Louisville Commercial Office Space for Rent

Q4 2025

Louisville Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Louisville commercial real estate (CRE) market is demonstrating resilience and adaptability as 2025 concludes. The Office sector is stabilizing, with vacancy rates holding steady and leasing activity showing positive momentum [1, 2]. Industrial fundamentals remain robust, with tight vacancy and strong demand for modern distribution space [4]. Retail is thriving, with vacancy rates at historic lows and rent growth accelerating [6]. Multifamily is absorbing a wave of new deliveries, with occupancy stabilizing and rent growth remaining positive [7].

TenantBase Proprietary Data [8] highlights the distribution of active tenant demand over the last 90 days (107 total deals):

  • Retail/Storefront led market activity with 63.55% of all searches [8].
  • Warehouse was the second most active sector at 23.36% [8].
  • Office accounted for 14.95% of total search volume [8].

Office Market

Market Overview Louisville's office market is finding a new equilibrium, with vacancy rates stabilizing and tenant demand focusing on quality and flexibility.

  • Vacancy & Availability: The overall vacancy rate stands at 16.2%, with Class A properties in the CBD and East End submarkets seeing tighter conditions [1].
  • Net Absorption: Net absorption turned positive in Q3 2025, driven by professional services and healthcare tenants expanding their footprints [2].
  • Rental Rates: Asking rents have remained stable, averaging $19.50 per SF full-service, with Class A rates commanding a premium [1].
  • Market Drivers: TenantBase data shows a preference for shorter lease terms, with 50.00% of office inquiries seeking leases of Less than one year [8].

TenantBase Activity [8]

  • Demand Share: Office accounted for 14.95% of total search volume [8].
  • Lease Term Preference: Demand is split between short-term agility and mid-term stability:
    • Less than one year: 50.00% of deals [8].
    • 2-3 Years: 35.71% of deals [8].
    • 3-5 Years: 7.14% of deals [8].
  • Size Requirements: The average lower size requirement for office space is 500 SF for short-term leases, increasing to 3,025 SF for 2-3 year terms [8].

Industrial & Warehouse Market

Market Overview The Louisville industrial market remains a logistics powerhouse, supported by its strategic location and robust infrastructure.

  • Vacancy & Rent: Vacancy remains low at 4.8%, with limited speculative construction keeping supply in check [4]. Rents have risen to $6.75 per SF (NNN) for warehouse distribution space [4].
  • Demand & Supply: Leasing activity is steady, with 3PLs and manufacturing users driving demand [4]. The construction pipeline is active but moderating, which should help balance supply and demand in 2026 [4].
  • Leasing Highlights: TenantBase data shows a mix of demand, with 26.67% of warehouse inquiries for 1-2 Year terms and 26.67% for 2-3 Year terms [8].

TenantBase Activity [8]

  • Demand Share: Warehouse accounted for 23.36% of total search volume [8].
  • Lease Term Preference: Demand is spread across lease terms:
    • 1-2 Years: 26.67% of deals [8].
    • 2-3 Years: 26.67% of deals [8].
    • 3-5 Years: 26.67% of deals [8].
  • Size Requirements: The average lower size requirement for warehouse space is 2,500 SF for 1-2 year terms, increasing to 25,000 SF for 2-3 year terms [8].

Retail Market

Market Overview Louisville's retail sector is booming, with strong population growth and limited new supply driving vacancy to historic lows.

  • Vacancy & Availability: Retail vacancy is extremely tight at 3.5%, the lowest level in over a decade [6]. Availability is scarce in prime centers, driving competition among tenants [6].
  • Rental Rates: Rent growth is robust, rising 3.8% year-over-year to an average of $16.50 per SF (NNN) [6].
  • Construction: New retail development is minimal, focused primarily on grocery-anchored centers and mixed-use projects [6].

TenantBase Activity [8]

  • Demand Share: Retail/Storefront activity dominated with 63.55% of all search volume [8].
  • Lease Term Preference: Retail tenants show a clear preference for mid-term leases:
    • 1-2 Years: 28.13% of deals [8].
    • 3-5 Years: 25.00% of deals [8].
    • 5+ Years: 21.88% of deals [8].
  • Top Locations: Tenant interest is highest in Louisville (City) (22 deals) [8].

Multifamily Market

Market Overview The multifamily market is stabilizing as it absorbs a significant wave of new supply, with occupancy rates holding firm and rent growth poised to return.

  • Vacancy & Occupancy: Vacancy held steady at 6.2% in Q3 2025, with occupancy rates consistently above 93% [7].
  • Rents: Average asking rents rose 2.5% year-over-year to $1,175 per unit, driven by demand for affordable housing options [7].
  • Construction: The construction pipeline has shrunk to 1,500 units, a significant decrease from previous years, which will support tighter conditions in 2026 [7].
  • Investment: Sales activity remains cautious, but pricing has stabilized, offering opportunities for investors seeking steady yields [7].

2026 Outlook

Looking ahead to 2026, the Louisville market is positioned for continued growth and stability.

  • Industrial Strength: With a moderating construction pipeline and steady demand, the industrial sector is expected to see continued rent growth and stable vacancy [4].
  • Retail Resilience: The lack of new retail supply will keep vacancy low and rents rising, making existing centers highly valuable [6].
  • Office Stabilization: While challenges remain, the office market is expected to find a floor as tenants take advantage of favorable terms and right-size their space needs [1].

Sources

  1. Cushman & Wakefield: Louisville Office MarketBeat Q3 2025
  2. Commercial Kentucky: Louisville Office Market Report Q3 2025
  3. Colliers: Louisville Office Market Report Q3 2025
  4. Cushman & Wakefield: Louisville Industrial MarketBeat Q3 2025
  5. Commercial Kentucky: Louisville Industrial Market Report Q3 2025
  6. Cushman & Wakefield: Louisville Retail MarketBeat Q3 2025
  7. Berkadia: Louisville Multifamily Report Q3 2025
  8. TenantBase Proprietary Market Data (Louisville - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.