Across the country, tier one office markets are going back to pre-pandemic norms and larger office brokerages are seeing renewed demand. Employees, however, increasingly want a hybrid model of work, and office demand in Baton Rouge has begun to reflect that.
Garden offices remain popular and small businesses and corporate branches are paying premiums for the spaces, which tend to be more modern and have a “homey” feel.
In 2021, both Class A and B garden offices in Baton Rouge saw a blended average of 95% occupancy, with little new product coming into the market.
When it comes to overall leasing, there weren’t many large office deals in 2021, a trend that continued from 2020. Overall Class A occupancy in Baton Rouge fell by more than four percentage points and multistory occupancy dropped another 2 percentage points to 72% in 2021.
However, office sales were up in 2021 compared to 2020, as many businesses figured out their COVID contingency plans and started rolling forward with expansions. That, coupled with low interest rates, meant most of the sales were to owner-occupiers.
It’s normal in Baton Rouge for real estate agents to collect data each year and see occupancies slip another point or two and COVID-19 has exacerbated vacancy rates.
Baton Rouge differs from other cities for a number of reasons, said Ty Gose of Latter & Blum at the annual TRENDS seminar sponsored by the Greater Baton Rouge Association of Realtors.
In order for Baton Rouge to align with national office trends, he says, businesses need to work on things like rotational work organization, modernizing and adding amenities to offices and investing in buildings.
Potential businesses also look at state and local tax policies for companies, an area in which we are not competitive, he says.
“HR and regional managers want to see communities around offices that address livability, transportation, health, opportunities and education,” he says. However, he believes communities like Harveston will assist in addressing some of these issues.