Chances are, if you live and work within the city of Lafayette, you drive by or maybe even work in an office building owned by Billeaud Companies. Beginning more than 100 years ago, Billeaud Companies has transformed its agricultural heritage into income-producing real estate investments, in and around Lafayette and Broussard.
Our premier buildings at 900 S. College/College Oaks and 102 Asma in the Saloom Office Park are a good example of our portfolio. Our multi-tenant, office building portfolio represents the heart and soul of what the Lafayette market has to offer. That being the case, you can imagine The Current’s recent article “It’s not your imagination; Lafayette’s real estate market is struggling” caught our attention.
From my perspective, I’d certainly have to take exception to the statement: “The price of office buildings has dropped as low as $25 per square foot … There are a number of office buildings sitting on the market unable to find buyers at $40-$50 per square foot … What that represents is a cratering of the value of office buildings.” I won’t speculate how or why these statements were made, but I’d have to say they fall somewhere between wild speculation and just plain wrong.
If there are a number of office buildings sitting on the market at $40-$50 per square foot, much less $25, I certainly don’t know about them. I just did a quick export of all the available office building listings for sale in Lafayette Parish from the Louisiana Commercial Database (LACDB), and there were 49 of them. Most are not what you would think of as “office buildings.” These are small, converted industrial buildings, some residential conversions, medical office, proposed construction, etc. Of what I would call traditional multi-tenant office buildings, I counted 15 for sale.
The overall average listing price per square foot for those 15 was a little over $115. I didn’t include in that number several medical office buildings that go for $200 per square foot or much more. The low was just over $50 per square foot for a 6,400-square-foot, two- story building on Industrial Parkway. The high at $233 per square foot was for a 6,000-square-foot building on Curran Lane, just off Ambassador Caffery, near Walmart.
The featured picture in The Current’s article was of 3639 Ambassador Caffery Parkway, next to Home Depot. It is a 95,000-square-foot, six-story building listed for $62 per square foot, about right in my opinion. Others on the list, like 515 S. College, listed for $74 per square foot, and 202 Rue Iberville in Energy Plaza, one of the former Stone Energy buildings at four stories and 77,000 square feet, can be had for $86 per square foot. The other Stone Energy building on Kaliste Saloom recently sold for $74 per square foot. It is a beautiful, well-built, 77,000-square-foot building, but it was 100 percent vacant with high operating costs. Again, no $50 or $40 and certainly not $25. If there are buildings for sale at that price, please call me. I want to see them.
The Current mentioned the Chevron Building on Johnston Street near the mall a couple of times as a harbinger of doom in the office market, when in fact this building is an incredible success story. This 120,000-square-foot, five-story, highly customized, single tenant building sold last year for $25 per square foot. That’s extremely low, but I ask you, what would you pay for a 100 percent vacant, single-user building with a foundation problem needing an enormous cash injection to retrofit and convert the space to multi-tenant? The fire code/sprinkler system issues of carving up floors alone would drive you crazy. Probably $25 per square foot, right?
By all reports, The Summit, as it is now known, has been retrofitted and is at least 70 percent occupied. The Summit is now flowing cash for its gutsy, local, entrepreneur/investor owners who took the risk to make it happen. My hat’s off to them for another great Lafayette real estate story that escaped the journalism of The Current.
Indeed, the office market and the overall real estate market in Lafayette is not great. The collapse of oil prices in 2014 and the exodus of exploration in the Gulf of Mexico and resulting job losses have been a punch in the economic gut of Acadiana and the Lafayette real estate market. I would even argue that it is on the scale of what happened here in the 1980s. But, if that’s the case, then why no bank failures or rash of bankruptcies? Why is La Fonda still packed and why no “We be-leaving Lafayette” bumper stickers? Because we have significantly diversified our economy and continue to do so. There is so much good news about new companies, mostly tech and medical, coming to or expanding here. Sure, we are missing the economic sparkplug of the oil patch, but we are doing a pretty good job making up the difference and continue to build on that effort.
During a difficult real estate market, stories like this are a disservice to our industry. I’m a salesman and an eternal optimist. I also do my best to be realistic and confront the brutal facts, but I fail to see how The Current’s bad news cheerleading, particularly when the facts are incorrect, serves our community.