When you list the strongest real estate markets in the Midwest, you can’t leave out Louisville. This Kentucky city is performing as well as any Midwest market today. Credit its central location, well-educated workforce and pro-business government.
The latest office snapshot report from Commercial Kentucky provided yet more proof of the strength of the Louisville region, as vacancies continue to fall in the office sector.
But not all the news was good. Vacancies are down, but so are asking rents and leasing activity.
According to Commercial Kentucky, the overall office vacancy rate fell to 13.7 percent in the first quarter of 2015. That’s down a full percentage point from the first quarter of 2014, when the market’s office vacancy rate stood at 14.7 percent.
This doesn’t mean, though, that the office market here isn’t without its challenges. Commercial Kentucky put some of the blame on the rough winter, but Louisville’s Central Business District saw just 34,476 square feet of leasing activity in the first quarter of this year. That’s a paltry number, down from 108,676 square feet of leasing activity in the CBD in the fourth quarter of 2014.
There was more activity in the suburban markets in the first quarter, 120,191 square feet. That’s up from 94,588 square feet of leasing activit in the suburbs in the fourth quarter of last year.
Commercial Kentucky is predicting that leasing activity, though, will end the year on a positive note. The company is predicting that activity will jump in the next 12 months.
Asking rents were down, too, in the first quarter. Commercial Kentucky reported that direct asking rents fell to $16.81 a square foot during the quarter. That number stood at $17.14 a square foot in the first quarter of 2014.
Overall, though, the office market looks firmly in rebound mode in Louisville. And that’s particularly good news in a market that is already enjoying bustling industrial and multifamily markets.