shell’s U.S. oil production and 20% of its global earnings.
It continues to employ about 3,000 workers in the state, including at its offices in the Hancock Whitney Center, where it leases several floors.
In 2020, with a long-term lease in the building set to expire in 2025, the company began looking at options for a new space, including relocating to Houston or to an existing office building elsewhere in New Orleans, Shell officials said.
“This was a remarkable building in 1972 and it still is, but the needs have changed,” said Hirstius. “We need a more collaborative workforce. We need much larger collaborative environments and we enjoy being outside. The River District suited all of our needs in the best way.”
Shell's new home will be 120,000 square feet — about one-tenth the size of the 51-story high-rise — and the company will be slashing the amount of office space it occupies. In its current home, Shell leases 308,000 square feet, according to Mike Otillo, a leasing agent with the California-based Hertz Investment Group, which has owned the tower since 2015.
Hirstius would not discuss specific numbers but said the new building will better suit the company’s current workforce, with fewer small offices, fewer walls and larger common areas.
It's not clear who will take over the space in the Hancock Whitney Center, which has seen other energy industry tenants depart in recent years and currently has an occupancy rate of about 85%. Moreover, adding tenants to the River District won't be much salve to landlords and business owners in the Central Business District, which has seen a decline in commercial tenants since the pandemic.
Otillo said Hertz has no plans yet for the vacant floors, and was caught off guard by Thursday’s announcement.
“We didn’t know,” he said. “We learned of it today when everyone else did.”
Hirstius couldn’t say whether the new building would sport the company's name and logo, though a Shell spokesperson confirmed that the long-term lease gives the company naming rights.
Regardless of what the building is call, Hirstius said, "It will be our building. Everything about it will be our design and we are the main tenant.”
In a prepared statement, the developers said Shell will occupy 120,000 square feet of the 142,000-square-foot building.
It's not clear how much the building will cost to construct, though experts said the cost-per-square-foot for the construction of new mid-rise office buildings in New Orleans could average at least $300 per square foot, which would amount to roughly $43 million for the building.