The LSU Board of Supervisors today will consider entering into a 10-year lease for space on campus for the LSU Online department, currently located in Pleasant Hall, at a rate of some $35 per square foot.
The pricey new digs planned for the rapidly growing LSU Online is in the Louisiana Emerging Technology Center on E. Parker Boulevard, which is owned by the LSU Research Foundation, an affiliate of the university, and privately managed by a Georgia company.
For more than a year, the building—originally built in 2004 as a wet lab but never utilized as such—has been marketed as class A office space to private tenants, with little success.
Now, university officials say LSU Online needs the space—more than 21,000 square feet—because it has outgrown its longtime home in Pleasant Hall and no other space is available on campus to accommodate its needs.
But the 10-year lease deal, which board documents say cannot exceed a rate of $35 per square foot in the first year, though could increase to as much as $38 per square foot in subsequent years, would be one of the priciest in the market—by far.
Only a handful of class A office buildings in Baton Rouge command as much as $30 per square foot—the Coastal Protection and Restoration Authority building on The Water Campus, II City Plaza, and the IBM building among them, according to the 2019 TRENDS report and appraiser Wesley Moore. None lease for as much as $35 per square foot.
What’s more, on the Louisiana Commercial Database, the LETC building advertises available space at a rate of only $26.50 per square foot.
So, why is one arm of LSU charging another arm so much for the space?
LSU spokesman Ernie Ballard notes that NAI/Latter and Blum, which handles leasing for the building, ran lease comps showing $28-$38 per square foot is a fair market rate, and that the deal is a good one for LSU Online.
“LSU Online has specific needs that other available commercial space could not accommodate such as training rooms, classrooms and other needs of online learners,” Ballard says. “The LSU Research Foundation, an affiliate of the university, will do the buildout to meet those needs, and the buildout will be at the sole expense of LSURF. Considering the needs of LSU Online, the buildout … the lack of other available space … and the maximum rent of $35 per square foot falling within the fair market rate comp, this facility is the best option for LSU Online at this time.”
Several of the comps prepared by NAI/Latter and Blum broker Ryan Greene, however, are several years old. One dates back to 2010, another to 2013. Also, the priciest of the quoted leases are for properties in suburban Baton Rouge, miles from the LSU campus.
Greene stands by the comps and says the LETC building is unique and aptly suited to LSU Online.
Ballard says it is not unusual for one LSU entity to rent space on campus from another. He could not immediately say, however, whether LSU Online is currently paying rent to Pleasant Hall; and, if it is not, whether the online department will pass the cost of its new lease—not to exceed $751,900 per year—onto students.
A Board of Supervisors committee will consider the lease at a meeting this morning. The full board meets at 1 p.m.