The downtown Baton Rouge office market is likely to shift from a landlord’s market to the tenant’s favor this year. Vacancy rates have returned to pre-Hurricane Katrina levels, and there are options that didn’t exist in the past few years, says Branon Pesnell, a broker with Beau Box Commercial Real Estate who specializes in the office market.
City Plaza has vacancies now that Phelps Dunbar and Louisiana Business, the parent company of Business Report, Daily Report and 225 have moved out. Phelps Dunbar is now in neighboring II City Plaza, and Louisiana Business has a new office on Jefferson Highway. Stanford Financial Group, mired in a scandal, has left its eighth-floor offices in City Plaza. There is now 56,000 square feet of free space in City Plaza, Pesnell says.
City Plaza is competitive with One American Place in pricing, averaging $22 to $24 a square foot, which also has upcoming vacancies, Pesnell says. The cost of parking can add another $2 per square foot to costs downtown, which is a possible turnoff to suburban tenants looking for more affordable space. II City Plaza, which also has vacancies, averages $28 a square foot. Chase North and South towers are currently full.
Pesnell says this year’s market conditions are challenging with sublease space on the rise and rates expected to fall nearly 10% if the recession lingers. He estimates the area already has 100,000 square feet of sublease space available as companies consolidate offices to cut costs.—Anna Thibodeaux
