Building permits and construction valuations are two important statistics LEDA tracks. Because these numbers are made available immediately upon purchase of commercial and residential permits, we can identify businesses moving into the market and anticipate an increase in population as it happens and prior to its effect.
The 2006-07 fiscal year was a record for Lafayette in terms of total construction valuation. At $493.8 million, the year-end total was more than $176 million higher than the previous year. Construction valuation for the 2007-2008 fiscal year was down; however, that wasn’t unexpected with so many big-dollar projects permitted in the pervious year and the sun preparing to set on GO Zone incentives (which expired at the end of 2008).
With the issuance of Our Lady of Lourdes’ permit for its new facility on Ambassador Caffery Parkway, 2008-09 year-to-date construction valuation in Lafayette is $15 million higher than the 2006 record-setting year. With 20 weeks still left in the fiscal year, it’s hard to predict if year-end numbers will match or exceed those in 2006, or if they will fall in line with pre-2005 numbers that showed steady, progressive growth.
Three sectors in particular over the past seven to 10 years have seen increased construction activity: medical, hotel and multi-family housing. You can’t go far in Lafayette without seeing some kind of construction project related to one of these sectors. As these projects are completed, often we can see related increases in industry-specific employment, retail sales or other factors.
In an effort to meet the increasing demand for medical services, there has been a construction boom at hospitals and medical centers across the parish. Since 2000, $344 million in new construction or renovation projects in the medical sector have been permitted. Medical construction peaked in 2001-2003 with $79 million in projects, which included the Cardiovascular Institute of the South, The Heart Center at LGMC and Heart Hospital of Lafayette. Construction saw another spike in 2007 with 40 permits issued totaling $49 million. This included Lafayette General Medical Center’s Pavilion and Acadian Ambulance’s training facility on North University Avenue. In April, Our Lady of Lourdes was issued the largest single construction permit in Lafayette history, $120 million, for its new six-story medical tower.
A drive around town will show that Lafayette has seen a boom in hotel developments. Since 2000, 41 permits for new construction or alterations have been issued for hotel properties in Lafayette. In 2004 there were 43 hotels with 3,331 rooms in the parish. Currently, there are more than 60 hotels operating with upwards of 5,700 rooms. The 2008 calendar year saw the most projects for hotel construction — 13 permits valued at nearly $18 million.
Lafayette’s hotels are consistently filled with business travelers, echoing the vitality of Lafayette’s overall economy and prompting the boom in hotel development projects. The opening of boutique hotels has unlocked a new dimension of hotel service in Lafayette, delivering a desired upgrade in services and amenities for leisure and business travelers. With the number of hotels increasing, hotel receipts (total amount spent on hotel rooms) have risen 92 percent since 2004; and 2009 expenditures through February are 4 percent higher than in 2008. (According to LCVC, hotel-motel sales tax collections, however, are down this year; see this month’s cover story.)
Finally, multi-family housing has also seen a boost in construction activity in recent years. Since 2002, 35 permits have been issued for multi-family housing projects totaling $198 million, with the largest share coming in the 2006-07 fiscal year. That year, the top five commercial projects were apartment complexes, and two additional apartment projects were in the top 10. These seven projects totaled $82 million and added 1,424 units to Lafayette’s apartment market. While the majority of those units are marketed as student housing, the two apartment projects permitted so far in 2009 for $15 million are targeting young professionals and non-students.
Despite an influx of 3,100 new units since 2002, apartment vacancy rates are still less than 3 percent. Vacancy rates were at an all-time high in 2000 at 9 percent and dropped to a low of 0.9 percent in 2006. Currently the apartment vacancy rate is 2.8 percent.
During slow economic times, one of government and business’ most proactive approaches is to prepare for the economic rebound. This could be as basic as revamping an advertising campaign or as involved as a full-blown market study and analysis. Sometimes, this preparation includes construction projects. Whether it’s building infrastructure or constructing or upgrading new or existing facilities, having a plot of land that’s shovel-ready or a move-in ready facility could be a key factor in local businesses’ success once the national economy makes a turn for the better.
Construction valuation is one of many economic indicators that can be found on LEDA’s Web site, lafayette.org
Gregg Gothreaux is president and chief executive officer of the Lafayette Economic Development Authority.