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PRESS RELEASE SANDRA CORRINAG, SIOR

FEATURED ARTICLE IN CityBusiness

 

Jefferson office market stagnant, but strong
By: Robin Shannon, Managing Editor

 

The steady growth that Jefferson Parish office markets have enjoyed in recent years is starting to show some signs
of flattening as companies related to the oil and gas industry began giving back some leased space in 2015, but
commercial Realtors say the diversified nature of the region will continue to keep those markets strong.

 

 


A recent yearend
report by Corporate Realty shows occupancy rates in
the Class A Metairie market dropping from about 95 percent in 2014 to 93
percent last year. Occupancy in smaller buildings remained steady at
about 91 percent. Average rental rates range from $21 to $24 per square
foot in most Metairie buildings.

 


Jeff Cohn, a sales and leasing associate for Corporate Realty, said the
market could be best described as “stagnant” rather than “shrinking,” but
added that there has been some impact from falling oil and gas prices in
recent months.

 


“There is a big section of the Metairie market that is leased to engineering companies that do work for oil and gas
firms,” Cohn said. “We are seeing some of those companies give back some space as they have let people go.”
Cohn said assorted companies have started to give back leased office space in Metairie’s three largest office
buildings – Lakeway Center, the Galleria and Heritage Plaza. He said that although occupancy has gone down, there
has been little impact on rental rates in the market.

 


“It continues to be a super tight market without a lot of contiguous space available to rent,” Cohn said.
The largest contiguous block of space currently available in the market is a roughly 44,700squarefoot
floor of 2121 Airline Drive. Formerly known as the Cox Communications building, the sixstory, 123,000squarefoot
property recently sold to the parent company of insurance firm Burns & Wilcox for the firm’s New Orleans office.
Sandra Corrigan of SRSA Commercial Real Estate, the leasing agent for the property, said the building has attracted
quite a bit of interest since the sale closed late last year. She said negotiations are underway with several
prospective tenants, including a bank, which will take over a ground level retail area.

 


“It’s a building that is so central to every location and hasn’t been available in over 10 years,” Corrigan said. “It
offers easy access to downtown, Metairie and the North Shore. It’s why Cox bought it when they did.”
Corporate Realty leasing director and broker associate Bruce Sossaman said much of the activity in the market has
been in the form of building sales similar to the transaction for the Cox building. In the past 12 months, deals have
been made for the purchase of the 94,000squarefoot Severn Place building at 2450 Severn Ave. and the 55,000 squarefoot
former University of New Orleans Jefferson Campus at 3330 North Causeway Blvd. That deal also included about 88,000 square feet of vacant land.

 


While no change is expected at Severn Place, Sossaman speculated that the highest and best use for the UNO
property would likely be new retail or hospitality.

 


“The land value alone was $60 per square foot,” Sossaman said. “When you factor in the building, it shoots to $90
per square foot. I think the highest and best use calls for it to be torn down and replaced with something new.”
Aside from a handful of medical practice offices on a smaller scale, Cohn said there has been very little activity in
the way of new construction in the Jefferson market. He said rental rates have not increased enough to sustain any
new substantial construction.

 


Sossaman agreed, adding that the increasing cost of land is making it tough for any kind of new space.
“You are seeing some landlords in Elmwood making improvements to some properties to increase leasing efforts,”
Sossaman said. “The owners of 800 Commerce Road West have made infrastructure improvements and common
area updates that have led to increased occupancy. Meanwhile, the owners of the 990 North Corporate Drive
building have been relocating tenants to sister buildings in the area to make that building ready for a pending
purchaser occupant.”

 


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purchaser occupant.”

 


Maria McClellan, an independent commercial broker who represents tenants, said many of her clients have been
considering some of that “flex space” found in the Elmwood area as a conversion from warehouse to office space.
“Parking is free and singlestory
building rents are much lower,” McClellan said. “You can also finish out the open
space how you want it.”


McClellan said the traditional office market in Jefferson is “saturated” and that there is very little out there.
“It is definitely still a landlord’s market,” she said. “Tenants seeking leases have had to get creative.”

 

 




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