BATON ROUGE

INDUSTRIAL MARKET
Presented by:
Scot Guidry, CCIM
Mike Falgoust & Associates Commercial Real Estate
AND
Mathew Laborde, CCIM
Beau Box Commercial Real Estate

INDUSTRIAL COMMITTEE MEMBERS

Todd Pevey, MPA

Brent Garrett, CCIM, SIOR

MIE Properties

Beau Box Commercial Real Estate

Branden Barker, CCIM, CPM

Ryan Greene, CCIM

NAI Latter & Blum

NAI Latter & Blum

Mike Mooring, MAI

Walt Ketchings

The Lakvold Group

NAI Latter & Blum

Scot Guidry, CCIM

David Lakvold, MAI, SRA

Mike Falgoust & Associates Commercial Real Estate

The Lakvold Group

Mathew Laborde, CCIM

Beau Box Commercial Real Estate

STUDY AREA (BATON ROUGE MSA)

Image Source: Baton Rouge Area Chamber and LEO, LLC

OIL & NATURAL GAS PRICES (Past 10 Years)

Brent Crude OIL Spot Price

Henry Hub NATURAL GAS Spot Price

BATON ROUGE MSA

INDUSTRIAL
MARKET
OCCUPIED
VACANT

26.4 MILLION
SQUARE FEET

VACANT

OCCUPIED

VACANCY RATE
KATRINA EFFECT

ECONOMIC RECESSION EFFECT

16%

14.4%

13.8% 14.1%
14%
12%

15.0%

11.6%

11.0%
9.3%

10%
8%

8.7%
6.5%
7.7%

6%
4%

4.7%

2%
0%
YE04

YE05

YE06

YE07

YE08

YE09

YE10

YE11

YE12

YE13

YE14

NET ABSORPTION
KATRINA EFFECT

ECONOMIC RECESSION EFFECT

1.2
MILLION
SQUARE
FEET

NEW CONSTRUCTION
Industrial Permits Issued
(Square Feet)

646,301

456,905
323,043
281,554
158,283

2ND HALF 2012 1ST HALF 2013 2ND HALF 2013 1ST HALF 2014 2ND HALF 2014
*PermitdatafromEastBatonRouge,WestBatonRouge,andAscensionParishesonly.

Where is the Vacancy?

WHERE
IS
THE
VACANCY?

WHERE
IS
THE
PERSISTENT
VACANCY?

WHERE
ARE THE
DEALS
BEING
MADE?

WHERE
IS THE
NEW
CONSTRUCTION

SAMPLE INDUSTRIAL LEASE RATES

Size (SF)

Lease Rate Range

(/SF)

Lease Type

Flex Space2

5,000 - 15,000

$8.00 - $12.00

Net

Office Warehouse Older

5,000 - 15,000

$3.50 - $4.50

Net

Office Warehouse New

5,000 - 15,000

$8.50 - $9.50

Net

Bulk Warehouse Older

20,000+

$3.00 - $4.50

Net

Bulk Warehouse New

20,000+

$5.50 - $7.00

Net

Product Type1

1Excludeslaydownyardarea
2Multitenant,tiltwallconstructionwithaminimumoffice/warehouseratioof20/80

SAMPLE INDUSTRIAL LAND PRICES

DESIRABILITY

East Baton Rouge

(SALE PRICE /SF)

West Baton Rouge

(SALE PRICE /SF)

Ascension
(SALE PRICE /SF)

PRIME LAND

$7.00 - $8.50

$2.00 - $3.00

$4.00 - $5.00

NON-PRIME LAND

$3.00 - $4.00

$0.75 - $2.00

$2.00 - $3.00

1Basedonlandtractsconsistingof210Acres

INDUSTRIAL COMMITTEE MEMBERS

Todd Pevey, MPA

Brent Garrett, CCIM, SIOR

MIE Properties

Beau Box Commercial Real Estate

Branden Barker, CCIM, CPM

Ryan Greene, CCIM

NAI Latter & Blum

NAI Latter & Blum

Mike Mooring, MAI

Walt Ketchings

The Lakvold Group

NAI Latter & Blum

Scot Guidry, CCIM

David Lakvold, MAI, SRA

Mike Falgoust & Associates Commercial Real Estate

The Lakvold Group

Mathew Laborde, CCIM

Beau Box Commercial Real Estate

GONZALES

EDENBOURNE
MARCH 2014

Emerson

New River Parish

Community College
Campus

GONZALES

EDENBOURNE
MARCH 2015
Emerson

New River Parish

Community College
Campus

EDENBOURNE
Emerson

GONZALES

AIRLINE MANCHAC
American Tire
Distributors

MARCH 2014

E B R PA R I S H

AIRLINE MANCHAC

E B R PA R I S H

MARCH 2015
American Tire
Distributors

B ATO N R O U G E

CRESCENT CROWN
Crescent
Crown

Cortana

CRESCENT CROWN

B ATO N R O U G E

Cortana

Crescent
Crown

GEISMAR

HWY 30 CORRIDOR
MARCH 2014

Bengal
Transportation

HWY 30 CORRIDOR
MARCH 2015

New Construction

Bengal
Transportation

GEISMAR

GEISMAR

HWY 30 CORRIDOR

Bengal
Transportation

New Construction

E B R PA R I S H

SETPOINT
MARCH 2014
Presonus

Setpoint

E B R PA R I S H

SETPOINT
MARCH 2015
Setpoint

Presonus

W B R PA R I S H

We s t p o r t

Community
Coffee

W B R PA R I S H

We s t p o r t
Community
Coffee

Performance

We s t p o r t

W B R PA R I S H

Performance

LA-1 / POPLAR GROVE

FUTURE RAIL TERMINAL

W B R PA R I S H

NOTICEABLE TRENDS

The Vacancy Rate is trending down for the 4th consecutive year. Market is healthy. Lowest seen since 2006.
Major concern and watch for oil pricing and how it will affect the overall industrial economy and employment.
Tuscaloosa Marine Shale (TMS) is likely mothballed until oil prices rise to $80/barrel or more.
The discovery of an abundance of shale gas and shale oil will allow the US to be energy independent.
High uncertainty as to the future price of oil.
Some of the multi-million dollar announcements were delayed, scaled back, or scrapped altogether.
Rental rates for expanding areas stabilize at higher pricing due to lack of speculative construction and inventory.
Increased demand for office-warehousing with stabilized material storage yards.
The demand will remain high for the sale of office warehousing which meet industry needs and have no functional
obsolescence.
Regional industrial service centers continue to consolidate facilities under one roof.
US manufacturing sector continues to grow.
Interest in, and dependence on, rail continues to grow.
Continued use of US natural resources and less dependence on imports.
Natural gas prices remain low.
Port of Greater Baton Rouge expected to increase exports.

FORECAST
Rental rates on average have stabilized at the current rates. Vacancy will likely remain flat at
around 7.5%. Expect continued interest from service companies entering the market and existing
companies expanding to larger facilities, however, some companies that planned to enter the
market or those that planned expansions locally may take a temporary wait and see approach in
anticipation of oil pricing and its effect on the industry. Look for new announcements of 25,000+
square foot build to suits as a result.
Except for a catastrophic world event, oil prices are expected to remain low 2Q15. Labor will
remain in high demand as well as affordable rental housing in the short term. Contract labor
pricing has caused the costs of large scale projects to go well beyond the estimated budget and
may cause some of the announced projects to scale back in size or not happen.
The industrial boom, aside from some recent setbacks, is in mid-race and the scope of the existing
projects will keep contractors busy for the next 3 to 5 years. US manufacturing will continue to
grow creating a continued demand for the raw chemical products produced in Louisiana.