After being fairly active for most of the 2015, the regional Baton Rouge real estate market—which has approximately 6.6 million square feet of office space—slowed and became flat at the end of 2015, a trend that has not let up in 2016.
Branon Pesnell, executive vice president of Beau Box Commercial Real Estate, tells Real Estate Report the slowdown is primarily attributable to statewide economic conditions.
“Our state economy is so dependent on oil. That’s not so much the case in Baton Rouge, but there’s still a trickle down effect,” he says. “As the state’s petrochemical industry goes, so go all sectors of real estate.”
Additionally, state budget concerns have contributed to the office market slowdown.
“There’s an air of nervousness about the state budget,” Pesnell says.
The average quote rental rates for both Class A and Class B office space has remained flat. Occupancy rates for the first quarter of 2016 dropped to 85.7%, down from 89.3% in 2015. Most of the decrease is attributed to vacancies that resulted from The Advocate’s relocation to a new headquarters on Siegen Lane and IBM’s completion of its downtown offices.
But while the office slowdown has significantly limited the number of new tenants entering the market, it’s not expected to lead to a glut of sublease space in Baton Rouge.
“The recent collapse in oil prices has adversely impacted the market. However, the result has been primarily the lack of new or expanded business interest,” says Jonann Stutzman, an agent/broker with NAI/Latter & Blum Commercial in Baton Rouge. “Some national office users have contracted their presence in the market on relatively short notice, and some continue to consolidate in order to achieve maximum efficiencies and economies of scale.”
Read the full 2016 edition of Real Estate Report, a Business Report publication, for this and more stories on the local real estate market. Send your comments to editors@businessreport.com. Send your comments to editors@businessreport.com.
