Downtown Louisville office vacancies predicted to possibly set records
LOUISVILLE, Ky. (WAVE) - After getting a taste of working from home during the pandemic, a lot of people are finding it hard to break the habit.
Like most cities, downtown Louisville has plenty of vacancies.
“In 2019, the vacancy rate for all the class A buildings, which class A is typically the towers, the higher, taller buildings in the market, was about 14%,” CBRE Managing Director David Hardy said. “And today, it’s about 25.5%. So that’s an 82% increase in the vacancy rate in downtown Louisville.”
The vacancy trend accelerated when downtown giant Humana sought to accommodate work-from-home habits embraced by employees during the pandemic. The company is downsizing its footprint in office space and parking space, abandoning its 1600 downtown monthly spaces and opting for a more flexible parking plan.
Humana is not alone.
“We have several other companies that we’ve talked to, or are currently talking to, to make these adjustments,” Director of the Parking Authority of River City Mike Tudor said. “And they’re looking at the same kind of workforce. Whether they’re looking at bringing them back into the office full-time, or whether they’re bringing them in part-time and they need this flexible parking option.”
A first-quarter report from commercial real estate firm JLL also acknowledged the trend and the Humana impact, predicting near-record downtown vacancies in 2023.
“It will be difficult to match the pace of 2022, and the slower start to 2023 could lead to a year with near-record negative absorption (vacancy rate),” the report said. “However, there are several large tenants looking for space both within the CBD (Central Business District) and suburban markets.”
Hardy of CBRE pointed to a ripple effect in the short term.
“It means less income, less value for those buildings,” Hardy said. “Less people in the buildings on the streets, less parkers, less diners, less everything.”
Copyright 2023 WAVE. All rights reserved.