Infrastructure work began earlier this month at the Office at City Farm, Dantin Bruce Development’s planned 60,000-square-foot office park on Jefferson Highway. Less than a quarter of a mile away, a competing 70,000-square-foot office park—6700 Jefferson—is about to get underway as well. Can the market support dueling office parks?
“Absolutely,” says Branon Pesnell of Beau Box Commercial Real Estate, the firm that is handling leasing for 6700 Jefferson. “We’re approaching 90% occupancy marketwide, which means what is on the market is older, dated and functionally obsolete.”
Others who are not directly involved with either project agree with Pesnell’s assessment that demand exists for more office space—particularly along the Jefferson Highway corridor.
“That area has attracted pretty steadily strong demand, especially when you’re talking about infill sites,” says appraiser Wesley Moore. “I think once developed and fully available you’re going to see a steady stream of new offices.”
One thing that makes the office park model attractive is parking, experts say. Though potential tenants are interested in downtown, many shy away because of the lack of affordable parking.
Also, there’s a prestige factor involved for a company when it builds out its own office space, particularly in a high-demand area like the Jefferson Highway corridor.
“Towne Centre is a tremendous attraction,” Moore says of the nearby shopping center. “And despite all the retail and restaurant uses, there is only one office building, so there really is a need in that area.”
That said, experts don’t expect an areawide office construction boom like that the multifamily sector is experiencing. Pesnell notes that besides the Jefferson Highway parks just one other office park—on Coursey Boulevard—is under construction. Willow Grove development also has a limited amount of office space underway, and more is planned for Rouzan and Long Farm. But the latter two projects are still at least a year away.
“That’s basically it for this market,” he says.
Also, with the drop in oil prices and the resulting slowdown in some segments of the petrochemical sector, the expected demand for more office space has slowed, though just slightly.
“We’ve seen a little bit of drop off in the first quarter,” Pesnell says. “But really it’s not expected to affect us very much.”