1. Office employment continues to reach new highs
Source: JLL Research, BLS
Northwest County vacancy dropping
Source: Thomson Reuters, JLL Research
Leasing activity concentrated in core suburban markets
Source: JLL Research
Occupancy gains continue to be steady
2,257
27.4% 28.2% 27.5%
31.7%
26.7%
19.7%
10.0%
20.0%
30.0%
40.0%
2010 2011 2012 2013 2014 YTD 2015
41.2%
35.3%
11.8%
5.9%
5.9%
West County
Clayton
Northwest County
South County
CBD
29,100
Increase in professional & business
services employment since 2010
Office Insight
St. Louis | Q2 2015
42,628,094
Total inventory (s.f.)
116,756
Q2 2015 net absorption (s.f.)
$19.85
Direct average asking rent
0
Total under construction (s.f.)
15.5%
Total vacancy
181,495
YTD net absorption (s.f.)
2.3%
12-month rent growth
0.0%
Total preleased
Economic expansion continues to pick up steam
Unemployment across the region is down to 5.3 percent, its lowest level in eight
years. In the most recent Federal Reserve Burgundy Book, 75.0 percent of hiring
managers surveyed are actively looking to increase employment. Initial
estimates have the economy growing significantly faster compared to previous
years when growth was below 1.0 percent. With the start-up community keeping
its momentum, areas such as Cortex in Midtown have become very attractive to
tenants that want to be near other start-up and technology companies. The
@4240 building, for example, already has 65 companies and 450 employees
since opening last year.
Large tenants are driving down vacancy in Northwest County
For several years, Northwest County had been one of the worst performing St.
Louis submarkets. Those times have changed very quickly. In 2015, total
absorption is 310,000 square feet, more than 8.0 percent of the total inventory.
Large leases by SunEdison (90,000 square feet), Charter (60,000 square feet),
and Boeing (140,000 square feet) have finally wiped out losses from the
recession. Most of the gains have been in the Earth City and Riverport area.
Buildings in those parks offer large floor plates and high parking ratios for
tenants looking to maximize density.
Few Class A options in the suburbs could bring new construction
As tenant demand exceeds supply, the likelihood of one or more suburban office
buildings breaking ground has never been greater. Currently the market has just
five Class A options in the suburbs with over 50,000 square feet available. The
limited options have caused tenants to get creative in the search for space.
Charter leased 135,000 square feet at a former Macy’s department store for a
call center. The building is part of the redevelopment of the former Northwest
Plaza shopping mall. Another large employer, World Wide Technology is going
to build a new corporate headquarters in Westport Plaza near its existing
location.
