New Orleans’ first new industrial construction project in 20 years starts at Michoud
Regional economic development officials on Tuesday announced a major expansion of NASA’s Michoud Assembly Facility campus in New Orleans East, breaking ground for a 50-acre industrial and office park adjacent to the space agency buildings.
The development, which will be called Propel Park, will include more than 1 million square feet of warehouse and office space. It represents the first new industrial construction project in New Orleans in more than 20 years, according to economic development officials.
Los Angeles-based Industrial Realty Group, or IRG, is developing the park with plans to invest more than $100 million in the project over the next few years. It has signed a long-term lease for the site with NASA and plans to build it out in four phases, targeting tenants for light assembly, manufacturing and distribution.
The first phase will consist of a 260,000-square-foot warehouse that will cost an estimated $35 million and be home to Propel Park’s first tenant, Textron Services, a global manufacturer of aviation and military equipment. Textron, which has local offices in Slidell and a manufacturing plant near Michoud on Chef Menteur Highway, already leases warehouse space in one of the older Michoud buildings. It will relocate to a 97,000-square-foot space in the new warehouse.
IRG is close to finalizing lease agreements for the remaining space in that building and is negotiating with tenants for subsequent phases, said company President Stuart Lichter. He would not identify these tenants, making it hard to estimate how many jobs Propel Park could bring to the area. Officials said the number could be several hundred once all four phases are finished.
Other warehouseing plans
The project is the latest in recent months targeting industrial services such as warehousing and distribution. An industrial park has been mentioned as a potential use for part of the shuttered Six Flags amusement park site, which city officials have been trying to redevelop in New Orleans East upriver of Michoud. and the the Port of South Louisiana has discussed plans to attract warehousers and manufacturers to the former Avondale Shipyards site in West Jefferson.
Analysts think the Louisiana International Terminal deepwater port planned for lower St. Bernard Parish, coupled with renewed interest in the U.S. space program, is driving some of the interest in warehouse and distribution properties such as Propel Park.
“Going forward, I really believe New Orleans East can be ideal for distribution, manufacturing and cargo warehousing connected to the Louisiana International Terminal,” said Transoceanic CEO Gregory Rusovich, a veteran of the maritime industry. “You come off Judge Perez [Drive], connect to [Interstate] 510 then get on I-10 andyou’re right there. I’m excited about the opportunities.”
What’s in it for NASA, tenant?
Planning for Propel Park began several years ago, after NASA ended its space shuttle program and began looking at alternate uses for the vast Michoud Assembly Facility.
Rather than close it, the space agency began leasing parts of its unused buildings to tenants such as Textron. Although Michoud has since gotten a new lease on life, thanks to the Artemis rocket program, the demand for space from outside users has continued to increase, Michoud Director Lonnie Dutreix said.
In late 2021, NASA inked a deal with IRG to be the master developer for the new park. Terms of the deal were not disclosed, but the company did not receive any Louisiana state incentives to develop the project.
For NASA, the deal makes sense because as an arm of the federal government, it wouldn’t be able to realize any revenue if it sold its undeveloped land. Leasing it, on the other hand, will generate money that can be plowed back into its local properties.
For IRG, the deal is attractive because the site is safe — secured behind high levees and security gates — shovel-ready and adjacent to NASA.
“NASA is a huge demand generator, and all these new space companies — Space X and others — want to be around NASA because they get the benefit of the knowledge and invested infrastructure,” Lichter said.
No Amazon or Walmart
Lichter said the park will not try to recruit an Amazon or Walmart for a massive distribution center but will target smaller and “last mile” tenants, as well as technology and light manufacturing companies that would have a natural synergy with NASA.
The first phase of development could be completed by the end of this year. Impetus, a regional general contractor specializing in building and infrastructure spaces, is the general contractor.
It’s unclear how much demand exists for warehouse space in New Orleans East, which has been snubbed by investors and tenants alike for several decades. Commercial appraiser Bush Benton says lease rates for warehouse and industrial space in that area have been so depressed that it has been difficult for investors to justify investing in a major development like Propel Park.
But there are a few bright spots, including Blade Dynamics, which manufactures huge blades for wind turbines on a site adjacent to Propel Park.
Additionally, the lack of new Class A warehouse space in the area will inherently make Propel Park attractive, said Lee Audibert, a Property One commercial broker who is handling leasing at the development.
“There is demand for new Class A warehouse space,” Audibert said. “Most of the product in the New Orleans area is dated; it’s from the 1970s and ‘80s and is inefficient for modern use.”
Although the developer of the nearby Six Flags site has said his plans could include a new industrial park, Louis David of the New Orleans Business Alliance, which helped facilitate Propel Park, said there is room for both in the market.
“If you were to have two industrial parks, I think they would be complementary,” David said.
Although the developer of the nearby Six Flags site has said his plans could include a new industrial park, Louis David of the New Orleans Business Alliance, which helped facilitate Propel Park, said there is room for both in the market.
“If you were to have two industrial parks, I think they would be complementary,” David said.
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