Derbes Falgoust Commercial Real Estate
Industrial Staged for Next Wave
Industrial Market Trends
The announcements of petrochemical mega construction projects in Louisiana began in 2010 and gained real traction in 2012 resulting in an industrial construction boom creating demand for service to industry service centers, general warehousing, logistics and distribution centers. The first wave of activity began in 2012 and continues today, albeit at a slower pace. Current estimates on the next wave of industrial projects is estimated to be between $115 to $130 billion in new investments throughout the southern portion of Louisiana.
Persistent low cost and abundant natural gas, the feedstock for the petrochemical industry and export opportunity, as well as a continued growing national economy are the primary reasons for the industrial revolution taking place.
The effect on commercial to light industrial office warehouse vacancy rates dropped each year as some of the announced projects were started. Specifically, the greater Baton Rouge metro area noted a vacancy rate of approximately 15% in 2010 dropping to a low of just under 6% in 2017. Currently, the market vacancy rate rests around 7% after noting a slowing in new activity in 2019 due to the lull between what’s winding down and the next surge expected to begin over the next 18 months.
These large-scale industrial projects have kept Construction, one of the Baton Rouge region largest job sectors well employed. Parallel to vacancy rates, construction employment noted a slight dip in 2019 due to the lull. It’s expected to rebound into 2020 and 2021 as spending on the next wave in construction projects begin.