|The IBM deal is a milestone project that will have far-reaching implications for Baton Rouge—and especially its downtown—for decades to come.|
By the time Gov. Bobby Jindal announced on March 27 IBM's plans to bring an 800-job technology center to the heart of downtown, the worst-kept secret in Baton Rouge was out of the bag.
For months, in fact, the Capital Region had been abuzz about the efforts of state economic development officials and the Baton Rouge Area Foundation to lure the blue-chip giant to the Red Stick through a unique public-private partnership that includes incentives, promises to provide a skilled, high-tech workforce of freshly minted computer science graduates, and a brand-new, $55 million, mixed-use complex with an eight-story office tower, 11-story apartment building and parking garage overlooking the Mississippi River.
With the details now revealed, it's easy to understand the exuberance over the IBM deal. This is big for Baton Rouge. Very big.
“For Baton Rouge, this may be the single biggest moment in the history of its economic development,” says Gov. Bobby Jindal. “It's transformative.”
The deal is potentially transformative for several reasons. The IBM Services Center: Baton Rouge, as it is officially called, will provide software development, maintenance and integration services to IBM's clientele, bringing 800 direct jobs to the Capital Region over the next four years and generating an additional 500 or so indirect jobs. They're the kind of high-tech jobs Baton Rouge has been trying to create for years: well-paying, digital media, software-engineer-type jobs that lure coveted, creative-class professionals to the area.
The deal will also expand and enhance the LSU College of Engineering's computer science division, which will get state money to double its faculty, triple its graduates and provide IBM with a qualified workforce. Not only will that enhance the program's reputation, it will propel it to the list of top 15 computer science programs in the country in terms of number of graduates and, therefore, make it easier to attract other high-tech companies to the area.
Not least, however, the IBM deal is seen by many as the tipping point that will take downtown to the next level. The area is already well on its way, with dozens of new construction and redevelopment projects in the works. But the presence of IBM—with its shiny, new building overlooking the Mississippi River and the hundreds of smart, young, high-tech employees who will work and live there—is the game changer that will transform the city's historic center into a thriving, 24-hour downtown.
“This is the tipping point for downtown Baton Rouge,” says DDD Executive Director Davis Rhorer. “It is a milestone for Baton Rouge.”
The deal to land IBM came together after nearly two years of intense courtship. LED Secretary Stephen Moret took the lead in a multifaceted series of negotiations—code-named Project HAL— that included IBM; BRAF, and its for-profit real estate company, Commercial Properties; LSU; and the city-parish.
The deal reflects the collaborative nature of the partnership. The state will put up $14 million over the next 10 years to expand LSU's computer science program, which will include hiring new faculty and offering new courses. The College of Engineering will launch a statewide partnership with high schools, community and technical colleges, and other universities to promote interest in computer science-related career fields and enhance student recruitment.
The state is also footing part of the bill for the $30 million IBM office building, which will be constructed on the city block bounded by Main Street, North Street, Lafayette Street and River Road, which previously held The Advocate building. The state will also cover IBM's lease and expenses for the next decade—including its temporary office space in the Essen Center, at 5353 Essen Lane, where the technology center will be located until the new building is complete in the spring of 2015. Funds will come from the state's operating and capital budgets as well as from Community Development Block Grants, Moret says.
BRAF and its for-profit real estate company, Commercial Properties Realty Trust, are developing and managing the real estate portion of the project, which includes the 11-story residential building with 95 river-view apartments and nine separate townhomes. The BRAF-affiliated Wilbur Marvin Foundation will own the office building. Commercial Properties will secure private financing for the residential building, which will also be owned by the Wilbur Marvin Foundation.
IBM at a glance
Where will it be? How many employees will they need? Who's involved? Why does it matter? Click here to find out.
The city-parish will put up a total of $4.5 million over the next several years to help the state pay for the construction of the office tower and to offset IBM's expenses for the company's first few years in operation here.
State officials say the collaborative nature of the deal—the training at LSU and the mixed-use development from BRAF—was critical to clinching it and ultimately lured IBM to Baton Rouge over the competing city, which Daily Report has reported was Lincoln, Neb.
“This mixed-use development was a key part in selling them on Baton Rouge,” says Moret. “They were really excited about the idea of a mixed-use, New Urbanism-inspired space that would enhance their ability to recruit and retain talent.”
IBM isn't the only one excited about the downtown building. Downtown leaders, among others, say the IBM complex on River Road represents a turning point for a downtown already in the midst of a dynamic redevelopment. That redevelopment started in earnest in 1998, when BRAF funded Plan Baton Rouge, a master plan for downtown revitalization by New Urbanist guru Andres Duany. His plan calls for a livable, walkable, 24-hour city. Mixed-use developments, where people can live, work and play, are key to that vision; and the riverfront—which runs the length of downtown and connects state government to the Nicholson Drive corridor—is an important piece of the puzzle.
What makes the location of the IBM complex even more significant is that it is one of three vacant parcels—and among the last vacant parcels downtown—on the river. Next to it, across Main Street, is the 1.3-acre lot that for years developer Richard Preis tried to develop into a high-rise condominium called River Place. He sold the land for an undisclosed price late last year to The Shaw Group founder Jim Bern-hard and architect Trey Trahan, who have yet to announce their plans for the property. But something big is expected, and likely sooner rather than later. Bernhard is bringing a new business to downtown and has made no secret of his desire to leave a legacy in the community.
A third vacant parcel is the adjacent surface parking lot on River Road between Florida and Laurel streets and is owned by Richard Hartley and David Vey. Vey says the partners have no plans at present to sell what may well be the most lucrative parking lot in the city. But many believe it's just a matter of time until demand for a higher and better use for downtown land trumps the easy money generated by a surface lot, however badly needed the parking spaces may be.
In the meantime, advocates of smart growth and downtown development couldn't be more thrilled that two of the three properties are in play.
“That land has always been in our master plan for development,” says Rhorer. “Now that two of the three are in play, it's very exciting and it's an incredible commitment to the development of downtown.”
The critical mass of development along the riverfront will do a couple of things. First, it will help bring downtown closer to the number of residents it needs to become a truly thriving urban neighborhood. About 2,300 people live in 700 or so units within the boundaries of the DDD, which includes Spanish Town and Beauregard Town. That number has grown slowly over the past few years but is still far short of the 10,000 or so residents needed to attract round-the-clock services.
“You're not going to get a lot of things like movie theaters and drugstores until you have rooftops down here,” says Preis. “All these retailers look at rooftops—who's living under them and how much they're making—because there is a formula that drives a Walgreen's or a Rite-Aid to a certain location, and the rooftops are critical.”
It was a big victory for downtown leaders and residents earlier this year when the Prescriptions to Geaux pharmacy opened on Third Street. Later this spring, a corner grocery store is scheduled to open on the corner of Florida and Third streets. They're both seen as positive developments, but it's not the same as having a national chain set up shop.
With its mixed-use development, IBM will bring downtown closer to the number of residents needed to attract a national chain.
“If you get 500 new bodies downtown, it makes it that much easier to attract development,” says Preis. “All those people have to have a place to live, and they have to have a place to shop and eat.”
Several other residential developments are also in the works. (See the map on page 15.) New Orleans developer T.J. Iarocci is redeveloping the former Commerce Building into 95 residential units with retail on the ground floor. Adjacent to the Commerce Building is the former Capital One Building, which is under contract to an investor group led by architect Dyke Nelson. Sources say plans are in the works, though not yet finalized, to redevelop that building into residential units as well.
The hard reality of doing residential downtown
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On the other side of Interstate 110 on Spanish Town Road, the Gulf Coast Housing Partnership is developing The Elysian, a mixed-income residential project of 100 units. And in the far northwest corner of downtown, contractor Pete Clement continues to work on a mixed-use project, River Park, which, if it comes to fruition, will include dozens of residential units. Though he has yet to unveil plans, sources say he is close to securing equity investors for the deal.
Taken altogether, the new residential projects will create hundreds of apartments and condos downtown.
“Residential feeds the 24-hour clock,” says Vey. “As more people go downtown, it will spawn more businesses and more commercial activity, and they feed off each other.”
The synergy created by IBM and its presence downtown is critical, says Moret. Not only will having a major company like IBM help attract other high-tech companies to Baton Rouge, it will likely induce them to consider locating downtown.
“Companies are objective and quantitative, but there is a little bit of follow-the-leader mentality as well,” says Moret. “If they see a company like IBM in this market, that is going to be something of an incentive to bring them here as well.”
IBM's presence downtown will also serve as an important link in the increasing connectivity throughout downtown. Development along the riverfront will connect through the central business district, Spanish Town and, once The Elysian is completed, under the interstate and, eventually, into Mid City. Southward, it will extend along the River Road to the Nicholson Corridor, which is undergoing a redevelopment of its own. (See the related story here.)
The city's Riverfront Master Plan of 2003, as well as Plan Baton Rouge and its 2009 follow-up, Plan Baton Rouge II, envision the kind of connectivity among neighborhoods that is starting to be realized. Some 80% of the 104 projects outlined in Plan Baton Rouge have been completed. The development of IBM will bring even more of those projects to fruition.
“The development downtown continues to radiate out and bring in the surrounding neighborhoods,” says CPEX Executive Director Elizabeth “Boo” Thomas. “One of the hopes is to eventually connect everything—from downtown to LSU and eventually down Burbank (Drive) and River Road.”
The complete realization of such a vision is still years away, and an important piece of the puzzle still missing is mass transit. The hoped-for connectivity between downtown and surrounding areas cannot happen until the Capital Area Transit System gets its act together, which won't happen overnight.
But the IBM deal brings Baton Rouge significantly closer to realizing the New Urbanist vision first articulated in Plan Baton Rouge, and business and civic leaders are sounding more optimistic about the future of the city—particularly downtown—than they have in a long time.
“This is the biggest thing to happen since ExxonMobil,” says Preis. “It's huge, and it's a new chapter for downtown Baton Rouge.”
The IBM deal is the latest—and largest—of several new and redevelopment projects in the works downtown. Properties are changing hands, buildings are being rehabbed, and a lot of plans are being drawn up behind the scenes. Below is a partial list of recent, pending and potential deals.
1 IBM Complex
River Road between North and Main streets
Site of former newspaper headquarters will house new IBM office building, apartments, garage and retail space.
2 Commerce Building
Laurel and N. Third streets
New Orleans developer T. J. Iarocci is redeveloping it into 100 condos with shops and, maybe, a ground floor grocery store.
3 Bernhard property
River Road between Laurel and Main streets
Jim Bernhard and Trey Trahan acquired the 1.3-acre tract from Richard Preis in late 2012. No plans have been announced, but many believe a mixed-use development is inevitable in the future.
4 Hampton Inn
Lafayette Street between Laurel and Main streets
Downtown's fourth major hotel opens in April.
5 The Elysian
Spanish Town Road, east of Interstate 110
The Gulf Coast Housing Partnership is developing a 110,000-square-foot mixed-income apartment complex that will include 100 affordable apartments.
6 Creative Bloc
Main and N. Eighth streets
Entrepreneur John Jackson is redeveloping a string of one-story buildings into a collaborative space for a video production company.
7 Latil Building
324-326 N. Third St.
Andy Blouin is renovating the historic building that housed a long time stationery store and turning it into a reception hall and catering company.
8 Repentence Park
River Road at North Boulevard
Two acres of newly renovated green space and fountains between the Old State Capitol and River Center Arena will connect to North Boulevard central green.
IN THE WORKS
9 Capital One Building
Commerce and N. Third streets
Investor group led by architect Dyke Nelson has it under contract. Possible uses include mixed-use with residential units.
10 Richoux Building
Florida and N. Third streets
Businessman Mike Crouch has it under contract and is negotiating with Raising Cane's to bring the chain's first downtown restaurant to the ground-floor space.
11 River Park
River Road north of Hollywood Casino
Contractor Pete Clements continues efforts to secure financing for his 36-acre mixed-use development of condos, retail and office space.
12 Greenway (segment)
This connecting green space runs down North Boulevard from Town Square to Interstate 110, then south to City Park and north, via Seventh Street, through the Capitol Park to Memorial Stadium.
13 River Center Library at Town Square
New 45,000-square-foot high-tech library is in design and development phase.
DOWN THE LINE
14 Former Dept. of Insurance site
The state has this prime property on the market for some $5 million. Though restrictions may apply, some sort of mixed-use development is a possibility, should it change hands.
15 Old State Office Building
150 N. Third St.
This historic 12-story office building is among the surplus state properties, on the market for some $10 million. Real estate sources say a residential redesign is attractive.
16 Hartley-Vey parking lot
River Road between Florida and Laurel streets
The 129,000-square-foot lot is considered one of the most valuable pieces of downtown property, with an estimated value of more than $15 million. The owners say it's not for sale, at least not at the moment.
17 Hearin parking lot
Sixth Street between Florida and Convention streets
John O. Hearin reportedly says he'd like to do a residential development on the lot, but isn't ready to discuss firm plans yet.
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