Baton Rouge Economy Absorbs Displaced Population
ROBERT SIEGEL, host:
The Capitol of Louisiana is Baton Rouge. It's also home to Louisiana State University, to the historically black Southern University and since September it's been home to a lot of people displaced by Katrina. At one time there were as many as 250,000 people joining the half million or so who live in and around the city.
I asked Stephen Moret, the head of the Baton Rouge Area Chamber of Commerce, how many of those people are still there and expect to stay?
Mr. STEPHEN MORET (Baton Rouge Chamber of Commerce): There's a range of estimates. I mean, they go really from 25,000 all the way to 100,000.
SIEGEL: I want to take you back to some of the things we were hearing six months ago and what has stuck and what turns out to have been just a brief spike. We were hearing about New Orleans businesses, law firms, other sorts of service industries of that sort, buying homes, almost by the subdivision around Baton Rouge to move their people upstate. Has it happened?
Mr. MORET: Well, it did. What you need to understand is the Baton Rouge area is, as a market, has typically grown a little less than one percent per year. So from a home construction perspective, you're talking about our whole market might generate in a year about 3,000 homes. So, you know, overnight you had 250,000 folks and even if you say there's say 50,000 to 100,000 here now, that's obviously many, many times the normal rate of construction of new homes and so forth.
And so what you saw, particularly with those organizations, the large law firms, the corporations that had the financial capability to do so, they immediately bought up apartments, they bought up condos, they bought up even homes for their executives and employees to be able to weather the post-Katrina situation.
SIEGEL: Are any of those firms staying in your city or are they going back home to New Orleans?
Mr. MORET: Well, they are. I mean, there's two kinds of folks that are staying here. One is, and perhaps the most common, is the organizations that already had a presence in both markets. So, for example, some of the big law firms have shifted their focus, to some extent, away from New Orleans and toward Baton Rouge. So, to the extent they had available space here, they've moved some of their partners and associates up here, same kind of thing in some of the other professional services firms.
We've also seen an acceleration and a creation of new business in the Baton Rouge area and we think about 150 new businesses in the fourth quarter of last year were New Orleans area businesses relocating to the Baton Rouge area. And we think that we ultimately are going to experience permanent increase in jobs and population equivalent to about five to 10 years of normal growth for the Baton Rouge area. So, Katrina has really kind of accelerated the Baton Rouge area's future, but it's sort of obviously complicated it as well.
SIEGEL: Well, to say that it's a hot real estate market with values rising would be an understatement.
Mr. MORET: Well, that's true to some extent, but I think that it's settled out a bit. I mean, what you saw right after Katrina was that corporations and individuals with the financial means to basically pay cash for homes, did so. And so, for example, in September, in a month in which we'd normally sell, say 600 to 700 homes, we actually sold nearly 2,000 homes in the Baton Rouge area.
But as a got close toward the end of the year we saw both the rate of sales slow down and we also saw the pricing slow down as well. And I think what you're seeing there, Robert, is that a lot of folks that have the means to come up with a short-term solution obviously did it. But now we've got a much, much bigger group of folks who are still kind of in limbo waiting to see what's going to happen with their insurance settlement, waiting to see what's going to happen with Federal support from President Bush and Congress.
What we think is going to happen is we've got this initial spike in population, but then we're going to see an acceleration in growth over the next few years as the New Orleans area recovery proceeds much slower than we all wish it would.
SIEGEL: What's happened at the airport? How many flights are coming in or out now as opposed to six months ago?
Mr. MORET: Well, I don't want recall the exact number, but I'll tell you that we're still, even today, elevated about 50 percent. One of the things that's been a positive for the Baton Rouge area is that we've gotten more direct flights.
SIEGEL: Is it a zero sum game? And, obviously, if people are flying in to Baton Rouge rather than into New Orleans, Baton Rouge's gain is New Orleans's loss ultimately, you're in competition with the other city.
Mr. MORET: I don't think that's right. We believe that our two economies are very linked and so we really actually are very sincere about wanting the New Orleans area economy to come back strong and to come back quickly because we think that is a good thing for the Baton Rough area.
SIEGEL: Mr. Moret, thank you very much for talking with us.
Mr. MORET: Oh, thanks, Robert, I enjoyed it.
SIEGEL: Stephen Moret, how is President and Chief Executive Officer of the Baton Rouge Area Chamber of Commerce. He spoke to us from Baton Rouge.