2019-07-10_DTZ戴德梁行_Office_Q3_2018_St.Louis_4页_778kb

St. Louis Office Market Q3 2018 Summary

Core Content

The St. Louis office market in Q3 2018 showed a mix of growth and stability, with a focus on the local economy, innovation, and investment opportunities. The report provides insights into economic indicators, market trends, submarket performance, and key transactions.

Economic Indicators

• St. Louis Employment: Increased slightly from 1,379,000 in Q3 2017 to 1,392,000 in Q3 2018.
• St. Louis Unemployment: Declined to 3.5% in Q3 2018, a 10-basis point drop from the previous quarter.
• U.S. Unemployment: Continued to decline, reaching 3.9% in Q3 2018.
• Federal Reserve Actions: The FOMC raised interest rates for the third time in 2018, signaling confidence in the economy and potential for further increases in 2019.

Market Overview

• Vacancy Rate: The overall vacancy rate in the St. Louis metro area was 12.0%, a 30-basis point decrease from Q3 2017.
• Net Absorption: Net absorption for the overall market was 169,000 sf in Q3 2018, with a 12-month forecast indicating growth.
• Speculative Construction: Controlled speculative construction across the metro area suggests continued demand for Class A space.
• Rental Rates: Average asking rent for the overall market was $19.12 psf/year in Q3 2018, with a forecast of increase.

Submarket Performance

St. Louis City

• Vacancy Rate: 18.5%, down from 19.6% in Q3 2017.
• Net Absorption: 103,827 sf in Q3 2018, with a YTD total of 243,062 sf.
• Under Construction: 709,408 sf.
• Rental Rates: Average asking rent was $17.03 psf/year for all classes, with Class A at $19.79 psf/year.

Clayton

• Vacancy Rate: 6.2%, the tightest submarket in the metro.
• Net Absorption: 23,022 sf in Q3 2018, with a YTD total of 10,268 sf.
• Under Construction: 604,508 sf.
• Rental Rates: Average asking rent was $25.05 psf/year for all classes, with Class A at $29.47 psf/year.

West County

• Vacancy Rate: 11.2%, slightly below the 10-year average.
• Net Absorption: 39,512 sf in Q3 2018, with a YTD total of -105,017 sf.
• Under Construction: 280,000 sf.
• Rental Rates: Average asking rent was $21.12 psf/year for all classes, with Class A at $24.71 psf/year.

Mid-County

• Vacancy Rate: 3.7%.
• Net Absorption: -3,875 sf in Q3 2018, with a YTD total of -16,809 sf.
• Under Construction: 25,200 sf.
• Rental Rates: Average asking rent was $17.32 psf/year for all classes, with no Class A data available.

North County

• Vacancy Rate: 10.4%.
• Net Absorption: -289 sf in Q3 2018, with a YTD total of 7,464 sf.
• Under Construction: No data provided.
• Rental Rates: Average asking rent was $16.22 psf/year for all classes, with Class A at $20.20 psf/year.

South County

• Vacancy Rate: 10.8%.
• Net Absorption: -9,888 sf in Q3 2018, with a YTD total of -34,922 sf.
• Under Construction: No data provided.
• Rental Rates: Average asking rent was $21.10 psf/year for all classes, with Class A at $24.43 psf/year.

St. Charles County

• Vacancy Rate: 15.4%.
• Net Absorption: 16,510 sf in Q3 2018, with a YTD total of 36,496 sf.
• Under Construction: No data provided.
• Rental Rates: Average asking rent was $18.86 psf/year for all classes, with Class A at $20.65 psf/year.

Key Lease Transactions

• 3 CityPlace Dr. (West County): Renewal by Lockton Companies (56,557 sf) and New York Life Insurance Company (12,980 sf).
• 211 N. Broadway (City): Renewal by St. Louis Regional Chamber & Growth (27,126 sf).
• 6 CityPlace Dr. (West County): Renewal by Knowledgegelake (24,059 sf).
• 800 Market St. (City): Renewal by C J Thomas Company (20,391 sf).
• 14767 N. Hwy 40 Outer Rd. (West County): Expansion by Rabo Agrifinance (18,683 sf).
• 600 Washington Ave. (City): Renewal by Cushman & Wakefield (18,468 sf).
• 13801 Riverport Dr. (North County): New lease by Aegis Home Warranty Group (16,557 sf).
• 1 Memorial Dr. (City): Renewal by East-West Gateway Council of (16,101 sf).
• 14515 N. Hwy 40 Outer Rd. (West County): New lease by Club Ready (15,869 sf).

Key Sales Transactions

• 200 N. Broadway (City): Sold by M-IV STL Place, LLC to BPRE Saint Louis GP Corp.
• 900 N Tucker Blvd. (City): Sold by Lee Enterprises to StarLake Holdings.
• 1015 Corporate Square Dr. (Mid-County): Sold by 1015 Corp Square LLC to 1015 CS Partners LLC.

Outlook

• Job Growth: Expected to remain steady, which will drive leasing activity and reduce vacancy rates.
• Industry Trends: Healthcare and financial services are anticipated to gain momentum.
• Investment Potential: Clayton is highlighted as a strong opportunity for investors due to its tight supply and high rental rates.
• Innovation: The Cortex Innovation District continues to be a major driver of office absorption, with Cortex 3.0 contributing significantly.

Vacant Space by Submarket

• St. Louis City: Contains 34.5% of the vacant space in the metro.
• Class A Contiguous Space: Limited availability, with suburban Class A occupancy exceeding 93.2%.

Conclusion

The St. Louis office market in Q3 2018 reflects a resilient and growing environment, driven by economic expansion, innovation, and strong leasing fundamentals. While vacancy rates remain relatively high in some areas, the market offers opportunities for investors, particularly in Clayton and the Central West End, where demand for Class A space is robust. Controlled speculative construction and strategic developments like Ballpark Village are expected to further enhance the market's appeal and rental income potential.