Whether you define a big business deal as a major acquisition like CB&I’s $3 billion purchase of The Shaw Group, a huge industrial investment like CF Industries’ planned $2.1 billion chemical plant in Geismar, or a property transfer with lasting implications for downtown like Jim Bernhard’s purchase of Richard Preis’ RiverPlace site, there was no shortage of significant activity in the Capital Region in 2012.
LED announced industrial construction projects with staggering dollar figures seemingly every few weeks throughout the year. Major retail chains like Costco signed deals that will establish their presence in the local market. Even New Orleans’ nola.com digital newspaper moved to town, opening a Baton Rouge bureau in the heart of downtown.
“2012 was a great year for the Baton Rouge area economy and one of BRAC’s best years for economic development projects,” says BRAC President and CEO Adam Knapp. “Huge gains were seen in the areas of digital media and foreign direct investment as well as new industrial manufacturing driven by low natural gas prices.”
Granted, trouble spots in the local economy remain. The super-tight lending climate has made speculative development all but impossible, and long-awaited projects like Juban Crossing remain stalled, despite continued assurances construction will begin any day. The election and the “fiscal cliff” negotiations only added to the economic uncertainty.
“It was an unusual year in a lot of ways because so many things were trying to happen but didn’t happen because of so much uncertainty,” says Chad Ortte of Rising Realty Group. “By the same token, you also had some good things. … Overall I’d say it was a steady year.”
Here’s a look back at some of the deals of 2012 that turned heads, either because of their sheer size or because of the impact they are likely to have on the local economy and local landscape for years to come.
Baton Rouge lost its only Fortune 500 company in 2012, when the Netherlands-based CB&I acquired The Shaw Group for $3 billion. The deal, announced in August and approved by shareholders in December, will not mean an end to Shaw’s presence in the Capital Region—but it will change things. Company founder and CEO Jim Bernhard cashed out his stock in December and retired, as did several other top executives. Others in the C-suite relocated to CB&I’s U.S. headquarters in The Woodlands, Texas. What the new corporate owners have planned for Shaw’s local employees remains unclear, but SEC filings suggest there may be layoffs and/or relocations.
One of the most surprising and potentially significant land deals of 2012 came in the final hours of the year, when The Shaw Group’s Jim Bernhard closed a $3.3 million deal to buy the 1.3-acre tract of downtown riverfront property that developer Richard Preis had long tried to develop into a luxury condominium tower called RiverPlace. Bernhard remains mum about his plans; but architect Trey Trahan, who owns an adjacent parcel and helped conceptualize the deal, says the two want to turn the entire block into a mixed-use development that will take downtown Baton Rouge to a whole new level.
In one of the most controversial deals of the year, supporters of the Capital Area Transit System managed to get passed in a special, April election a 10.6-mill property tax to support major improvements to the beleaguered transit system. But within months, system administrators conceded the funding, which will provide some $15 million to the CATS operating budget in 2013, is insufficient to do everything that was promised to voters. That prompted outrage from an already frustrated community and spawned efforts to overhaul the CATS board and take a serious look at privatizing the system.
The year kicked off with an announcement that Canada-based Methanex would likely relocate a methanol production plant from Chile to a 225-acre site in Geismar. In late July, it confirmed the $550 million deal, which will give the company its first U.S.-based methanol production facility in more than a decade. The new plant will create 130 direct jobs and nearly 1,000 indirect jobs. More significantly, it represents a wave of new industrial construction and expansion projects along the Mississippi River from New Orleans to Baton Rouge and beyond. Others announced last year were:
• CF Industries’ $2.1 billion expansion of its Donaldsonville Nitrogen Complex
• ExxonMobil’s $215 million expansion of both its Baton Rouge Chemical Plant and Port Allen Lubricants Plant
• Construction of a $300 million facility in Geismar by Avalon Rare Metals
• BASF’s $233 million expansion in Geismar
• Air Liquide’s $85 million capital expansion in Port Allen
Costco Wholesale Corp., the largest warehouse club chain in the United States, signed a purchase agreement in April to acquire the former Coca-Cola bottling site on Airline Highway for an undisclosed price. Costco has since filed concept plans to build a 149,000-square-foot warehouse store on the 28-acre site that will include an attached tire center and a freestanding gas station. Three outparcels will also be available on the site for future development. Once open, the store is expected to employ 175 to 200 full- and part-time workers. But the real significance of the deal is the growing presence it will give Costco in south Louisiana—it is also building a warehouse store in New Orleans—and the fact Baton Rouge represents a big enough market to support such an outlet.
After attempts by a physicians’ group to buy the vacant Woman’s Hospital campus on Airline Highway at Goodwood Boulevard fell through earlier in the year, the city-parish came forward in November with a $10 million purchase agreement for the 24-acre site. If and when the deal is finalized, the facility will be renovated into a public safety complex that will also serve as a new headquarters for the Baton Rouge Police Department. The sale of the campus would include the hospital building, medical office building, support services building, materials management building, parking garage and all surface parking. Preliminary estimates suggest it could cost as much to convert the hospital to office space that can be used by the police department, but advocates of the plan note that this amount is but a fraction of the cost of constructing a new headquarters facility.
The local print media world was turned on its head in 2012 when The Times-Picayune in New Orleans scaled back publication of its newspaper to three days a week. Not long after, Nola Media Group, which publishes The Times-Picayune and the online nola.com, announced plans to expand into the Baton Rouge market, leasing office space downtown and hiring a local staff of more than a dozen reporters and editors. The Advocate, meanwhile, countered with a move into The Times-Picayune’s territory, opening a New Orleans bureau of its own and publishing a New Orleans version of The Advocate, which quickly exceeded expectations and now has a circulation of 20,000.
After years of planning and construction, L’Auberge Casino & Hotel Baton Rouge opened its $368 million complex overlooking the Mississippi River, increasing to three the number of casinos in the Capital Region and raising the bar on the type of luxury entertainment options offered by the local gaming industry. Whether the area can support three casinos long-term remains to be seen. L’Auberge is a significant development in one of the last remaining undeveloped areas of the parish and it will likely spawn more development in blighted pockets of the Gardere area, which is already showing signs of new life.
Commercial Properties Realty Trust, the for-profit arm of the Baton Rouge Area Foundation, raised more than a few eyebrows last fall when it sold the historic Hilton Baton Rouge Capitol House to RockBridge Capital, a Columbus, Ohio, hotel investment firm, for $40 million—about $30 million less than it spent restoring the hotel several years ago. BRAF officials, however, insisted the sale was a good deal for both parties and that selling the property was always part of the plan. Prism Hotel and Resorts, which took over management of the facility in early 2012, has continued to run the hotel under RockBridge’s ownership.
Baton Rouge’s historic Commerce Building, an examplar to midcentury modern architecture, was acquired last fall by the New Orleans-based firm 5thfloor Company, which is led by developer TJ Iarocci, on behalf of a group of private investors. The eight-story, 180,000-square-foot building, located on the corner of Laurel and Third streets in downtown, was previously owned by Bob Dean and has been vacant for several years. A purchase price was not disclosed. The deal is just the latest of several big real estate transactions downtown and represents the ongoing rejuvenation of the district. Iarocci, one of the partners behind the award-winning Rice Mill Lofts redevelopment project in the Bywater section of New Orleans, says he is exploring a multiuse option for the property that would include residential, retail and office spaces.
