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An office space shortage and construction expenses mean some of Baton Rouge’s older properties could get a second look.
It was once a part of the American dream: earning the corner office decked in mahogany, with enough square feet to host a conference in. Cartoon character George Jetson boasted a spacious private workspace; WKRP in Cincinnati‘s Les Nessman was so desperate for one, he deployed masking tape to denote fictional walls and a door.
But today, businesses demand something different when it comes to office space: open areas, cubicles, and of course, parking. But where does that leave the Capital Region’s office buildings of the past? It’s a Catch-22 in the office market right now. Class A office space is in short supply. New construction isn’t an option for many companies, given the price tag for land, labor and leases. That means older properties—while not optimal—are, in some cases, getting a second look.
“There aren’t a whole lot of existing options,” says Branon Pesnell, executive vice president of Beaux Box Real Estate. “We could create more interest in these older buildings. However, a lot of them are functionally obsolete, and they don’t meet today’s tenant requirements, such as space or layout, and parking. Most of those are operating under shoestring budgets and it’s hard to justify the expense to renovate them and meet those tenant needs, but it’s something the landlords are going to have to go if they’re going to make their buildings attractive.”
The obvious solution is new construction, right? Well, only if you’ve got a big budget, and time to spare. With the abundance of petrochemical and industrial jobs—gigs that are steady and pay more—subcontractors have raised their rates, and Baton Rouge land is not cheap.
“We’ve got all of these people that want to move to Baton Rouge, but there’s not many that are willing to sign up for those rents,” says Gary Black of Wampold Companies. “There’s a little bit of a disconnect because there’s no class A office space in Baton Rouge; however, you have to have someone willing to commit to a lease in order to motivate the builder to build the building. No one’s going to build a speculative office building.”
Older office buildings await in various parts of the city, including the Sherwood Forest corridor, Sherwood Oaks Office Park, 2900 Westfork building and the Corporate Boulevard atrium. Renovation remains an option, but restoring an old building can be just as expensive as building a new one, and some of the issues may be near-impossible to fix, such as creating an open layout or adding parking.
“There’s a need for high efficiency and low cost,” Pesnell says. “The way that work environments are now, there’s a lot more sharing of ideas and collaboration and there’s a trend toward paperless environments. The days of the old 15-by-15 executive office with a lot of mahogany, and a conference table in your office is just gone. Now there are collaborative work areas outside of that; it’s a product of our environments, with emails and calls rather than meetings. It’s going to continue to get more and more efficient, and the brick and mortar is becoming less and less important for office buildings.”
The construction of the Water Campus will create about 50,000 square feet of vacant office space in the existing home of the Coastal Protection Agency downtown. It will be available in about a year.
“The challenge is that rents you have to achieve in order to build a true class-A office building, which is probably going to have to mean that you have to build a parking garage, those rents are strong, they’re well-above $30 per square foot,” Black says. “There’s a disconnect between, ‘Hey, we need an office building and we need it now,’ and the time it takes to design it and secure it, financing it, and getting it physically constructed is years. That is an issue, there’s a rub between, ‘Hey, we’ll build it and they will come,’ and how to close the gap on that, because you can only close that gap so small.”
