An in-depth look at the Louisville office market. Analysis includes sales, leasing, construction, and employment.

1. Office
Outlook
An in-depth look at the
Louisville office market.
Analysis includes sales,
leasing, construction and
employment.
Louisville | Q2 2019
JLL Research
1

2. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q2 2019
Louisville
Leasing remains steady as Louisville experienced positive net absorption.
Despite the relatively strong start to the year some concerns continue to
surround the CBD as several large blocks of space are expected to be vacated
in the near future. Currently six of the downtown towers have full floor
availabilities, which has created favorable lease term for tenants.
On the development side construction began on Two Olympia Park with
amenity plans announced that include an on-site health and fitness clinic,
Zen-inspired garden with a reflecting pool, indoor living spaces featuring
green walls, common conference center, and a quick cafe. The amenities are
first-of-their kind for Louisville and present a unique opportunity for tenants
to be in a space that emphasizes work-life balance.
In the CBD, The Gateway to NuLu redevelopment announced three tenants
that will fully occupy the 75,000-square-foot building. Lodgic Everyday
Communities will open their second coworking space nationally, and local
companies El Toro and Edj Analytics will occupy the remainder of the
building. This and the announcement of the new Microsoft hub for AI, IoT, and
data science give Louisville some momentum as it tries to transition to a new
age economy.
Outlook
The Louisville office market continues to be resilient despite some potential
vacancies in the CBD coming by the end of the year. Given the activity in the
first two quarters there is reason to be optimistic about the viability of the
office sector moving forward. There continues to be interest from both
tenants currently located in Louisville and those looking to relocate from
other markets that are intrigued by the high-quality space within the CBD and
suburban markets.
Fundamentals Forecast
YTD net absorption 342,744 s.f. ▲
Under construction 375,917 s.f. ▲
Total vacancy 9.8% ▼
Average asking rent (gross) $19.42 p.s.f. ▲
Concessions Rising ▲
-100,000
100,000
300,000
500,000
2015 2016 2017 2018 Q2 2019
Supply and demand (s.f.) Net absorption
Deliveries
Vacancy continues downtown trend, absorption up
12.8%
12.2%
11.3%
9.4%
9.8%
2015 2016 2017 2018 Q2 2019
Total vacancy
$10.00
$15.00
$20.00
$25.00
2015 2016 2017 2018 2019
Average asking rents ($/s.f.) Class A
Class B
Louisville Office Outlook
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Top trends and activity
• The fully leased 734 W. Main building transferred to a local investor.
• The Gateway to NuLu announced three tenants for the building being
renovated at 552 E. Market Street.
• Two Olympia Park is under construction with a fall 2019 completion
target, and includes amenities that haven’t been seen within Louisville.
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3. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Class Inventory(s.f.)
Net
absorption
(s.f.)
YTD net
absorption (s.f.)
YTD net
absorption (%
of stock)
Direct vacancy
(%)
Totalvacancy
(%)
Average direct
asking rent ($
p.s.f.)
YTD
Completions
(s.f.)
Under
Development
(s.f.)
CBD Totals 9,324,484 34,838 64,355 0.7% 10.0% 10.3% $18.30 0 75,000
CBD Totals 9,324,484 34,838 64,355 0.7% 10.0% 10.3% $18.30 0 75,000
Hurstbourne Totals 3,491,922 48,631 50,652 1.5% 8.5% 9.3% $19.99 0 0
Middletown/ Eastpoint Totals 1,563,082 2,830 57,060 3.7% 6.6% 8.8% $24.49 126,810 48,000
Plainview Totals 2,059,933 43,736 97,856 4.8% 10.7% 11.4% $17.40 0 0
RiverRoad/Brownsboro Totals 768,838 13,463 14,173 1.8% 6.9% 6.9% $26.13 135,917
South Central Totals 1,517,355 42,701 59,223 3.9% 8.7% 15.3% $15.77 0 0
Southeast Totals 514,752 0 0 0.0% 2.8% 2.8% $18.46 0 117,000
St. Matthews Totals 1,371,808 -575 -575 0.0% 4.5% 4.8% $18.66 0 0
Suburban Totals 11,287,690 150,786 278,389 2.5% 7.8% 9.4% $20.72 126,810 300,917
Louisville Totals 20,612,174 185,624 342,744 1.7% 8.8% 9.8% $19.42 126,810 375,917
CBD A 4,363,853 40,690 77,016 1.8% 12.7% 12.8% $19.71 0 75,000
CBD A 4,363,853 40,690 77,016 1.8% 12.7% 12.8% $19.71 0 75,000
Hurstbourne A 2,857,426 24,272 10,185 0.4% 8.8% 9.7% $20.80 0 0
Middletown/ Eastpoint A 1,079,561 1,830 56,060 5.2% 9.2% 12.3% $24.65 126,810 48,000
Plainview A 504,033 0 0 0.0% 0.0% 0.0% $0.00 0 0
RiverRoad/Brownsboro A 589,059 13,463 14,173 2.4% 9.0% 9.0% $26.13 135,917
Southeast A 460,524 0 0 0.0% 3.2% 3.2% $18.46 0 117,000
St. Matthews A 707,033 -575 -575 -0.1% 3.0% 3.5% $23.67 0 0
Suburban A 6,197,636 38,990 79,843 1.3% 7.1% 8.1% $23.32 126,810 300,917
Louisville A 10,561,489 79,680 156,859 1.5% 9.4% 10.1% $21.28 126,810 375,917
CBD B 4,960,631 -5,852 -12,661 -0.2% 7.7% 8.1% $15.60 0 0
CBD B 4,960,631 -5,852 -12,661 -0.2% 7.7% 8.1% $15.60 0 0
Hurstbourne B 634,496 24,359 40,467 2.8% 7.3% 7.3% $14.79 0 0
Middletown/ Eastpoint B 483,521 1,000 1,000 0.4% 0.9% 0.9% $20.11 0 0
Plainview B 1,555,900 43,736 97,856 6.3% 14.2% 15.1% $17.40 0 0
RiverRoad/Brownsboro B 179,779 0 0 0.0% 0.0% 0.0% $0.00 0 0
South Central B 1,517,355 42,701 59,223 2.8% 8.7% 15.3% $15.77 0 0
Southeast B 54,228 0 0 0.0% 0.0% 0.0% $0.00 0 0
St. Matthews B 664,775 0 0 0.0% 6.2% 6.2% $16.76 0 0
Suburban B 5,090,054 111,796 198,546 3.1% 8.7% 11.0% $16.86 0 0
Louisville B 10,050,685 105,944 185,885 1.5% 8.2% 9.5% $16.23 0 0
Q2 2019
Statistics
Louisville Office Outlook
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
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4. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
$58,975,000
5
$169
7.5-8.5%
6.0%
94.0%
7.5-8.5%
7.5-8.5%
Notable sales transactions past 12 months
RBA (s.f.) $ p.s.f. Sale date
12501 Lakefront UBS 177,000 $30,000,000 $169 Aug-18
Executive Park Priam Capital Poe Company 109,496 $86 Apr-18
Triad East Linn Station 001
Triad East
Holdings
96,020 $5,859,000 $61 Apr-18
11001 Bluegrass SF Partners Commonwealth Business Center 126,000 $10,000,000 $79 Feb-18
$9,400,000
Core Class A CBD
Core Class A suburban
Average Class A price p.s.f.
Sales activity by building classAt a glance
Past 12 months sales volume
Number of transactions
Building Buyer
Average Class A cap rate
Sales volume $ by submarket
Urban sales volume as % of
total
Suburban sales volume as % of
total
Cap rate range Transactions details
Top sellers (s.f.)Top buyers (s.f.)
Sale price ($)Seller
Mid-America Farm Credit
$3,725,000
$9,400,000
$15,850,000
$30,000,000
(blank)
CBD
St. Matthews
Plainview
Southeast
$30,000,000 $28,975,000
$58,975,000
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
A B Total
Q2 2019
Sales
Louisville Office Outlook
This report analyzes sales from the past 12 months
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
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$75,900,000
5
$78
7.5-8.5%
47.0%
53.0%
7.5-8.5%
7.5-8.5%
Notable sales transactions past 12 months
RBA (s.f.) $ p.s.f. Sale date
734 W. Main Calella TMT Ventures 53,784 $6,050,000 $112 May-19
500 W. Jefferson Optima 500 556,042 $25,500,000 $46 Dec-18
Kaden Tower In-Rel Properties Kaden Companies 115,530 $91 Dec-18
30,000 $3,850,000 $128 Dec-18
12501 Lakefront UBS 177,000 $30,000,000 $169 Aug-18
Seller
Somera Road
Building Buyer
Average Class A cap rate
Past 12 months sales volume $ by submarket
Urban sales volume as % of
total
Suburban sales volume as % of
total
Cap rate range
Average Class A price p.s.f.
Sales activity by building classAt a glance
Past 12 months sales volume
Number of transactions
Core Class A CBD
Core Class A suburban
Transactions details
Top sellers (s.f.)Top buyers (s.f.)
Sale price ($)
$10,500,000
Mulloy Properties
Mid-America Farm Credit
111 W. Washington Main Street Realty
$10,500,000
$30,000,000
$35,400,000
St. Matthews
Southeast
CBD
$61,550,000
$14,350,000
$75,900,000
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
A B Total
60%19%
12%
6%
Somera Road Mid-America Farm Credit
In-Rel Properties Calella
Mulloy Properties
60%19%
12%
6%
Optima 500 UBS
Kaden Companies TMT Ventures
Main Street Realty

5. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Total available at delivery (%) 54.7%
Total leased at delivery (%) 45.3%
Average floor plate (s.f.) 25,757
Average number of stories 3
Average asking rent ($ p.s.f.) $25.67
Notable deliveries past 12 months
Building Submarket RBA (s.f.) Delivered
Leased at
delivery (%)
805 N. Whittington Parkway Hurstbourne 140,000 Q4 2018 50.0%
2201 High Wickham Place Middletown/Eastpoint 61,000 Q1 2019 84.0%
13906 Promenade Green Way Middletown/Eastpoint 66,050 Q2 2019 0.0%
Total pre-leased (%) 32.2%
Total under construction (s.f.) 300,917
Total under renovation (s.f.) 75,000
Average floor plate (s.f.) 19,678
Average asking rent ($ p.s.f.) $24.50
Notable projects under construction or announced
Building RBA (s.f.)
Estimated
delivery
Pre-leased (%)
4803 Olympia Park Plaza 135,917 Q3 2019 0.0%
552 E. Market Street 75,000 Q2 2020 100.0%
1801 Tucker Station Road 72,000 Q4 2020 0.0%
2550 Eastpoint Parkway 48,000 Q3 2019 50.0%
1803 Tucker Station Road 45,000 Q3 2019 0.0%
Upcoming deliveries by year (s.f., excludes YTD completions)
V-Soft
Speculative
BTSMiddletown/Eastpoint
Campisano CapitalCBD
Southeast Hollenbach Oakley BTS
BTS
BTSNTS Development
River Road/Brownsboro Fenley Real Estate Speculative
Owner/developer Spec or BTSSubmarket
Under construction/renovation
At a glance
Schulte Design and Construction
Southeast Hollenbach Oakley
Historical completions
Deliveries
At a glance
267,050
12- month deliveries (s.f.)
SpeculativeSchulte Design and Construction
Speculative
Spec/BTSOwner/developer
375,917
Under construction/renovation (s.f.)
228,917
147,000
0
50,000
100,000
150,000
200,000
250,000
2019 2020
260,000
248,000
328,400
192,500
140,000
127,050
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2014 2015 2016 2017 2018 2019
Q2 2019
Construction
Louisville Office Outlook
This report analyzes all office developments under construction and new deliveries in the last 12 months > 30,000 s.f.
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
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6. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q2 2019
Leasing
Louisville Office Outlook
2
Address: 552 E. Market
Square Feet: 25,000
Tenant: Lodgic
Type: New Lease
2
1
Address: 400 W. Market
Square Feet: 8,897
Tenant: Northwestern
Mutual
Type: New Lease
3
3
Address: 9410 Bunsen Pkwy
Square Feet: 45,295
Tenant: Johnson Controls
Type: Renewal
1
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
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7. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
-1.0%
-0.3%
0.4%
1.1%
1.8%
2.5%
3.2%
3.9%
2015 2016 2017 2018
Louisville U.S.
2019
22%
15%
13%12%
11%
10%
7%
Trade, Transportation & Utilities
Educational & Health Services
Professional & Business Services
Manufacturing
Government
Leisure & Hospitality
Financial Activities
Mining, Logging & Construction
Other Services
Information
Q2 2019
Employment
Louisville Office Outlook
3.6%U.S. unemployment
1.5%U.S. 12-month job growth
3.5%Louisville unemployment
0.8%Louisville 12-month job growth
4.0%Kentucky unemployment
1.0%Kentucky 12-month job growth
-3,700
-2,900
-1,000
-900
-500
0
500
1,500
3,600
5,400
-6,500 -4,500 -2,500 -500 1,500 3,500 5,500 7,500
Professional & Business Services
Leisure & Hospitality
Other Services
Trade, Transportation & Utilities
Information
Financial Activities
Government
Mining, Logging & Construction
Manufacturing
Educational & Health Services
-6.0
-1.0
4.0
9.0
2014 2015 2016 2017 2018
Professional & Business Services Information
Government Financial Activities
2019
0%
4%
8%
400,000
500,000
600,000
700,000
800,000
2015 2016 2017 2018 2019
Employment Unemployment
Employment vs. unemployment rate
Employment by industry
Job growth (12-month change)
* Represents 12-month change in employment. All charts represent the latest economic data available from the Bureau of Labor Statistics as of May 2019.
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof
Job growth*
Job growth by sector*Historical employment
Employment by industry Office employment*
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8. Rick Ashton, CCIM
Vice President
+1 502 394 2521
rick.ashton@am.jll.com
Jeff Dreher, SIOR
Vice President
+1 502 394 2519
jeff.dreher@am.jll.com
Pat Richardson, CCIM
Vice President
+1 502 394 2515
pat.richardson@am.jll.com
Yandell Wood, SIOR
Vice President
+1 502 394 2518
yandell.wood@am.jll.com
Doug Owen, SIOR
Senior Vice President
+1 502 394 2516
doug.owen@am.jll.com
David Wood, SIOR
Vice President
+1 502 394 2510
david.wood@am.jll.com
Contact
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Luke Bade
Associate
+1 502 394 2512
luke.bade@am.jll.com
Alex Westcott
Research Analyst
+1 502 394 2504
alex.westcott@am.jll.com