Does oil still have a stronghold in Acadiana’s real estate market? In short, yes, but not nearly as tightly as it did in the ’70s and ’80s. Lafayette has come a long way since the last major oil bust in terms of economic diversification, but like it or not the oil industry is still the fuel to our engine.
Much of the Acadiana area’s real estate is tied to the global oil industry because of the plethora of engineering, service, and manufacturing companies that are located along our business corridors. Identifying how these companies’ office spaces, industrial buildings and service yards are directly affected by both the expansion and contraction of the oil and gas sector is a fairly easy task. What is a bit more daunting to comprehend is how the communities’ retailers are impacted by this recurring fluctuation and more importantly how it dictates their respective expansion, relocation and contraction plans.
An obvious place to start would be the last few years when oil was climbing to record highs and life was just plain good in Lafayette. None of us thought twice when we observed Academy relocate and expand to one of its largest footprints in the country. Kohl’s decided to open one of its first two Louisiana stores in Lafayette. Wal-Mart and Home Depot built new stores in Broussard, with other outparcel users and small-shop tenants following suit. The northern submarkets of Lafayette finally received their long awaited Target-anchored shopping center with the other national tenants following. The list can certainly go on and on, and the point quickly made, that when Acadiana’s oil sector is producing at a high level with maximum employment, residents are spending their hard-earned dollars, and retailers are expanding as quickly as possible to cash in.
The equation gets a bit trickier when the picture isn’t so rosy. Louisiana has always lagged behind the national economy, not to the point of being counter cyclical, but it is certainly on a different timetable. Granted, there are many reasons for this, oil definitely not being the only one, but it is undeniably a contributing factor to this discrepancy, especially along our Gulf Coast region. Because of the cushion that the oil industry provides, we typically don’t feel the pain that the rest of the nation experiences until much later in the cycle. With all upside comes unavoidable downside; this double-edged sword can cut very deep if there isn’t a diversified economy ready to step up and shield us from the impact of an oil price collapse.
When the national economy started skirting sideways, then eventually downward to the recession we have recently experienced, our region remained steady for the most part as the oil cogs continued turning; they take a while to slow down. Because of this continued spending, especially as compared to other parts of the country, commercial retail brokers were cautiously optimistic because of the amount of activity coming in from retailers looking to expand into our area. This was mainly based on sales figures of Lafayette’s existing retailers and how well they were doing as weighed against more distressed cities and states. This quickly came to a halt when oil started sliding from its all-time levels last year shortly thereafter, as these same vendors became very skittish and started asking questions that were certainly provoked by their knowledge of Lafayette’s historical slowdown some 25 years ago.
What these retailers failed to understand initially is that Lafayette has worked very hard since then to diversify its economy with the introduction of massive medical and technology sectors, strengthening UL and its relationship with the community, becoming the retail hub in a 50-plus mile radius, and solidifying home grown businesses that circulate money within the community. Even with Lafayette Parish’s small drop in retail sales, the stores here are very happy with what they are experiencing as a whole and are slowing revisiting the idea of continued expansion. With the result-driven nature of the retail industry, there is a very good chance that our region is one of the first where new development picks back up. The one variable that is working against us is the vast amount of vacant stores available throughout the country as a product of so many chains filing for bankruptcy. With many distressed landlords out there throwing sweet deals at the companies that are looking to open new stores, the competition will be stiff, but our fundamentals are strong and will not go unnoticed.
Because of their continued interest in our state, particularly the Lafayette area, decision makers for these companies are slowly realizing how good of a job we, as a community, have done to protect ourselves from spikes and troughs in oil prices. Because of these concerted efforts, we have not felt near the negative effects as many other parts of the nation, and we very likely won’t. Unfortunately, I’m not quite convinced that the worst is over just yet, but I am confidant that the experiences of the inglorious past will not be relived.
Ryan Pécot is a commercial broker with Stirling Properties. Since 2001 he has worked out of the firm’s Lafayette and New Orleans offices, specializing in retail brokerage, with a focus in tenant representation. He also covers the Lake Charles, Alexandria and Houma markets.
Local and state agents Thursday night raided The Keg, the popular college bar located in the area known as The Strip, leading to the (at least) temporary closure of the venue.
Here's your daily look at late-breaking national and international news, upcoming events and the stories that will be talked about Friday, April 18, 2014:
Friday's Blogs from the Bog!
Time and time again, the Lafayette Parish School Board shows an overwhelming tendency toward idiocy, but Wednesday night’s contentious discussion over Northside High School’s teen mother program tops the list of dumb discussions.
C & C Technologies, HIT Fitness, R3 Sciences, the Acadiana Symphony Association and the United Way of Acadiana recognized for innovation.
“The accomplishment of this goal within the next ten years is not only critical for the region to effectively compete with other regions for residents and businesses, but also to provide an amenity for everyone in Acadiana to enjoy.”
Education Superintendent John White says a continued push to try to keep Louisiana from using tests associated with the Common Core education standards are creating "a state of chaos" for public school teachers.
The Acadiana Symphony Orchestra has decided to end its traditional Independence Day spectacular known as Red White & Boom.
Under the deal, Teche shareholders would get 1.162 shares of IberiaBank for each share of Teche stock.
Gov. Bobby Jindal's plan to use $210 million in surplus and one-time money to help balance next year's budget received the backing Thursday of the State Bond Commission, support that was needed for the maneuver to work.
Acadiana's nightlife guide.
State wildlife and fisheries agents have arrested a 39-year-old man accused of stealing crawfish.
An East Feliciana Parish lawmaker has jettisoned his proposal to make it harder for a condemned prisoner to appeal a death sentence.
Senators advanced a proposal Wednesday that would let the governor remove New Orleans-area levee board members for violating what he considers to be public policy, despite concerns it would introduce political meddling into state flood protection.
The must have pieces this season
Dave Perkins, LCG Comp Plan honored along with local architects and designers at the 2014 INDesign Awards
Greg Manuel’s Lafayette-based residential development company is taking advantage of exponential industrial growth in Lake Charles.
Longtime Lafayette retailer ventures online.
It’s not how aggressive or conservative you are — it’s planning for risk that matters most.
Thanks to cutting-edge digital technology, more and more consumers are banking on ATMs and mobile phones.
Regional bank bids farewell to Downtown May 30
ABiz takes a look back at the most noteworthy moments for the local banking industry over the last year.
Most experts say short-term interest rates will be unchanged through 2014, but long-term rates are inching up.
Largest recruitment event in Acadiana returns May 21 to the Cajundome Convention Center
A lawyer’s ad should only be a starting point, as there is much more to consider when seeking quality representation.
Thanks to the inaugural 2012 INNOV8, a design for lifting heavy objects was brought to market.
The annual juried competition recognizes excellence in architecture, interior design and historic preservation in Lafayette and the five surrounding parishes.
Cypress Bayou GM hosts open house.
New hires, promotions, transfers in Acadiana business
The scion of a landmark Four Corners restaurant climbs back into Lafayette’s culinary scene as franchisee for a popular burger chain.