The developers of the River House mixed-use development on Nicholson Drive are offering their 34,000-square-foot office building for sale, after efforts to lease the building have proven more difficult than originally anticipated.
The three-story building, which is still under construction, is available for lease at an annual rate of some $26.50 per square foot, according to a listing in the Louisiana Commercial Database, or about $900,000 per year.
But it’s now also available to buyers. Realtor Ty Gose says developers Marc Blumberg and Manny Organek will evaluate any offers to purchase or lease and see what makes the most sense.
“We’ve been working on getting some leases done in there for the past several months and we’ve had some activity but the downtown market is softer now and we just haven’t gotten what we wanted,” Gose says. “So they want to float it out there to see if there is a user that is interested in purchasing the building.”
The LACDB does not list an asking price for the building and Gose declines to say what his clients would accept, noting that the numbers are fluid because any buyer or tenant would need to complete a build out of the property.
“It’s in the shell state and the numbers will shift a little bit depending on what the buyer wants to do,” Gose says.
As a rule of thumb, however, office buildings in Baton Rouge that command lease rates as high as $26.50 per square foot—which is among the priciest office space in the market—would typically have an asking price of nearly $200 per square foot, of $6.8 million for a 34,000 square foot building.
Few office buildings in the market lease for anywhere near as much as $26.50 per square foot. The newly constructed IBM building and the CPRA headquarters building on the Water Campus both lease for $30 per square foot. II City Plaza’s lease rate is $28.50 per square foot. The average downtown lease rate for class A office space is slightly below $25 per square foot.
Several factors are contributing to the softening downtown office market, which was predicted in 2016 and has materialized. Several new buildings have added inventory to the market at a time when demand is softening and more employees are telecommuting, appraiser Wesley Moore of Cook Moore and Associates says.
“A lot of the chemical industry expansion is still under way but you’re moving into the construction stages and some of the engineering firms that were involved in the planning stages have downsized,” he says.
The River House, which is located on the site of the old Prince Murat Hotel, has been a long time in the making. It was originally approved by the Planning Commission in 2009, but was delayed because of the recession and, later, a change in the financing plan for the project. Construction began on the development in the fall of 2015, and the office building is nearing completion.
A 16,000-square-foot retail building, which includes a ground floor restaurant tenant, and two multifamily buildings totaling 224 units are also part of the development. A restaurant tenant has been secured and will be announced when the developers break ground on the building, says Blumberg.
The multifamily buildings should be ready for tenants to move in about two weeks and are about one-third preleased.
—Stephanie Riegel
