One of the surprise winners of the New Orleans market is office space, particularly in the Central Business District (CBD). Average rents are nearly 10 percent higher than they were before the 2005 storms, and the buildings have a higher occupancy rate.

Occupancy of Class A office space in the CBD is at 87.9 percent now as opposed to 86.9 percent before the storm, according to Richard Stone, manager of the Latter & Blum Commercial Office.

Class B office space shows a more dramatic increase with occupancy rates at 72.8 percent before the storm and 83 percent now.

At a recent economic conference, Stone said if these occupancies keep up, Class B office space might get pushed out of the CBD and down Canal Street into MidCity.

As great as the numbers are right now, many real estate experts still worry about what might happen six or seven years from now. Right now, many of the new businesses vying for space in the CBD are recovery-related businesses, so once those move out, there could be a readjusting of the market.

Another thing that’s increasing occupancy is a smaller supply of office spaces to choose from. Some large buildings have been taken off the market including the Latter & Blum building on Common Street and Dominion Tower, the latter which alone offered 470,000 square feet of Class A office space before the storm. Both of these buildings were put on the market.

In terms of Class B space, 37 percent of the inventory was taken off the market because of storm or other related damage.

Right now New Orleans Class A offices have a lower vacancy compared with other metropolitan centers like Atlanta, Chicago, Dallas, Denver, Phoenix and Houston, and the rental rates are still on the lower end compared with these cities.

Given the current crunch, Stone expects office rents to rise a little come renewal time.