Louisiana led all U.S. states in the value of industrial construction projects during 2013 and was ranked second overall for all commercial construction, according to a new report released Tuesday.
Nearly $4.9 billion in direct industrial construction spending happened in Louisiana last year, well ahead of Iowa, which was second with just over $2 billion in industrial construction projects, according to the study released by the NAIOP Research Foundation. NAIOP is the national commercial real estate development association.
All that industrial construction powered Louisiana to more than $5.5 billion in overall commercial construction projects. Texas, which had nearly $5.8 billion in direct commercial construction spending was first, while New York, at $4.8 billion, was third.
The commercial construction category includes industrial, office, warehouse, retail and entertainment projects. Louisiana had $359 million in retail and entertainment construction spending, which put the state in 12th place nationally, $236 million in office construction last year, which put the state at 23rd, and $87 million in warehouse construction, good enough for 26th place.
Texas led the three other categories.
Louisiana also ranked second nationally for new personal income generated by construction spending, with $3.95 billion in earnings. Texas was once again ranked first, at $4.8 billion.
Louisiana’s industrial construction boom has been caused by the easy access to an ample supply of cheap natural gas, which is an important part of chemical processes and a source of fuel.
“Louisiana also has superior logistics,” said Scot Guidry, an agent with Mike Falgoust & Associates Commercial Real Estate. “There’s the Mississippi River, a lot of the pipelines for the feedstocks come in here and there’s the refining capacity.”
Guidry follows the industrial real estate market in metro Baton Rouge.
There is nearly $84 billion in announced chemical plant construction in the pipeline for Louisiana, with much of the activity along the Mississippi River from Baton Rouge to New Orleans and in Lake Charles.
Some of the major projects could be shifted quickly, because of economic uncertainty or unrest around the world, Guidry said.
“Really, no one has a crystal ball, but it looks good for this area for a while to come,” he said.
As a matter of fact, Guidry said he sees industrial construction activity trickling down to smaller enterprises, such as service companies and investors. And the activity in the Tuscaloosa Marine Shale north of Baton Rouge could lead to more development.
NAIOP has conducted the annual study since 2008, using data from McGraw-Hill Construction and the U.S. Census Bureau.
The study found that direct construction expenditures were up nationally by 24 percent, to reach $124 billion. That was the biggest gain since the economic recovery started in 2011. The NAIOP expects that the figures will continue to rise through 2015, with year-over-year growth in the 8 percent to 15 percent range.
“Commercial development’s economic impact is tremendous; simply put, a healthy development industry is critical to a prosperous U.S. economy,” said Thomas J. Bisacquino, NAIOP president and CEO.
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