When the Twin Cities buyers of the old St. Louis County Jail said they were looking to convert the Duluth jail to office space, I set out to find out if more office space was even needed downtown.
The Wieland Block, which had added 65,000 square feet to the market, was about 40 percent leased. More space had opened up at the Wells Fargo Building. And the recession had probably led to more vacated space, giving the advantage to prospective tenants, I figured.
But the story took a different direction when I found out no solid statistics existed on office vacancy rates in Duluth. It had been estimates all along. But that would change by summer. A collaborative effort was underway to make regular market reports a reality.
That became the story.
But I did find out a few things along the way about the need – or lack thereof — for more office space downtown. For that, we’ll use some estimates:
In turns out, Duluth hasn’t seen the ideal 10 percent office vacancy rate downtown since the mid-1990s. Considered good, 10 percent is a balanced market, giving neither property owner nor tenant the advantage.
The current estimated 15 to 16 percent office vacancy rate is a soft market, which gives the tenant the advantage.
"At 15 percent there’s obviously some room to improve, to get space filled up, but it’s not horrible," said Kathy Marinac, president of the Building Owners and Managers Association in Duluth.
But can downtown absorb even more?
It really depends," Marinac said. "We have some inventory here to fill. But it may be that the jail would be geared more to government tenants. It really depends on how much they’re planning to do. It may serve a certain niche where it’s located, because it’s not on Superior Street, the main area for office space.
Steve LaFlamme, president of Oneida Realty, saw possible success with office space at the old jail, located on Second Street behind the St. Louis County Courthouse and federal building.
"That’s a unique setting up there," he said. "It all depends on what it looks like. It’s very unique. It may have a draw for a specific kind of user. It may very well have a demand, all its own."
The big issue would be parking, he said.
"The first thing they’ll (tenants) want is parking," LaFlamme said. "That would be my biggest question. It’s a unique enough location and has historical interest and value. It’s a unique product, but the parking would be the question."