Louisville Market Update

[Rob Bergeron]

National headlines are loud right now: the Office CMBS delinquency rate just hit 11.8%, the highest level ever recorded. Higher than the Financial Crisis. Higher than the Oil Bust. Higher than every stress test the office market has lived through in 25 years.

The office sector is going through a real correction—finally forced to reckon with remote work, hybrid schedules, aging Class B/C properties, and loans written on 2019 assumptions. A lot of American cities are feeling that pain sharply.

But here’s the reality on the ground in Kentucky:

Our commercial market is splitting into two very different stories.

On one side, yes—office vacancies in Louisville have climbed to around 23.4%, especially in the suburban corridors and older Class B/C buildings. Move-outs are real. Negative absorption is real. Some properties are going to struggle, reprice, or be repositioned entirely.

But on the other side?

Industrial is sitting at 3.8% vacancy.
Retail is hovering around ~5%.
Absorption is positive.
Demand is steady.
Rents are rising.

This is the split that matters.

In our region, industrial and logistics aren’t just “doing fine.” They’re among the strongest in the country.
And that’s before you layer in the bigger regional moves:

Toyota drops $912 million to expand hybrid production, with $204.4 million landing in Georgetown.
Ford continues forward with its battery plant.
Supply-chain companies keep gravitating toward our interstates, river ports, UPS Worldport, and the commercial rail line out west that connects Louisville to St. Louis, Kansas City, Denver, and the Western distribution spine.

That rail line is one of our quiet superpowers.

While coastal markets deal with 30%+ office availability and distressed loans, Kentucky sits in the middle of a logistics triangle that keeps getting more valuable every year.

It’s why industrial here barely budged even as other cities saw their vacancy rates double. It’s why retail absorption in the East End and Northeast suburbs remains strong. And it’s why Louisville continues to be what it has always been: steady, durable, and consistently consistent.

Here's the twist:

The more national office distress you see,
the more capital rotates into industrial, logistics, retail, and mixed-use redevelopment.
And Kentucky is positioned right in that slipstream.

Investors love stability.
Companies love access.
Workforces love affordability.
And right as NAR is projecting double-digit home sales growth in 2026 and a 4% bump in prices, Kentucky is stacking real economic foundations, not headlines.