Employment levels and office sector expansions are at all-time highs in the St. Louis area. Net absorption of office space has also increased, with over 600,000 square feet absorbed so far in 2015 alone. While absorption is up, over half of leasing transactions for spaces over 10,000 square feet have been renewals due to a lack of large blocks of Class A office space. The tight market conditions are expected to lead to new multi-tenant office development in the near future.

1. Employment at all-time highs
Source: JLL Research, BLS
YTD absorption through three quarters
Source: JLL Research
Lease type for transactions >10,000 s.f.
Source: JLL Research
Occupancy gains surging in 2015
2,257
(1,000,000)
(500,000)
0
500,000
1,000,000
2008 2009 2010 2011 2012 2013 2014 2015
51.06%
22.90%
26.03%
Renewal
Expansion in market
Other
Office Insight
St. Louis | Q3 2015
42,628,094
Total inventory (s.f.)
211,096
Q3 2015 net absorption (s.f.)
$19.68
Direct average asking rent
0
Total under construction (s.f.)
15.0%
Total vacancy
606,511
YTD net absorption (s.f.)
2.1%
12-month rent growth
0.0%
Total preleased
Never have more people been employed
Employment has reached an all-time high. Expansions in office occupying sector
has been steady and is also at an all-time high. Boeing, Charter, and Centene
are a few of the larger companies to expand their real estate footprint this year.
The tech sector continues to gain momentum, particularly in the Cortex district of
Midtown. San Francisco-based Square just announced it will establish a Midwest
hub in St. Louis. The company plans to hire 200 employees in the coming years
and occupy 17,000 square feet in the @4240 building. Square was founded by
St. Louis natives Jim McKelvey and Jack Dorsey.
Absorption surges in 2015
Total absorption through the first three quarters of 2015 is at its highest level
since the end of the recession. All of those gains have been in the suburbs.
Diving even further, 92.0 percent of the absorption has been in Northwest County
and Clayton. Northwest County vacancy is down to 18.9 percent, well below the
peak of 31.7 percent in 2013. The I-64 corridor in West County has also fared
well, absorbing 78,000 square feet this year. That will more than double next
quarter when Centene’s lease for all of 1370 Timberlake Manor Parkway
(118,000 square feet) commences.
Renewals lead the way as large blocks of space remain scarce
While absorption has been strong, over half the transactions in 2015 larger than
10,000 square feet have been renewals. With limited options, particularly in
Class A buildings, tenants have few options while exploring the market. With just
seven options over 50,000 square feet in the market currently vacant, large
tenants have few choices. This continues to enforce the expectation of a new
multi-tenant office building breaking ground soon, the location will likely be in
West County or Clayton
0.0%
5.0%
10.0%
1,200,000
1,250,000
1,300,000
1,350,000
1,400,000
1,450,000
2000 2002 2004 2006 2008 2010 2012 2014
unemployment rate
total jobs

2. Current conditions – submarket Historical leasing activity (s.f.)
Source: JLL Research Source: JLL Research
Total net absorption (s.f.)
Source: JLL Research
Total vacancy rate (%)
Source: JLL Research
Direct average asking rent ($ p.s.f.)
Source: JLL Research
1,069,443
335,882 314,112
-500,593
29,921
-96,131
108,313
293,792
481,327
606,511
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015
$19.26
$19.84 $19.65 $19.55
$19.23 $19.20 $19.22 $19.23 $19.40
$19.68
$16.00
$18.00
$20.00
$22.00
2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015
12.8% 12.6% 12.1%
14.9%
15.8%
17.9% 17.9%
17.1%
15.8%
15.0%
5.0%
10.0%
15.0%
20.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015
CBD
Landlordleverage
Tenantleverage
Peaking
market
Falling
market
Bottoming
market
Rising
marketWest County, Clayton
1,949,408
2,420,016
3,714,770
2,987,078
1,698,366
0
1,000,000
2,000,000
3,000,000
4,000,000
2011 2012 2013 2014 YTD 2015Northwest County, St. Charles
County, South County
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