Office Real Estate Report

The increase of the cost of construction is being felt by all sectors of commercial real estate. New carpet and paint for a lease space a few years ago was $5.00 +/per square foot and now is $10.00 +/- per square foot. A tenant used to be able to have other updates and changes to a space aside from carpet and paint. This is no longer. The increase in cost will eventually be passed along to the consumer. Lease rates will increase and/or tenants will be asked to participate in remodeling and updating expenses of lease spaces. Either way, the tenant will be paying a higher effective lease rate.

Small Office Users

The small office users of the community have returned to the office. The suburban office market is solid with limited spaces available to lease and very few office buildings on the market for sale. We often hear people comment that they see our signs all over and thus the market must be weak. This is not accurate. Unlike residential real estate when a sign is almost always for a full residence, our sign in front of a building is more often than not for a single suite inside of a large building.

Downtown Office Market

The downtown office market is our current challenge. Many of our major employers are struggling with workers returning to the office. The market has large blocks of space available, and this is prior to Hill’s vacating the 150,000-squarefoot building at 8th and Topeka. The revival of Downtown Topeka has been incredibly positive for all of Topeka and the office market. We need to continue to support this redevelopment.

The next greatest challenge we have in leasing spaces in downtown after the return of employees is parking. The City of Topeka has a two-hour free parking policy on Kansas Avenue and on the 100 blocks east and west of the Avenue. Unfortunately, this policy appears to be going away. This will impact office users that have customers/ clients visit their downtown office. In addition, the city is going to increase parking rates in cityowned garages. This increase in cost goes directly to the bottom line of a tenant or landlord.