The tide may be turning for office landlords—both nationally and in the Capital Region—as the market continues to adjust to post-pandemic realities.
According to a recent New York Times report, office building sales across the U.S. totaled $64.3 billion in 2023, a nearly 21% increase from the year prior. Leasing activity is also on the rise: In 2024, 6.5 million more square feet of U.S. office space was leased than vacated—the highest net absorption since 2019.
That momentum is being felt locally, says Steve Legendre, regional vice president and Baton Rouge market leader at Stirling Properties.
“Leasing activity increased quite a bit post-election and has continued,” Legendre says. “There’s not a lot of inventory out there, but we’ve had many more lease deals over the last four to six months than the six months prior.”
While office sales remain slow in the Capital Region due to high interest rates, leasing is proving more attractive—especially for startups that prefer to test growth potential before buying property. The gradual return to in-office work is also fueling demand.
“A lot of companies still operate on a hybrid schedule, where they may work from home on Fridays and certain staff members in their office might be able to work from home, but it has rebounded back,” Legendre says. “That’s the trend nationally as well.”
Bill Sanders, partner and principal at Lee & Associates, adds that companies are committing to longer leases as they embrace the return to office.
“As companies have been embracing a return to work, we’ve seen a definite uptick in activity,” he says. “There is more certainty from tenants as to how much space they need and a willingness to commit to that space longer term.”
New construction costs—now about 30% higher than pre-pandemic levels—are contributing to higher rental rates across office, retail, and industrial sectors. In response, landlords are renovating older buildings to meet modern standards, which is also driving rents up.
“What we see as a common trend is the flight to quality,” Sanders says. “Tenants upgrading their office space, maybe moving from a class B building to a class A building, so whether that would be a slight downsize or just getting more efficient and spending a little bit more money to be in a better building with more amenities and thinking of their office space as a recruiting tool to recruit top talent.”
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