Is There Chemistry Between Monsanto, CRE?
- Jun 25, 2015
By Gail Kalinoski, Contributing Editor
Louisiana’s industrial market would be the first commercial real estate sector to benefit from a potential $1 billion expansion by Monsanto at its Luling, La., over the next three to five years but there should be positive impacts on office, multi-family and retail sectors as well, according to a CRE executive in the region.
“It really solidified the need for those service companies to be in this area. The trickle-down effect is that they will expand their operations and increase their footprints in this region. It’s what we have been seeing as these announcements come out,” Brent Garrett, executive vice president of Beau Box Real Estate, told Commercial Property Executive. The firm has offices in New Orleans, Baton Rouge and Lafayette, La.
Monsanto President & COO Brett Begemann and Louisiana Gov. Bobby Jindal said Wednesday that the chemical giant had made a decision for a preliminary investment to expand the St. Charles Parish plant that makes Roundup Ready Xtend Crop System. Pending a final decision by the company’s Board of Directors in early 2016, Monsanto could invest more than $1 billion at the Luling plant, where dicamba, an active ingredient in crop protection products, is produced. The company last expanded the plant in 2010, when it added 26 new jobs and an estimated 166 indirect jobs to the region.
The new project would retain the current 645 jobs at the plant and create about 95 new positions with average salaries of about $76,500 per year. The Louisiana Economic Development office estimates that the project would result in an additional 450 indirect jobs in the state and would also generate about 1,000 construction jobs.
“Our Luling facility is a logical site uniquely positioned in the center of Monsanto’s manufacturing network, with convenient access across the Americas where the Roundup Ready Xtend Crop System has a fit,” Begemann said in a news release. “The state’s highly skilled workforce and business-friendly environment also put Louisiana at the top of our list for this potential expansion.”
The LED began formal discussions with Monsanto in March. The state has offered the corporation a performance-based $5 million Modernization Tax Credit and a performance-based $1.7 million Economic Development Award Program grant to reimburse rail and electrical infrastructure expenses for the expansion. Monsanto will also be able to take advantage of other state incentives including the Quality Jobs and Industrial Tax Exemption programs.
“This investment not only would retain hundreds of valuable jobs in our state but provide many more great career opportunities for Louisiana families,” Jindal, a Republican who formally announced his intention to seek the GOP presidential nomination on Wednesday, said in the prepared statement.
Garrett said the fact that Monsanto has a plant in Luling “should tell us it’s a good possibility of the expansion happening because of the existing infrastructure compared to a new facility.”
He said his firm is “getting calls from the indirect benefactors looking for places to locate their businesses.” Garrett said industrial sectors will see the immediate benefit if Monsanto expands followed by engineering companies seeking additional office space.
Garrett noted that the drop in oil prices has “caused folks to tap the brakes a little bit in the first half of the year,” but he expected the Monsanto announcement along with other new expansions and projects in the lower Mississippi River corridor will give the region a strong second half.
He said multi-family and retail sectors will also improve on good news like the potential Monsanto expansion.
“We’re very bullish about these expansions and the positive impact that they should have on the economy,” he told CPE. “We’re optimistic and hopefully this is a trend that will continue for quite some time.”