The U.S. office market remains in limbo, with companies still struggling to get their workers to return to the office, even on a part-time basis. Because of this, many employers are reducing the amount of office space they are leasing, leaving plenty of vacancies in office buildings across the Midwest.
Louisville is no different. For proof, turn to the third-quarter office report recently released by Cushman & Wakefield. According to this report, office vacancy rates continued to rise in Louisville during the third quarter of the year. At the same time, the office sector in this market recorded negative absorption for the quarter.
This third-quarter performance is another sign that the office sector’s struggles — and not just in Louisville — are far from over.
According to Cushman & Wakefield’s numbers, the office vacancy rate inthe Louisville market stood at 16.5% as of the end of the third quarter.
Overall net absorption in this sector came in at a negative 41,629 square feet, Cushman & Wakefield reported. However, if you’re looking for silver linings, no matter how dim, this is better than the negative 58,187 square feet of absorption the Louisville market recorded in the third quarter of 2022.
In other positive news, leasing activity in the Central Business District during the third quarter totaled 51,076 square feet, bringing the year-to-date total to this Louisville submarket to 166,633 square feet. This means that CBD office leasing activity is up 11.8% when compared to last year.
Class-A office leasing activity totaled 42,632 square feet in the third quarter, up slightly from the second quarter and above the 14,040 square feet recorded in the third quarter of last year.
The majority of the Louisville market’s negative net absorption came because of the downsizings taken on by Stoll Keenon Ogden law firm and Greater Louisville Inc. As a result of this, the Class-A office vacancy rate increased 70 basis points to 26.6%, while the Class-B vacancy rate remained unchanged at 17.2%.
In the suburban Louisville market, office leasing activity totaled 59,146 square feet for the third quarter, dipping 75% from the second quarter. The Hurstbourne/Eastpoint submarket recorded the most leasing activity in the third quarter, totaling 23,165 square feet. This accounted for 39% of all suburban leasing activity for the quarter.
Major office leases in this submarket included an expansion of Trilogy Healthcare and new leases from Fisher Homees and Houchens Insurance Group.
The St. Matthews submarket accounted for another 23% of suburban leasing activity in the quarter.
