2020 OFFICE MARKET REPORT 2020 GREATER NEW ORLEANS Annual Office Market Report 201 St. Charles Ave. | Suite 4411 | New Orleans, LA 70170 1 2020 OFFICE Table of Contents MARKET OVERVIEW 2 2020 Office Market Overview Corporate Realty, Inc. presents our ninth annual Greater New Orleans Office Market Report. This publication gives the reader a broad 3 Greater New Orleans understanding of the New Orleans office market as well as specific Market Overview information about occupancy and rental rates of each office building that contains at least 20,000 rentable square feet (rsf). Data from 2012 4 Guest Contributor: – 2020 provides insight into the current market and analyzes market Michael Hecht trends. Most graphs in this report feature data from 2018, 2019, and 2020 to illustrate both immediate and long-term change. Additionally, this year the “Percentage Leased” column includes both 2019 and 2020 Greater New Orleans 8 figures. The information in this report was compiled with the cooperation Office Market Trends of property owners and their representatives, and we thank all of those who contributed. 10 Central Business District Corporate Realty also publishes quarterly reports of the office market compiled by leasing director Bruce Sossaman, SIOR, which can be found 14 Orleans Parish, with previous annual reports at corp-realty.com/reports. Non-CBD Corporate Realty is consistently involved in the largest, most complex and most demanding real estate transactions and management 16 East Metairie assignments in this region, and we pride ourselves on having the top real estate professionals in the market. To find out more about us and our services, visit us at corp-realty.com. 20 West Metairie/ Kenner 21 Elmwood INTRODUCING 22 Northshore OUR 2020 GUEST 24 West Bank CONTRIBUTOR St. Charles Parish This year we are pleased to introduce the special feature of a guest 25 contributor. Michael Hecht, President and CEO of GNO, Inc., introduces the organization’s Professional Jobs Plan, a priority even before the 26 Corporate Realty’s pandemic hit. Michael explains why increasing the availability of Office Specialists professional jobs is vital to the growth and development of New Orleans and outlines the plan’s focus. Targeting companies that provide these 27 About Us professional jobs will help fill our commercial buildings and help people build careers, support families, and remain in New Orleans. 2 2020 OFFICE MARKET REPORT GREATER NEW ORLEANS MARKET OVERVIEW Politics, Protests and a longer lease terms which allowed efficient manner in which to operate; Pandemic. 2020 was anything but the office market, and office however, we believe in the long term normal and it would be negligent to building landlords, to weather weak companies and their employees need not acknowledge the turbulence that demand/economic downturns more face-to-face contact to build business defined the year. While it might be successfully and with a bit less pain relationships, create culture, and difficult to suggest that these national than their counterparts in the retail operate at maximum efficiency and international events will have a and hospitality sectors. Because of and productivity. meaningful long term impact on our this stability, rental rates in these relatively small office market in our submarkets also showed very little We are cautiously optimistic about relatively small city, it would also be change in 2020. 2021—especially about how the a mistake to suggest that these events New Orleans office market will did not impact activity in the office Two other office space related rebound. After being on the sideline market in 2020. concepts that were impacted by for virtually all of 2020, we believe the occurrences of 2020 are that there is some pent up demand For the office market in New co-working space and the trend for both office tenant expansions Orleans, 2020 was a “time out.” of remote working. We believe and tenants’ reinvestment in their There was little to no new leasing that co-working is here to stay. office environments. Additionally activity throughout our metropolitan While COVID-related concerns may we see New Orleans as being an area. Whenever possible, office ultimately impact how co-working attractive alternative to companies space decisions were put off, spaces are designed and how certain and individuals looking for the resulting in very few new leases, functions within these co-working amenities and quality of life offered very few internal relocations, and spaces operate, it is our opinion that by smaller but still dynamic cities. existing tenants opting for short- co-working spaces will continue to be We believe that the rebound in New term lease extensions for flexibility. in high demand. There are a number Orleans will be gradual through Businesses do not like uncertainty of reasons for this concept to continue the summer but as the pandemic and 2020 was clearly a year of and demand to be strong; the most subsides and vaccinations are uncertainty—in many respects. important is tenants’ and individuals’ near universal, the second half The end result was a flat office desire for flexibility. Co-working’s of 2021 will resemble activity market—both in terms of occupancy biggest strength is the flexibility it levels prevalent in New Orleans in and rental rates. The good news is offers its occupants/tenants due to 2019, including an increase in our that we saw very few office tenants little to no capital investment, ease occupancy rates and a very gradual giving up their space entirely and and speed of move-ins and move- increase in our rental rates. even fewer office lease defaults. outs, and the availability of short-term leases. We are less bullish on remote Overall office building occupancy working. While we all learned how dipped slightly in 2020 from 86.41% MICHAEL J. to work remotely in 2020, we do not SIEGEL, SIOR to 85.10%. Office leases, especially believe that this is a sustainable trend President and Director tenants occupying significant square in most industries going forward. of Office Leasing footage and/or major companies, Some industries and some companies have historically tended to have may find this a desirable and 3 Guest Contributor: Michael Hecht IT’S ALL ABOUT JOBS An Overview of the GNO, Inc. Professional Jobs Plan Even before COVID, the most urgent need for the New Orleans regional economy was more professional office jobs. These “white collar” positions are the foundation upon which many people will build careers and support families. Professional jobs allow people to shop at stores, eat at restaurants, live in homes, send kids to schools, and pay taxes in our community. And New Orleans does not have enough of these well-paying professional jobs. Without a sufficient quantity • Lower labor costs than markets • High-value “wrap-around” and variety of professional jobs, like NYC and San Francisco services from GNO, Inc: free Greater New Orleans will not be • Some of the deepest and trial space, relocation services, able to support its remarkable most flexible incentives in trailing-spouse assistance, etc. post-Katrina “brain gain.” But, North America, including the the converse is also true: if New Now, COVID has added yet 25% cash-back digital media another reason for companies Orleans can offer high-quality job incentive opportunities, then both residents to chose Greater New Orleans: and newcomers will be able to workers and companies are RICH CULTURE stay and prosper, creating a fleeing denser, more expensive reinforcing cycle of population • World-renowned and beloved cities, and seeking secondary and economic growth. cultural environment that is markets, like New Orleans, that highly attractive are a better fit for post-COVID Seen objectively and holistically, work and lifestyle needs. New Orleans has an excellent HIGH DIVERSITY business case for professional GNO, Inc. has already had strong • GNO has a diverse and trained jobs, including: success attracting professional population jobs, recently bringing in companies like DXC Technology, LOW COST “CONCIERGE” SUPPORT Accruent and the EY National • ­ Significantly lower office rental • Award-winning workforce Executive Assistance Team. With rates than other major cities: support from the State greater, more focused resources, $17-$23 psf versus $33 psf (FastStart), GNO, Inc. (GNOu), we know we can push Greater average rent and our colleges and universities New Orleans past the “tipping point” of professional job growth. 4 2020 OFFICE MARKET REPORT This is the GNO Professional Jobs THE PROFESSIONAL JOBS PLAN A first win of the Professional INITIALLY FOCUSES ON THREE Plan that we are now implementing. OFFICE VERTICALS: Jobs Plan was bringing back 110 well-paying jobs from India and 1. Software and Video Game THE PROFESSIONAL JOBS PLAN Mexico to Service Corporation IS BASED ON INVESTING IN AND Development International, in Jefferson Parish. EXECUTING A STRATEGY THAT INCLUDES: 2. Shared Services New Orleans beat out other U.S. cities to secure these re-shored 3. Regional Headquarters • Researching, targeting, and jobs, validating our winning prospecting professional office business case. Partnering with tenants around the country THE PROFESSIONAL JOBS PLAN INITIALLY FOCUSES ON THREE Corporate Realty, GNO, Inc. • Providing familiarization tours PRIMARY LOCATIONS: looks forward to bringing for prospects and site selectors 1. New Orleans Poydras thousands of more professional • Managing and closing deals Corridor/CBD jobs to the region, to fill our office with professional office jobs buildings, our neighborhoods, 2. Jefferson Highway, Causeway and our tax rolls. • Recruiting professional talent Boulevard, and Veterans Boulevard • Caretaking of both new and existing companies, to ensure 3. Northshore office parks their growth and success MICHAEL HECHT is President & CEO of Greater New Orleans, Inc., the economic development agency for southeast Louisiana. 5 6 2020 OFFICE MARKET REPORT While the full impact of COVID on the New Orleans office market may not be fully realized for years to come, immediately the pandemic has had a limited impact on occupancy and rental rates.