Office Market Snapshot St. Louis, Missouri • First Quarter • 2013
Market Tracker *Arrows = Current Qtr Trend
Vacancy
Net Absorption
Deliveries
Asking Rent
16.5%
-53,000 SF
0 SF
$18.46 FS
Office Market Takes A Step Back The St. Louis office market suffered a loss during the first quarter of the year with 56,000 square feet of negative absorption. After four quarters of growth in 2012, the step backwards during the first three months of the year was a surprising reversal for the market.
ST. LOUIS OFFICE
Economic Indicators Q1 12
Q1 13
St. Louis Employment
1279.6
1286.5
St. Louis Unemployment
8.70%
8.10%
U.S. CCI
67.53
62.05
U.S. Unemployment
8.30%
7.80%
Net Absorption
Square Feet ('000s)
200 100 0 -100 -200 -300
2009
The Clayton market realized negative absorption during the quarter despite having attracted two significantly-sized tenants. The St. Louis Economic Council leased over 30,000 square feet of former Rehab Care space at Pierre Laclede II. Additionally, as mentioned above, Xtra Lease entered into the Clayton market with a 30,000 square foot lease at 7911 Forsyth Boulevard. But with a number of mid-sized vacancies at PNC Center, Magna Place, and The University Club Tower, Clayton realized an overall loss of 32,000 square feet. The strongest growth in the market took place Downtown which extended the significant gains it realized in 2012. Osborn & Barr provided the biggest contribution to this growth with its relocation and expansion from Cupples 8 to Cupples 9 resulting in 30,000 square feet of positive absorption. Another significant expansion took place in the North County market. During the quarter, Covidien relocated into 140,000 square feet of Boeing space at its Corporate Technology facility in Hazelwood. Having left 114,000 square feet of existing North County space, this move represents 26,000 square feet of growth for the company. The North County market, none-the-less, incurred a loss for the year with Sara Lee downsizing by 23,000 square feet and a handful of other smaller tenants having vacated space.
300
2008
The losses incurred in the market were geographically widespread with negative absorption having been realized in Clayton, Mid-County, North County, and West County. Of these, the most significant loss took place in West County where 80,000 square feet of space was vacated. Xtra-Lease was one of the larger tenants leaving the market after it relocated from 56,000 square feet of space at Park 270 to the Clayton market. This space was backfilled by The Hub Group which relocated within the market from Creve Coeur Center. KV Pharmaceutical and Old Republic Title left a combined 56,000 square feet of space in the Westport submarket while Verizon vacated 22,000 square feet of Chesterfield office space in a relocation to its campus on Technology Drive in St. Charles County.
2010
2011
2012
2013
Vacancy Rate 20% 15% 10%
Construction activity, which has been scarce during the past couple of years, saw a significant new project get underway during the quarter. The future site of the 405,000 square foot Reinsurance Group of America headquarters broke ground on Swingley Ridge Road in Chesterfield. Whether we’ll see more of these types of expansions in our market depends on the jobs report. Nationally, employment slowed down in March. While St. Louis employment figures are not yet available for March, the three most recent months of data have shown better year-over-year growth than at any point in 2012. While employment growth is still not robust, this does suggest that the local employment figures are trending in the right direction.
5% 0% 2008
2009
2010
2011
2012
2013
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Cassidy Turley Office Market Snapshot St. Louis, Missouri • First Quarter • 2013
TOTAL BLDGS
INVENTORY
SUBLET
DIRECT
VACANCY
VACANT
VACANT
RATE
CURRENT NET
YTD NET
ABSORPTION ABSORPTION
AVERAGE
UNDER CONSTRUCTION
AVERAGE
ASKING RENT ASKING RENT (ALL CLASSES)
(CLASS A)
SUBMARKET Downtown
58
11,123,000
18,000
2,306,000
20.9%
50,000
50,000
-
$16.28
$19.48
Clayton
64
6,831,000
33,000
851,000
12.9%
(32,000)
(32,000)
-
$23.59
$25.29
Mid-County
58
2,084,000
10,000
347,000
17.1%
(44,000)
(44,000)
-
$15.48
$18.95
West County
249
16,165,000
140,000
2,261,000
14.9%
(77,000)
(77,000)
405,000
$20.35
$23.30
North County
57
5,346,000
60,000
1,023,000
20.3%
(11,000)
(11,000)
-
$16.81
$20.42
South County
64
2,640,000
-
407,000
15.4%
34,000
34,000
-
$20.08
$22.54
St. Charles County
87
4,136,000
8,000
525,000
12.9%
26,000
26,000
-
$15.54
$18.52
Class A
255
28,623,000
213,000
3,478,000
12.9%
(47,000)
(47,000)
405,000
$21.74
Class B
382
19,702,000
55,000
4,241,000
21.8%
(6,000)
(6,000)
-
$16.09
637
48,325,000
268,000
7,719,000
16.5%
(53,000)
(53,000)
405,000
$18.46
MARKET TOTALS
TOTAL
Office Submarkets
Key Lease Transactions 1Q 2013 PROPERTY
$21.74
SF
TENANT
TRANSACTION TYPE
SUBMARKET
McKelvey Road 3165
52,994
BJC HealthCare
Extension
Hazelwood
Roosevelt Office Bldg
44,020
Centene Corporation
Renewal & Expansion
Chesterfield
Pierre Laclede II
30,380
St. Louis Co. Economic Council
New
Clayton
Creve Coeur Center II
23,027
Cassidy Turley
Expansion
Creve Coeur
940 West Port Plaza Dr.
13,569
Lending Solutions, Inc.
New
West Port
Creve Coeur Center II
12,708
Cornerstone Insurance Group
Renewal
Creve Coeur
West Park I
11,945
Stifel Bank
New
Creve Coeur
100 Chesterfield Business Pkwy.
10,747
St. Louis Communications
New
Chesterfield
Owen Ridge Campus - Building 1
10,615
Baker 2013, LLC
New
Kirkwood South
Timberlake Corp Ctr I
10,208
JPMorgan Chase Bank
Renewal & Expansion
Chesterfield
Plaza 1 Office Center
8,950
Frederick J. Hanna & Associates
New
Earth City
Pierre Laclede II
7,392
The Growe Law Firm
Renewal
Clayton
St. Louis, Missouri
2
70
64
1 270
4
170
8
5
3 44
1. 2. 3. 4.
St. Charles County North County West County Mid County
5. 6. 7. 8.
7
6
55
St. Louis City Downtown South County Clayton
Rob Reardon Director of Research
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7700 Forsyth Boulevard 9th Floor St. Louis, Missouri 63105 Tel: 314.862.7100 Fax: 314.862.1648 Email: robert.reardon@cassidyturley.com The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. Copyright © 2013 Cassidy Turley. All rights reserved.
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