While most of us would gladly spend an afternoon watching countless episodes of The Office (I know I would), few of us would spend an afternoon discussing our local office real estate market (I do, but hey, it's my job and I happen to really like it). So give me just two minutes of your time.
Our office leasing market is becoming extremely tight, which is excellent: An overall occupancy rate of 88 percent (Class A, B, and C space) is up roughly 2 percentage points from this time last year. After surveying all of our office sectors (Downtown, Oil Center, Kaliste Saloom/Pinhook, and Kaliste Saloom/Ambassador Caffery) overall, there is just not a bunch of empty space out there. Our office market is quite stable: Rental rates are climbing in just about all classes of office space, with some buildings seeing prices over $25-$30 per square foot. Landlords have been hoping for this day for some time.
A couple of current trends in the leasing market: Tenants appear to be shying away from the "everyone needs an executive office" model and shifting into larger and more open spaces. This allows for flexibility, expansion and the ability to save costs on office buildouts. Landlords are beginning to make common practice of annual rental rate bumps. This practice has been extremely common in larger markets and is now becoming quite standard here in the Lafayette market.
Is it not time for some new office buildings here in Lafayette? I hear this question all the time. But did you know that over the last 10 years Lafayette has added more than 500,000 square feet of office space? Most of this space has come along the Kaliste Saloom/Ambassador Caffery Parkway corridor. Developments like SL Shaw & Associates' Cordoba Square and Province Office Park along with several quality mid-rise office buildings added by River Ranch Realty have headlined these efforts. These buildings are clearly defined by their high-end finishes, low- to mid-rise style, and often times owner-occupied buildings.
Much more to come: New office development is still in the pipeline here. River Ranch Realty is putting final touches on the new Whitney Bank Building, which is close to 52,000 square feet. SL Shaw has new projects on the drawing board as well, primarily on Kaliste Saloom and along the Ambassador Caffery extension.
Several other projects are moving from the drawing board to the approval process at this very moment. Again, the vast majority of these projects will sprout up along the Kaliste Saloom/Ambassador Caffery corridor.
Two minutes. Now you can happily return to your Office reruns.
Phillip Brupbacher has been a commercial broker with Coldwell Banker Pelican Real Estate for the past five years. Contact him at [email protected]