by Sandra Corrigan, SIOR
Before I share our insights on the local New Orleans Office market following the recent Office Occupancy and Absorption Survey for 4th Quarter 2019 (prepared by Bruce Sossaman), I want to share some of the creative ways the SRSA Commercial Real Estate team is reacting in these uncertain times.
We have a team member showing office space through extended distancing and video shares; another is doing virtual tours for prospects.
One team member is setting an example by encouraging building owners to become COVID-19 mobile test centers for the new antibody tests to help reopen the city.
We are creatively closing sales through distance closings, where sellers and purchasers are in different rooms and closing documents are passed from room to room in bins with gloves and masks for everyone.
Another team member is using this time to drone video properties while taking courses to acquire his CCIM designation.
This is how the agents of SRSA Commercial Real Estate roll – we are creative and responsive. We know this business and Louisiana. We are here for you and available during this time of uncertainty.
Moving Forward – Summarizing the 2019 Office Market:
Starting with Class A Office Space in the New Orleans Central Business District (CBD), this market has had 21,598 SF of negative absorption (0.2% of overall market). At year-end 2019, occupancy was 86.95%. Rental rates continue to increase especially in office buildings with higher occupancies, such as 1250 Poydras, 639 Loyola and 1615 Poydras.
Class B Office Space in the New Orleans CBD market continues to reduce in size with the 1010 Common Building taken off the market for a total renovation – to include two hotels and several floors of future office space. The remaining market consists of three buildings totaling a little over 800,000 SF. These three remaining buildings reflect 79.6% occupancy as rates at 935 Gravier greatly benefited from the mass exodus from 1010 Common in the 4th quarter of 2019.
Next, the Class A Metairie market has gained 1.8% occupancy in the past year with the year-end occupancy being 89.88%. Rental rates remain strong, with all buildings consistently maintaining 83-94% occupancies.
The Class B Metairie market, which consists of 13 buildings – all distinct in quality, location and amenities – has dropped by 1.09% over 2019 with overall occupancy at 90%.
Although there are a few office buildings considered in the planning stage, no new construction will start without substantial pre-leasing, above current market rates. Therefore, the pipeline is empty – which results in a very stable market.
Just a note in closing, be safe my friends. This too shall pass and we will see each other again, soon!
