IRR-Saint Louis Mid-Year Viewpoint 2015 Local Market Report - Office
The office market throughout the St. Louis MSA continues to experience a muted recovery and is still attempting to bounce back from a steep economic recession. The St. Louis MSA has seen minimal office development in the past several years due to the slowdown in the economy. The most recent development of note is the build-to-suit RGA Headquarters in Chesterfield, which was completed in Q4 2014. Demand for office space is slowly increasing and is expected to continue to increase in the short term as noted by decreasing vacancy rates. There are currently two medical office buildings and one build-to-suit 98,000 square foot office building for MiTek under construction all in the West County/Highway 40 submarket.
Also in this submarket, a 125,000 square foot speculative office building is planned by Delmar Gardens Properties. Finally, World Wide Technologies announced they plan to build a 205,000 square foot seven-story owner-user office building in the Westport Plaza market area.
Major leases signed in Q1 2015 include AT&T renewing 141,423 square feet at 125 Corporate Office Drive in Bridgeton, MO and METRO signing a new lease for 73,000 square feet at 211 N. Broadway in downtown St. Louis. Finally, PNC Bank renewed 61,317 sq. ft. at 120 S. Central in Clayton, MO. Office sales have been strong this year with the purchase of two St. Louis buildings as part of a $539 million, 23 Property, 12 state, 2.2 million square foot portfolio. The buildings included the 315,000 square foot Express Scripts Building and the 232,521 square foot Magellan Health Building. The Clayton CBD is the premiere market for office space in the St. Louis MSA. Class A properties in the Clayton Submarket have an average occupancy of approximately 91.0%, which is higher than the St. Louis MSA average of 82.0%. Supply and demand factors in the region for the short term are expected to be stable to improving. Rental rates appear to have stabilized and are expected to continue to increase while the vacancy rate also appears to have stabilized and is expected to continue to decrease over the next few years.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.