A Deep Dive Into Louisiana Office Space For Lease

We examined the 2,723 office spaces for lease in Louisiana totaling 8,700,000 square feet, and calculated the average listing to be 4,150 square feet priced at $18.76 per square foot. But that doesn’t tell the whole story. Office space can be priced nine different ways, ranging from Triple Net, which adds on operating expenses, to Full Service which is priced to include electricity, water, taxes, insurance, janitorial and even landscaping. This article takes a deep dive into today's prices of office space across the entire state, including how prices are quoted and who the agents are that lease the most office space.

Only 1% of Office Space For Lease Exceeds 25,000 SF In Size

Of the 2,723 office spaces for lease in Louisiana, approximately 1,600 spaces with 77% of the square footage are under 5,000 square feet in size. Only 10% of the spaces exceed 10,000 square feet and only 1% exceed 25,000 square feet. This small size office market is a reflection of the types of businesses in Louisiana which has a lack of corporate headquarters and major corporations which need large office spaces.

Prices Depend On Pricing Type

Pricing office space for lease comes in a variety of terms, and the fine points of these terms usually get negotiated during the lease review stage. Here are the major types of office lease pricing we discovered:

1. Full Service (also known as Gross)-the price quoted includes the base rent plus all other common operating expenses. The landlord pays all costs of electricity, water, property taxes, property management fees, landscaping and hazard insurance.
2. Modified Gross-includes a base rate and only a few operating expenses are passed along to the tenant. This pricing type usually adds on electricity and water, which are charged to the tenant since most office buildings do not have separate water or electrical meters for each space. The total cost is allocated to each tenant based on the square footage, and is called “additional rent” in a lease. The pro-rata costs are estimated and billed monthly, but reconciled at the end of the year when the true operating costs are known.
3. Triple Net-Quoted as a base rate but adds on all operating expenses, called common area maintenance, which are passed along separately to the tenant. There may be language in a lease that allows a stop on separate controllable operating expenses versus uncontrollable operating expenses such as property taxes and hazard insurance. The stop would place a cap on the percent increase of expenses that is paid.

We examined 2,723 office spaces for lease in Louisiana and found a range of rates from Full Service to Triple Net (NNN), but also a variety of both. Notice in the table that the quoted Full Service rate of $19 per square foot equals the same as the quoted NNN rate plus utilities and janitorial. This means there may be some additional expenses added that are called utilities but are not. The lowest rate of $12 per square foot plus utilities can be deceiving, since electricity cost can easily average $3 per square foot, water $1 per square foot and janitorial averages $2 per square foot.

Majority of Listings Are Priced As Full Service

Most office space for lease in Louisiana (71% as measured by sector square footage) is priced as Full Service, which includes all expenses except parking. Modified Gross and Triple Net pricing totals 29% of all listed square footage. One reason may be that the majority of office space for lease is in high rise office towers which are always priced as Full Service. The Triple Net pricing is usually associated with suburban locations and older, less attractive, properties, so they quote lower rates but attempt to pass along operating expenses to tenants.

Who Are The Agents Representing The Most Office Space For Lease?

While Cres Gardner with Beau Box has the most listings at 65, Greg Riera with national Jones Lang LaSalle is the top agent with 574,521 square feet listed, all in downtown office towers that were hit hard by COVID so they have lots of vacant space.

Summary

In summary, the office market in Louisiana is unique. Despite having millions of vacant square feet in downtown office towers, prices quoted have so far remained high as if strong demand for office space still existed. Often the actual lease price is negotiated down and includes some hidden buildout allowances. Full Service office space is about 71% of the 8,700,000 square foot market with an average list price of $19 per square foot, and 77% of the office space for lease is small at 4,150 square feet.

For more information on commercial property prices, read our articles:

Prices For Office, Industrial & Shopping Centers For Major Cities In Louisiana