The Zacher Co.’s annual market survey and forecast of Fort Wayne office space shows what everyone knows: it’s getting harder for companies to find space downtown. The survey, which was set for release Oct. 3, says the 13 million-square-foot overall market has a vacancy rate of 9.29%, compared to 10.81% in early October of last year. That’s compared to the national average of 12.2%, said Steve Zacher, managing broker for the Zacher Co. It’s also lower than several Midwestern cities, including Indianapolis and Cincinnati, he said.
Two things impacting the market likely are the recently opened Promenade Park on the riverfront and the $32 million revitalization of The Landing on Columbia Street that’s adding restaurants, shops and apartments.
“That’s part of the environment,” he said, “the live, work, play environment that causes the companies to be attracted to downtown.”
The downtown market has the lowest vacancy in the market at 6.9%. It’s the location to be as Ruoff Home Mortgage is expected to break ground on its 97,000-square-foot downtown corporate office and the future home of the recently announced the Barrett and Stokely building at Superior and Harrison streets that will include 225 apartments, a 900-space parking garage, and 60,000 square feet total for offices, retail space and “flex space.’
It’s also where several companies, including Shindigz, Pizza Hut and Rural Sourcing, have found suitable digs. Shindigz moved its headquarters from South Whitley to Wayne and Harrison streets to better attract talent. Rural Sourcing, an IT outsourcing services provider, announced in December that it would open its sixth software development center in Fort Wayne. It has leased 14,000 square feet in the City Exchange, 127 W. Wayne St., half the space purchased by Great Lakes Capital in the last year. Pizza Hut has its 23,370-foot corporate headquarters building at 7100 W. Jefferson Blvd., for sale for a year for $3.9 million. It’s leased space in the 202 Metro Building, 202 W. Berry St.
The areas with the sharpest decreases in vacancy rates are northeast and northwest. Over the past year, 320,729 square feet of office space found takers with another 86,542 coming from new construction. Some of the largest construction projects were 3 Rivers Federal Credit Union, 1112 Stellhorn Crossing Pkwy, 16,448 square feet; Crossroad Child & Family Services, Inc., 1825 Beacon St. 13,610 square feet; and a physical therapy business at 2626 St. Joe Center Road, 12,964 square feet.
The survey alludes to “An unannounced corporate space consolidation will result in a large office becoming available.” Zacher wouldn’t say who that was.
Tenants of Class A buildings — those with high-quality standard finishes, state-of-the-art systems, exceptional accessibility and a definite market presence — should expect to see raises in their rent. Class A downtown office rents are $19-$23 for full service, plus parking. Suburban Class A rents are $16.50-$20 full service including free surface parking.
“There’s not a lot of big blocks of space,” Zacher said.
Those that are available, are the former home of SIRVA, which moved to the Indiana Michigan Power Center downtown from 5001 U.S. Hwy. 30 W., where over half of the 280,526 square feet, 53.47%, is vacant.
The former corporate office of Wells Fargo, after Flagstar acquired 52 of its Midwest branches, 111 E. Wayne St., is now 75.31% vacant.
Office vacancies by quadrant: 2019 compared to 2009:
The northeast continues to have the highest vacancy rate, 13.67%, but that’s far from the 35.3% in 2012. Between 2012 and 2014 the area lost several for-profit colleges, Zacher said.
Zacher and the company’s other brokers expect Class A rents will be stable to increasing both downtown and in the suburbs, and Class B and C rents will be stable to slightly decreasing.
They also expect flat or negative absorption in 2020 and 2021 due to a possible economic slowdown and the anticipated expected supply of available space.
The survey report is a compilation of data derived from a variety of sources, including the Zacher Co.’s own proprietary database and historical data from third-party sources.
Some the notable activity in the last year:
• Ruoff Home Mortgage’s proposed project at Jefferson Boulevard and Ewing Street that will add 97,000 square feet of office space.
• Regal Beloit’s investment sale of space at 1946 West Cook Road, 82,841 square feet.
• SAZ Properties’ purchase of 9921 Dupont Commerce Court, 64,742 square feet.
• Circle Logistics, Inc.’s purchase of 1950 West Cook Road, 56,700 square feet.
• Purdue Fort Wayne’s purchase of 3000 E. Coliseum Blvd., 51,320 square feet. The building, formerly home to Brown Mackie College, will become the university’s South Campus.