The State of the New Orleans Office Market

When searching for office space for your business, it is important to have at least some knowledge of the overall state of the market.  The New Orleans office market is strong compared to the rest of the country.  According to the National Association of Realtors, the vacancy rate of the national office market was 16.1 percent in Q3 of 2012, above the historical average of 14.4 percent.  New Orleans had the third lowest vacancy rate in the U.S., at 12.8 percent, after Washington D.C. and New York City.

Why does this matter?  Because higher vacancy rates means tenants have more negotiating power against building owners.  The more vacancies that exist, the more owners will be willing to cut a deal to fill up space. The New Orleans market is stronger than average and trending stronger.  Tenants won’t have as much leverage as they might in other markets.  However, if you can find a good rate, try to lock it in for as long as possible since rates are now beginning to trend upward.

New Orleans is #1

 

Why is the market so strong here?  Several factors have contributed to the current strength of the local office market and overall economy. New Orleans ranked as America’s fastest growing city between April 2010 and 2011, adding 17,000 residents and growing at 4.9 percent.

Unemployment in the city is lower than the national average at an estimated 7.0 percent compared to 8.3 percent nationally.  Several industries are experiencing rapid growth in the area including healthcare, motion picture and digital interactive media, and educational services.  Let’s not forget that is in addition to the city’s perennial mainstays supporting tourism– the hotel, restaurant, and retail industries.

(For in-depth reports on the New Orleans, visit Stirling Properties’s page here.)

The city’s growth is due to more that just a return of residents who fled after Hurricane Katrina.  According to a Kaiser Family Foundation study, one in nine current residents were not living in Nola before the storm. First-time residents are more likely to be younger and better educated, who work higher paying jobs.

Louisiana also leads the nation in exports and is No. 2 in imports.  The state is positioned to surpass New York as No. 2 in film and television production.

Cost of Living

 

One reason industries continue to flock to the Big Easy is the city’s economic incentives and low cost of living compared to other large cities like New York, Washington D.C. and San Francisco.

The Future

 

A renewed sense of pride and excitement for New Orleans among residents has created a resurgence that will continue to drive growth and progress in the once declining city.  New infrastructure projects will spur additional investment and growth.  The airport continues to expand, adding flights both nationally and internationally.

The future looks bright for New Orleans, and that’s perhaps due the the city’s strongest asset of all–its people and unique culture.

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