Local real estate brokers weren’t exactly surprised by news this week that the Bon Carré Business Center is changing hands as it struggles with vacancies.
“Bon Carré was as great redevelopment project of an old mall when Cortana and the surrounding area was vibrant,” says Maestri-Murrell Commercial Real Estate broker Jonathan Walker. “But that’s not the case anymore.”
As first reported by Daily Report on Thursday, Commercial Properties Realty Trust has reached an agreement to transfer the sprawling property on Florida Boulevard back to its lender after defaulting on a more than $36 million mortgage.
Several factors came together in 2017 to make ownership of Bon Carré no longer sustainable for CPRT, the for-profit real estate arm of the Baton Rouge Area Foundation.
CPRT attorney Charles Landry says the 10-year mortgage on the property, originally a nearly $42 million loan, came due last April with a $36.1 million nut. The property’s Enterprise Zone Tax Exemption, which capped its property taxes at $80,000, also expired and its tax bill increased nearly 10 times to $796,000.
Meanwhile, occupancy at the center—which encompasses some 43 acres and includes more than 770,000 square feet of leasable space—has fallen to some 68%, down from more than 80% earlier in the decade.
Ty Gose of NAI/Latter & Blum, which handles leasing at Bon Carré, says the dip in occupancy has left an additional 120,000 square feet of vacant space at the development, bringing the total amount of vacant space to 220,000 square feet. That’s equivalent to the size of the IBM building in downtown Baton Rouge, he notes, adding that’s a lot of space in a relatively soft office market with lots of competition.
Gose says there are several letters of intent from potential tenants that could individually fill anywhere from 5,000 to 10,000 square feet. While that’s a considerable amount of activity, he adds that “it takes a lot of 5,000 and 10,000 square feet users to fill that space.”
“It is easy to see the difference in vacancy rates simply by the for-lease signs along Florida Boulevard, compared to areas in south Baton Rouge,” says Walker. “There are successful redevelopments of old properties and old malls, but most of these are in areas that are growing and it is simply about the property needing a facelift or re-tenanting.”
Still, he says all is not lost for Bon Carré, which is still home to the Louisiana Technology Park, Cox Communications and other tech-related tenants.
“There are tenants that will continue to need large chunks of space at cheap rents, and that is what you have here,” he says. “But you could poll the agents around town, our clients aren’t asking us to find them space in this area. Let’s be honest, lots of things change in 40 years and real estate is no exception.”
