If you browse the commercial real estate listings, you might be surprised by the number of downtown office buildings not only for lease but for sale.
At least seven buildings of 10,000 square feet or more are on the block, totaling more than 160,000 square feet, which is more than 10% of the total office space downtown.
Is this a worrisome trend?
It’s hard to say, according to brokers and appraisers, who note that the amount of office space for sale is higher than what it has been in recent years though not significantly greater.
By the same token, they interpret the “for sale” signs as evidence of a softening office market, which they believe will continue to remain sluggish for the foreseeable future.
“How many people are working at full force in your office right now?” asks broker George Kurz, who is listing one of the buildings, 721 Government St., for sale. “Most people are working as much at home as they can and that may never change. Office flexibility is changing.”
Appraiser Tom Cook of Cook, Moore, Davenport & Associates agrees that long-term changes are afoot and that the number of buildings for sale reflects those changes.
“There is an abundance of buildings for sale and for lease,” Cook says. “I think what COVID has done is made people realize they can work from home and be efficient.”
The buildings currently listed on the LACDB represent a wide variety of properties in a variety of price points. They include the former Baton Rouge Area Foundation building, currently owner-occupied by Level Construction, for nearly $200 per square foot; its nearby neighbor, the 1980s-era Gras Town Plaza building at $111 per square foot; and the historic Fuqua Building on Laurel Street at $265 per square foot. Kurz’s building on Government Street is listed at $152 per square foot.
Mathew Laborde of Elifin Realty, whose firm is listing three of the seven available properties, says each building is on the market for a different reason and he doesn’t think one can draw any broad conclusions from the fact they’re all for sale.
“I don’t think there’s any strong trend to point to,” Laborde says. “Several of the buildings are for sale as investments and have strong occupancy levels and tenants in place.”
But even before the pandemic disrupted the traditional workplace almost exactly one year ago, the downtown office market was softening and no one expected 2020 to be a banner year. Those trends are likely to continue.
“It’s a much softer market than it was a year or so ago–and it wasn’t real strong then,” Cook says. “You’re going to see things change and you’re going to see more office space downtown converted to apartments.”