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Commercial Department: Spotlight: Louisiana: September 2018

 

Spotlight: Louisiana

Tourism offers the Pelican State’s struggling economy some lift.

Prior to achieving statehood in 1812, Louisiana was heavily influenced by French and Spanish culture as explorers from those nations came to the region in droves. The state’s European heritage is still evident today, from the food and architecture found in New Orleans’ famed French Quarter and Jackson Square, to the Cajun and Creole impacts on language, art and music. Louisiana’s nickname, the Pelican State, comes from the brown pelican, the official state bird that has recovered from near extinction in the 1970s.

Despite the state’s booming tourism industry — 47 million visitors spent an all-time high $17.5 billion in Louisiana during 2017 — it had the nation’s lowest-performing economy last year, according to U.S. Department of Commerce data. Louisiana’s economy shrank by 0.2 percent in 2017, compared to 2.1 percent growth nationwide, as the state’s oil refineries, chemical manufacturers, and transportation and warehousing sectors struggled.

Commerce figures also show the state’s per-capita personal income of $43,491 in 2017 was 14 percent lower than the national average, although Louisiana’s figure rose nearly 3 percent compared to 2016. And the state’s population is on the rise, with the nearly 4.7 million residents as of July 2017, representing 3.3 percent growth over the previous seven years, according to the U.S. Census Bureau.

Louisiana offers a number of incentives for businesses that wish to expand or relocate within the state’s borders. These incentives include business-tax credits for media, software and research companies, as well as property-tax abatements for manufacturing companies and developers who rehabilitate older buildings.

In the New Orleans metro area, industrial development is driving the commercial real estate market. St. James Parish, on the city’s west side, is poised to add more than 12,000 jobs during the next two years, according to an October 2017 economics forecast published by Louisiana State University. About $11 billion of the metro area’s proposed $34 billion in industrial development was under construction at the time of the report.

A $260 million high-speed rail project is being planned for the 80-mile route between New Orleans and Baton Rouge, the state’s capital. Construction of new residential, retail and office developments at seven proposed rail stations could complement the transportation project, which may have a master plan ready by this fall.

According to the U.S. Department of Labor, the state’s fastest-growing employment sectors as of this past May were professional and business services (up 3.4 percent year over year), leisure and hospitality (up 2.9 percent), construction (up 2.2 percent), and manufacturing (up 2 percent).

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New Orleans office market

Corporate Realty Inc., an affiliate of Cushman & Wakefield, states in its year-end 2017 office-market report that asking rents in the Greater New Orleans area rose to a five-year high of $19.35 per square foot. Demand for office space is at a five-year low, however, with vacancy rates rising to 15.5 percent in 2017. c_2018-09_Spotlight_chart-1

In the city’s central business district, vacancy rates were at 12 percent and asking rents were as high as $21 per square foot for Class A properties at the end of last year. The Metairie submarket has been strong, with vacancy rates at 11 percent and Class A office space leasing for as much as $25 per square foot. Office development throughout the metro area has been hampered, however, due to an increase in hotels, apartments and condominiums that have made parking more expensive and difficult to find, Corporate Realty reports.

Focus: Fishing

The Pelican State is the nation’s second-largest seafood supplier, the Louisiana Seafood Promotion and Marketing Board reports. One out of 70 jobs in the state are related to the seafood industry, which generates $2.4 billion annually for the state. Shrimp, oyster, crab, crawfish and even alligator fishing contribute greatly to Louisiana’s economy.

The state has about 350 licensed seafood processors and distributors, according to the Louisiana Department of Health.

Louisiana is home to dozens of commercial seafood companies, including Gulf Crown Seafood Co., Louisiana Seafood Exchange, Tommy’s Seafood Inc., Harlon’s LA Fish & Seafood, and Craig Borges’ New Orleans Seafood Co.

Unemployment

Louisiana’s unemployment rate stood at 4.7 percent as of this past June, the 11th straight month the state had posted a rate below 5 percent. The Louisiana Workforce Commission projects the state will add 146,000 jobs between 2015 and 2024, equating to employment growth of 7 percent. c_2018-09_Spotlight_chart-2

Tariffs imposed earlier this year by the U.S. and China may heavily impact both imports and exports from the Pelican State. Louisiana has the largest trade surplus with China of any state, according to a Bloomberg report, and is a worldwide gateway for soybean distribution. The proposed construction in Louisiana of a $1.12 billion chemical-manufacturing plant by a Chinese company also may be impacted by a trade war.

Sources: Baton Rouge Area Chamber, Cushman & Wakefield, Experience New Orleans, Forbes, Lafayette Economic Development Authority, Louisiana Department of Health, Louisiana Economic Development, Louisiana Endowment for the Humanities, Louisiana Seafood Promotion and Marketing Board, Louisiana Travel Promotion Association, New Orleans Tourism Marketing Corp., Site Selection Magazine, SWLA Economic Development Alliance, The Houma Courier, The New Orleans Advocate, The Times-Picayune, U.S. Census Bureau, U.S. Department of Commerce, U.S. Department of Labor, U.S. News & World Report, Zillow.

3 Cities to Watch

Baton Rouge

The state capital and home to 225,000 people, Baton Rouge thrives on chemical and energy production, structural-material manufacturing, software development and technical research, according to the Baton Rouge Area Chamber. The chamber also reports that the cost of doing business in the city is 7 percent lower than the national average, partially due to low electric and natural gas prices. There are more than 31,000 students who attend Louisiana State University’s main campus in the city. The median home price of $164,200 as of this past May represented a 10.4 percent year-over-year increase, according to Zillow.

Lake Charlesc_2018-09_Spotlight_city

As the hub of southwestern Louisiana, Lake Charles has 77,000 residents and its five-county metro-area population is expected to reach 208,000 by 2020. In 2016, the median home price was $148,000, the cost of living was 5 percent below the national average and year-over-year job growth was 5.1 percent, according to Forbes. As of February 2017, southwestern Louisiana was home to 23 employers with at least 500 employees, including Lake Charles Memorial Health System, Citgo, Phillips 66 and McNeese State University.

Lafayette

Located about halfway between Lake Charles and Baton Rouge, Lafayette grew by 11,250 residents, or 9 percent, from 2009 to 2015, census data shows. A downturn in oil prices in 2015 and 2016, however, may impact long-term employment figures. Lafayette touts its historical sites, food, music, sports and shopping as major attractions. The city’s largest employers include Lafayette General Health, jewelry manufacturer Stuller Inc., and oil-and-gas management companies Island Operating Co. and Baker Hughes.

What the locals say

"Lafayette now is in a real uptick mode because the petrochemical industry, from the drilling aspect and the fracking aspect, has picked up. Oil prices are up and so we’re seeing activity in Lafayette, both on the industrial side, some office [projects] and the retail side. Now, if you go south of Lafayette — Houma, Thibodaux, Morgan City — they are still in a down mode because of the oil prices. …

Lake Charles has $60 billion of construction in play, mostly driven by the LNG (liquified natural gas) business.”Spotlight Local


Karl Landreneau

Director of commercial sales and leasing, NAI Latter & Blum


 

Neil Pierson is editor in chief of Scotsman Guide Media. Reach him at neilp@scotsmanguide.com or (800) 297-6061.

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