Daily Report

This Afternoon's Headlines / Tue, September 30, 2014

News alert: Highland Coffees landlords want to reopen talks

The owners of the West Chimes Street building that is home to Highland Coffees want to reopen lease negotiations with the coffee shop's owner, Clarke Cadzow. The move comes one day after Cadzow announced he would close the business, which has been a fixture in the North Gates neighborhood for 25 years, on Christmas Eve because he was unable to come to terms on a new lease with the building's owners. The announcement prompted outrage from loyal customers, who flocked to social media sites and signed an online petition to save the business. “We didn't want Highland Coffees to move,” says Hank Saurage, one of the landlords. “We are willing to reopen these negotiations with Clarke, and we are hopeful his loyal customers will understand we need their support as well.” It is unclear if or when the two sides may meet. Cadzow could not be reached for comment.—Stephanie Riegel

LNG facility to break ground at Port of Greater Baton Rouge next year

Construction on a natural gas liquefaction and fueling facility is set to get underway on roughly 80 acres at the Port of Greater Baton Rouge next year. Houston-based Waller Marine Inc. and Omaha-based Tenaska NG Fuels LLC announced today plans to build the facility, known as Tenaska Bayou LNG, with construction expected to take between 18 months and two years. Commercial operation is expected to begin in the first quarter of 2017. The facility initially will be capable of producing 200,000 gallons of LNG daily, the companies say. According to a conversion table provided by the U.S. Department of Energy, 200,000 gallons of LNG is the energy equivalent of more than 133,000 gallons of gasoline. The plant will also provide compressed natural gas. The companies say the LNG and compressed gas will be a lower-cost and cleaner-burning alternative for high-horsepower marine, transportation, natural gas and oil exploration, as well as production industries throughout the region. "Baton Rouge is a great location for this facility," says Doug Lauver, vice president of LNG development for Tenaska, in a prepared statement. "It's ideal for serving marine, trucking and industrial customers, and Louisiana and Baton Rouge have positive business climates. The energy infrastructure to support the facility is in place, and a local workforce is available to build and operate the plant." The companies have more details on today's announcement.

BR rum distillery delayed, hopes to break ground by end of year

Cane Land Distilling Company, a new startup that will distill rum from its 1-acre site at River Road and Oklahoma Street near downtown, is hoping to begin construction on its 29,000-square-foot distillery before the end of the year. The company—which put up a sign last week on its property depicting the planned facility—had originally hoped to be in operation by now, but ran behind schedule for a variety of reasons, including the inherent challenges of building along the River Road. "You're only allowed to build along the river at certain times of the year, depending on how high the water is," explains Walter Tharp, who co-owns Cane Land with partner Jim Massey. Plans for the distillery call for a two-story building that includes the distilling and barrel storage areas, as well as a 1,300-square foot tasting room/bar and retail area that will sell bottled products and promotional merchandise. There will also be an outdoor space for events. Cane Land announced plans for its new business in mid-2013, not long after acquiring the River Road property for $140,000. The property abuts the 28-acre site that was later announced as the site of the Water Campus. Tharp, whose family owns Alma Plantation in Pointe Coupee Parish, says the property—with its proximity to the cane fields just 17 miles away—is ideal because one of Cane Land's signature products is a rhum agricole, a special type of rum made with fresh-pressed cane juice rather than molasses. When completed, the distillery will have a production capacity of 50,000 cases. Republic National Distributing Co. has agreed to carry the product, Tharp says. See a rendering of the distillery. —Stephanie Riegel

Quiznos closing on Corporate; Smashburger negotiating for BR location

After 14 years in business, Quiznos is closing its restaurant in the shopping center at 7474 Corporate Blvd. Real estate broker Mark Hebert, who handles leasing for the shopping center, says the restaurant will vacate the 1,650-square-foot space at the end of October. It was one of the original tenants in the busy development, which was built in 2000. That leaves just one Quiznos outlet in the Baton Rouge market. A Quiznos at 5565 Essen Lane closed in 2013. Though Hebert has no immediate plans to fill the space on Corporate, he confirms he is negotiating with Smashburger to open elsewhere in the shopping center in a space he says will soon be vacated. Smashburger is a fast casual chain based in Denver and is one of the fastest growing restaurant chains in the U.S. It currently has three restaurants in Louisiana—one in New Orleans and two in the Shreveport-Bossier area. This would be its first Baton Rouge location. —Stephanie Riegel

Ascension Parish industrial park approaches next phase

L.J. Grezaffi, the developer of a 700-acre industrial park at the intersection of La. 30 and La. 73 in Ascension Parish, says the next phase of the project can be expected to begin next spring after a 1.25-mile road is completed. The road cuts through the development and is needed to access some areas of the park that are not immediately accessible by highways 30 and 73. Grezaffi says the thoroughfare will relieve between 40% and 50% of the traffic on La. 30 going toward Interstate 10 from the plants in the area. The road will be as wide or wider than La. 73, Grezaffi says. Bids on the project, stalled due to the wet summer, will be taken in mid-October. Grezaffi says there are four companies that have negotiated a space off of the future corridor, but, "until you have it in writing, there's no guarantee." Two of those companies lease equipment that is used in nearby plants. Another, Grezaffi says, is a warehouse company. Several major projects are currently under construction, Grezaffi says, including buildings for Cypress Equipment and Crawford Electric. The industrial park currently houses more than 50 companies with about 800 employees total. There are 340 acres left for purchase or lease. Grezaffi says most businesses construct their own buildings, but he has signed arrangements to build to suit. Check out details of what land is still available. —Kelly Connelly

Cook: Third filing of Jefferson Quarters subdivision planned

Edward "Scooter" Stafford of Stafford Custom Homes has purchased a 4.41-acre site fronting Jefferson Highway south of Hoo Shoo Too Road from Randall and Rebecca Smith for $465,000, or about $2.42 per square foot. A preliminary plan shows the property will be used for the development of 20 single-family lots that will serve as the third filing of Jefferson Quarters subdivision. But representatives from Stafford homes say they are rethinking the potential development of lots and are also considering constructing a single-family residence on the site because development costs for subdivisions have escalated. Stafford acquired the property under BES Investment Properties LLC, and the Smiths were represented by Brent Struthers at Beau Box Commercial Real Estate. A plan shows 20 lots being developed with an average size of 50 feet by 130 feet. The site includes more than 300 feet of frontage on Jefferson Highway and about 50 feet of frontage on the dead-end of Doc Bar Avenue. The preliminary plat indicates Doc Bar Avenue will be extended into the site, but there will be no access to Jefferson Highway. Stafford has built extensively in subdivisions including Green Trails and University Villas, and will likely build a similar product, but could not be reached for comment as of this afternoon's deadline.

(Appraiser Tom Cook owns Cook Moore and Associates. Reach him at 293-7006 or TCook@cookmoore.com.)

Andrews: Consumer protection group getting tough on mortgage servicers

On Monday, the Consumer Financial Protection Bureau, a relatively new consumer advocacy group created out of the Dodd-Frank Act, enforced new mortgage servicing rules against Flagstar Bank of Troy, Michigan, and hit the $9.87 billion bank with $37.5 million in fines. At issue are Flagstar's loss mitigation activities and the bank's failures "at every step in the foreclosure relief process" according to a CFPB statement. "Flagstar "took excessive time to process borrowers' applications for foreclosure relief, failed to tell borrowers when their applications were incomplete, denied loan modifications to qualified borrowers, and illegally delayed finalizing permanent loan modifications." As a result, "struggling homeowners lost the opportunity to save their homes," says CFPB Director Richard Cordray. Furthermore, the CFPB says similar actions against mortgage servicers will be taken across the country, including in Louisiana, if servicers fail to follow the rules that went into effect at the beginning of this year. "The bureau has been clear that mortgage servicers must follow our new servicing rules and treat homeowners fairly," says Cordray, adding "today's action signals a new era of enforcement to protect consumers against the cost of servicer runarounds." Most mortgage servicers have an incentive to work with struggling borrowers to minimize losses, and the Flagstar situation is an exception to the rule, but area homeowners who are having trouble with a problem mortgage can find a local HUD-approved counseling agency by visiting the CFPB website and learning about the process.

(Brian Andrews is assistant director of the Real Estate Research Institute at LSU's E. J. Ourso College of Business. His private practice is Andrews Commercial Real Estate Services, and he can be reached at brian.andrews@acresllc.com.)

BR roofing company buys Highlandia site of new office, warehouse

Baton Rouge-based Premier South Roofing and Sheet Metal has purchased property at 625 Highlandia Dr., on which the company's new offices and warehouse have been constructed and are set to be moved into next week. Premier South, which is currently located 11646 Industriplex Blvd., purchased the property as Premier South LLC from Highlandia R&D LLC for $1,214,919, according to records filed with the East Baton Rouge Parish Clerk of Court today. A spokesperson for Premier South says the new facility on Highlandia includes a two-story office, as well as a warehouse. The company's offices on Industriplex will be vacated following the move. The listed manager of Highlandia R&D is Randy Poche. —Steve Sanoski

'10/12 Industry Report': Industrial construction curve has barely begun, but real estate markets are already booming

Many Baton Rouge-area companies are in a wait-and-see mode in terms of their expectations for an industrial business surge, but local real estate professionals don't have to be convinced of what lies ahead. As detailed in a feature from the new 10/12 Industry Report—a special publication from the publishers of Business Report—agents in the residential, commercial and industrial sectors all say rising demand is keeping them busy searching for space and scouting deals for clients. Not surprisingly, vacant warehouses are growing scarce. But available office space is also getting tight, says commercial agent Jonathan Walker at Maestri-Murell Inc. in Baton Rouge. Much of the office demand is coming from engineering firms that are expanding to handle large industrial design projects they have taken on. "They need a lot of manpower, and they fill up a lot of office space," Walker says. As professional services and other support businesses staff up, the action ripples into housing as well. The rising number of workers in the area is boosting demand for apartments, as is clear in the number of new rental units proposed or already under construction in the area. The projects include a 330-unit complex in Perkins Rowe being developed by Vintage Realty of Shreveport and another 300-unit project nearby by Vintala Partners. Apartment leasing has picked up steam in part because single-family home mortgages are still somewhat difficult for first-time buyers to acquire, given that banks these days demand a 20% down payment. Read the full story, and check out the full lineup of stories from the 10/12 Industry Report specialty publicaiton. Send your comments to editors@businessreport.com. Copies of the 10/12 Industry Report can be purchased at the offices of Louisiana Business Inc., 9029 Jefferson Hwy., Suite 300, or by calling 225-928-1700. Look for future issues of 10/12 Industry Report to be published as the industrial boom along the Interstates 10 and 12 corridor continues.

News roundup: Jindal administration rewrites LSU hospital deals … Pennington researcher awarded $10M to study obesity treatment options … Condensate export numbers trickle out

The new deal: Gov. Bobby Jindal's administration has renegotiated contracts for six LSU hospital privatization deals, hoping to reach a compromise with federal health officials that will keep Medicaid dollars flowing to the privatized patient services. The contracts govern the management transfer of hospitals in New Orleans, Lafayette, Bogalusa, Shreveport and Monroe and a deal that closed LSU's Lake Charles hospital and moved its inpatient services to a nearby private hospital. The Jindal administration's new proposal would change the way the hospital managers are paid, establishing a new payment category with a special reimbursement rate. The Associated Press has the full story.

Securing funding: The Patient-Centered Outcomes Research Institute announced today that its board of directors has approved funding a $10 million study led by the Pennington Biomedical Research Center’s Dr. Peter T. Katzmarzyk, who will test patient-centered obesity treatment options and programs in clinics serving high percentages of black and poor individuals throughout Louisiana. Learn more about the study. The funding is a part of $102 million PCORI is providing to 46 new studies of obesity-related issues. PCORI has more details on today's announcement.

Between the lines: New government data about crude exports includes information about the first-known U.S. exports of lightly treated condensate, but FuelFix.com reports the real details are hidden from view. According to the report, the U.S. in July exported 400,000 barrels of those unfinished kerosene and light gas oils, which by definition reflect partially refined products and generally require further processing. Given that no unfinished light gas oil shipments were reported in the five previous months, it appears likely that all 400,000 barrels recorded for July were minimally processed condensate. Read the full story.
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