The Louisville office market remains a busy one, especially in the city’s downtown core. But the sector does face upcoming challenges, with several companies set to leave behind big chunks of space in the upcoming months, according to the latest research report from Cushman & Wakefield Commercial Kentucky.
In good news, Commercial Kentucky reported that the CBD here saw 37,970 square feet of closed office leases during the third quarter.
And for the first three quarters of the year as a whole? Commercial Kentucky said that the CBD has seen 143,876 square feet of office leases. That is up 17 percent from the 122,631 square feet of leases reported at the third quarter last year.
Much of the activity this year can be traced to several big leases. Ernst & Young expanded into 20,109 square feet at 400 W. Market, while Kentuckiana Works leased 6,500 square feet at 325 W. Broadway.
What’s interesting, though, is while more office leases were closed this year than last, the overall CBD office vacancy rate did rise a bit. Commercial Kentucky reported that the overall CBD office vacancy rate ended the third quarter at 15.3 percent, an increase of 0.3 percent from the same time last year.
Why this increase? Commercial Kentucky pointed to Humana leaving behind almost 40,000 square feet of office space at 400 W. Market.
There might be another vacancy rate jump, too, in the near future. Commercial Kentucky reports that Kindred Healthcare will soon be leaving 45,720 square feet at Louisville’s Kaufman Strauss Building to move into its newly built owner-occupied building at 680 S. Fourth St. This, Commercial Kentucky says, could result in an increase in the Class-B office vacancy rate of as much as 2 percent during the next two quarters. Humana is also expected to vacate more than 50,000 square feet of office space at Waterfront Plaza in early 2018.
Average asking rents, though, did rise. Commercial Kentucky reported that the average office asking rent stood at $17.03 a square foot at the end of the third quarter, compared with $16.73 at the end of the same quarter last year.
