Look Out! 10GW of Power

While the rest of the nation builds regulatory walls against data centers, Southwest Louisiana is taking a completely different approach. Lake Charles and surrounding Calcasieu and Cameron Parishes have spent decades embracing heavy industry in a way few other communities in North America ever have. This region is the industrial engine of the Gulf Coast—home to massive petroleum refineries, petrochemical complexes, and multi-billion-dollar Liquefied Natural Gas export terminals. In a landmark announcement, LNG developer Venture Global inked multi-billion-dollar framework agreements with energy giants GE Vernova and Baker Hughes. The deal paves the way for up to 16 combined-cycle, gas-fired power generation blocks, capable of producing over 11 gigawatts of power. Up to 10 gigawatts of that electricity is slated to feed new, adjacent AI compute and data center projects. Here is the secret weapon that makes this deal so important for real estate and energy investors: Venture Global isn't asking Entergy or the local power grid for a single megawatt. ------------- **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1) iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613) Website: [www.victorjm.com http://www.victorjm.com/](http://www.victorjm.com http://www.victorjm.com/) LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce) YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734) Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso) http://www.facebook.com/realestateespresso%5D(http://www.facebook.com/realestateespresso) Email: [[email protected] mailto:[email protected]](mailto:[email protected] mailto:[email protected]) **Y Street Capital:** Website: [www.ystreetcapital.com http://www.ystreetcapital.com/](http://www.ystreetcapital.com http://www.ystreetcapital.com/) Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital) http://www.facebook.com/YStreetCapital%5D(https://www.facebook.com/YStreetCapital) Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)

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  Welcome to the Real Estate Especial Podcast, your morning shot of what's new in the world of real estate investing. I'm your host Victor Manash. On today's show, we're looking at a major shift at the intersection of energy, AI, and commercial real estate. Now, if you've been following real estate trends over the last couple of years, you'll know that data centers have been the golden child of institutional capital. Some of the technology hyperscalers, private equity firms, and real estate investment trusts are pouring hundreds of billions of dollars into building out digital backbone required to train next generation AI models. But there's just one massive problem. Across the country, local communities are shutting the door. From Northern Virginia's data center alley to Georgia, North Carolina, even Texas, we're seeing a major

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  wave of not in my backyard opposition. Neighbors are turning up at city council meetings protesting the noise in massive cooling fans, objecting to what could be potential massive water consumption, and the possibility of increasing electricity costs. Worse yet, conventional data centers plug directly into the local utility grid. That massive draw on electricity threatens to strain local power supplies, and it could force utility companies into major upgrades that would eventually get passed down to residential customers in the form of higher bills. The result is zoning boards are denying permits, local governments are issuing moratoriums, and power utility interconnection queues are backed up anywhere from five to seven years.

• 1:23Speaker 00

  Which brings us to Lake Charles, Louisiana. While the rest of the nation is building regulatory walls against data centers, southwest Louisiana is taking a completely different approach. Lake Charles and the surrounding area, including Calcasieu Parish, Cameron Parish, have spent decades embracing heavy industry in a way that few other communities in North America ever have. This region is the industrial engine of the Gulf Coast. It's home to massive petrochemical plants, petroleum refineries, multi-billion dollar liquefied natural gas plants. And in Lake Charles, heavy industry is not viewed as a nuisance, it is the economic foundation of the community. Local municipalities in the area know how to handle complex industrial permitting. The local zoning is well established, and the regional labor force has a lot of expertise

• 2:08Speaker 00

  in mega project construction, and pipe fitting, and power generation. And now, that unapologetic embrace of heavy industry is positioning Lake Charles as a new potential capital of AI power infrastructure. Now, this is a community in which my team has been heavily invested in for close to a decade. Our first project was a workforce housing RV park specifically for the workers who come from out of town to work in various aspects of construction in the petrochemical industry. Now, to be fair, it took a long time for that project to be performing even halfway decently financially. In the early years, occupancy never met the expectations. That's starting to turn around now, as a lot of new infrastructure is coming to the community. We also built an assisted living and memory care campus, which by the way,

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  won the Senior Housing News Architectural Design Award back in 2021. That facility is now full, and we're getting great monthly rates. Immediately next door to that, we started development of a 240 unit apartment complex. Now, we paused that project a couple of years ago, because it looked like the market conditions were getting a little bit too risky, especially with rising interest rates and rising construction costs. At the same time, we saw a glut of new supply coming in from the restoration of a number of hurricane damaged units. So at that point, it made sense to pause the project. Well, now, the market conditions have changed. And just yesterday, in a landmark announcement, LNG developer Venture Global inked a multi-billion dollar framework agreement with Baker Hughes and General Electric Vernova. The deal pays

• 3:31Speaker 00

  the way for up to 16 combined cycle gas-fired power generation blocks capable of producing over 11 gigawatts of power. 1 gigawatt of that power is for the LNG plants, and 10 gigawatts is slated to feed new adjacent AI compute and data center projects. Well, here's the secret weapon that makes this deal so important for real estate, as well as energy investors. Venture Global is not asking the local power utility for a single megawatt. They're not even asking to connect to the state level grid. They're building these power generation plants in what the industry calls an island mode, completely off-grid, behind the meter generation. Instead of waiting seven years for the utility connection or triggering public fights over residential rate hikes, Venture Global is taking low-cost natural gas straight from

• 4:16Speaker 00

  the regional pipeline infrastructure and generating electricity onsite using GE Vernova and Baker Hughes gas turbines. And those will feed adjacent data center facilities on their own industrial land. The CEO of the company described the strategy as creating a vertically integrated AI utility. By anchoring this off-grid model in Lake Charles, they bypassed the two largest bottlenecks holding back the multi-trillion dollar AI revolution. Number one is congestion in the electrical grid, and number two is public pushback. For real estate investors, this announcement signals a major economic windfall for southwest Louisiana. And that's across several sectors. Number one, while they are taking an island approach, nothing is ever an island unto itself. There will be economic spinoff in the area. Anytime you have billions

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  and billions of dollars of investment going into a community, that drives demand for housing, it drives demand for food and beverage, for hotels, for everything that's required in a community. So that's going to attract thousands of specialized trade workers in construction, hundreds of high-paying permanent engineering and technical jobs, and that workforce drives sustained demand for multifamily rentals, single-family built-to-rent communities, and extended stay hospitality. And then, third, commercial service support. A massive expansion in power generation draws an entire ecosystem. That includes equipment repair hubs, specialized logistics facilities into that Lake Charles industrial corridor. Now, these suburban markets across North America are fighting over data center zoning and power grid allocations. Lake Charles is demonstrating how that heritage and that willingness to embrace

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  heavy industry is in fact going to be used to power the next generation of the digital economy. As real estate investors, the lesson is clear. Investment capital seeks out those jurisdictions where it gets the best treatment. And a community that welcomes economic growth is one that's going to attract that capital. So continue to keep a close eye out for southwest Louisiana as this off-grid AI energy model unfolds. As you think about that, have an awesome rest of your day. Go make some great things happen, and we'll talk to you again tomorrow.