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The local office market is moving in the right direction, as lower interest rates and declining work-from-home models bode well for the sector, according to Fabian Edwards with Elifin Realty.
Baton Rouge’s office utilization rates hover around 60%, higher than the 50% national average, according to data presented at the annual Trends seminar earlier this year.
“I think a lot of other folks in the local market are starting to look at office a lot differently than a year or two years ago,” Edwards says. “As we get further from COVID, fewer and fewer businesses are operating on a remote, or even mainly remote, kind of hybrid model. That has pushed a lot of companies back to the office in the traditional sense.”
The office sector saw an increase in sales volume and property values, according to October figures. Sales volume increased from $86.9 million in September to $92.8 million last month—an increase of 6.81%. Property values rose from $145.72 per square foot in September to $146.42 in October. Despite the increase in sales volume, office deals were down 6.82%.
Edwards says despite the tide turning, the inventory is low compared to previous years, but an encouraging sign is that some larger office properties have recently sold. Weiler Plastic Surgery purchased a 17,469-square-foot property on Bluebonnet Centre Boulevard earlier this month. Other deals include Five-S Group’s purchase of the Pelican Financial Plaza office building and the sale of a 30,000-square-foot space on Corporate Boulevard near College Drive.
“All signs are pointing to a really strong and healthy office comeback,” Edwards says.
Employers trying to get their workers back in the office want to provide an upscale work environment to incentivize employees to come back. Edwards says that office buildings in some areas along Bluebonnet Boulevard, Perkins Road and Jefferson Highway are some of the most desirable properties for business owners.
“From the purchaser’s perspective, folks want nice offices that will incentivize employees to come back, but also that will likely continue to appreciate over time,” Edwards says.
Companies leasing buildings in less-desirable areas often look to upgrade to more favorable locations when their leases come up for renewal, according to Edwards.
Jacob Loveland with Elifin says rate cuts don’t affect leasing as much as ownership, but they do spark interest among those looking for investment properties.
