IRR-Louisville Mid-Year Viewpoint 2015 Local Market Report - Office
Over the past few years, the University of Louisville, in partnership with NTS, has been the most active and dominant commercial real estate developer in the office market, and likely will remain so for the near future. The partnership’s two new office parks, Nucleus and ShelbyHurst, have seen strong positive absorption. Nucleus, in the CBD, will gain an 800-space parking garage, as well as a second office building in the range of 150,000-200,000 square feet. In the East End, ShelbyHurst will gain its third office building, the 120,000 s.f. 500 North, complementing its neighbors 600 North and 700 North. The suburban office market is also experiencing growth in the Old Henry Crossing, Blankenbaker Station, and Old Brownsboro Crossing developments.
Leasing activity in the CBD remains stubbornly low, even as landlords offer generous T.I. allowances and other concessions. Fortunately, relief may be on the horizon in the form of decreased inventory.
The conversion of the former Hilliard Lyons building to an Embassy Suites Hotel reduced the building’s available office space by roughly 300,000 square feet. More recently, the Starks Building was sold in April, with new owners Hudson Holdings proposing to convert the historic building from office to a hotel and apartments. Additionally, the Landmark Building, which has recently struggled to maintain high occupancy, is listed for sale and well-positioned a block from the proposed Omni Hotel site. Construction is expected to begin by January 2016 on the Omni development, which will offer 600 hotel rooms, 215 apartments, and a 25,000 s.f. grocery store. Kindred Healthcare will see progress on its new six-story, 142,000 s.f. office building, adjacent to its corporate headquarters. As downtown adds residential units, hotels, restaurants, and retail, we anticipate the CBD office market will be better suited to absorb its available inventory.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.