Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Upcoming SlideShare
Colored shredded paper
Colored shredded paper
Loading in …3
×
1 of 7

St. Louis Office Outlook Q4 2016

1

Share

Download to read offline

Office vacancy is at an eight year low the region absorbed more than 600,000 square feet of space for the second year in row. Find out more in Q4 Office Outlook.

Related Books

Free with a 30 day trial from Scribd

See all

St. Louis Office Outlook Q4 2016

  1. 1. Office Outlook St. Louis Q4 2016
  2. 2. Change in employment since 2010 Source: JLL Research, BLS Leasing activity by submarket (> 10,000 square feet) Source: JLL Research Significant acquisitions of St. Louis companies Source: JLL Research Vacancy continues its descent 2,257 18% 15% 6%9%3% 48% CBD Clayton Northwest County South County St Charles County West County Office Insight St. Louis | Q4 2016 42,154,174 Total inventory (s.f.) 218,607 Q4 2016 net absorption (s.f.) $19.05 Direct average asking rent 170,234 Total under construction (s.f.) 12.7% Total vacancy 628,821 YTD net absorption (s.f.) -3.4% 12-month rent growth 52.8% Total preleased Office employment surges ahead to new highs The end of 2016 marked the first time in the history of St. Louis that office employment exceeded 500,000 workers. Financial activities and professional and business services (PBS) have led the way. Since 2010, PBS has doubled the pace of St. Louis non-farm payroll growth, increasing 23.6 percent. Large employers continue to add jobs; Boeing, Charter, and Centene announced or signed lease expansions this quarter. Some smaller employers are trimming staff. Lord and Taylor announced the closure of its Downtown St. Louis location; the move will leave behind a vacant 60,000 square foot block next year at 500 N Broadway. Bankrupt solar company, SunEdison, is planning further layoffs, its entire 90,000 square foot space in Northwest County could be available early in 2017. SunEdison leased the space less than three years ago. Leasing activity once again tops two million square feet Nearly 64.0 percent of leasing activity in 2016 took place in West County and Clayton, advancing the trend of tenants preferring the suburbs to the CBD. This leasing activity has pushed absorption over 600,000 square feet for the second consecutive year. Centene continues to be a driver of occupancy growth. The Clayton-based company accounted for almost 10.0 percent of leasing activity in 2016 after four new leases in Clayton and West County. Looking forward, the region has 1.3 million square feet of tenants in the market. Leasing activity is expected to remain steady next year. M&A brings jobs and office space into question Several acquisitions of St. Louis companies bring the potential for future occupancy loss. The three most notable were Scottrade, Isle of Capri, and Monsanto. Scottrade owns and occupies almost 700,000 square feet of space in West County. A lot of this space could be coming back to the market after its acquisition by TD Ameritrade closes. Isle of Capri, also in West County, is set to be purchased by Eldorado Resorts out of Nevada; the impact on the 100 St. Louis employees in West County is still to be determined. The biggest transaction was Bayer AG’s $66 billion purchase of Monsanto. With 4,000 local employees, Monsanto has a significant real estate footprint across the region. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 2010 2011 2012 2013 2014 2015 2016 Professional & business services Financial activities Company Acquirer Value Monsanto Bayer AG $66 billion Scottrade TD Ameritrade $4 billion Isle of Capri Eldorado Resorts $1.7 billion
  3. 3. Current conditions – submarket Historical leasing activity (s.f.) Source: JLL Research Source: JLL Research Total net absorption (s.f.) Source: JLL Research Total vacancy rate (%) Source: JLL Research Direct average asking rent ($ p.s.f.) Source: JLL Research 335,882 314,112 -500,593 29,921 -96,131 108,313 293,792 481,327 689,921 628,821 -600,000 -400,000 -200,000 0 200,000 400,000 600,000 800,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $19.84 $19.65 $19.55 $19.23 $19.20 $19.22 $19.23 $19.40 $19.72 $19.05 $18.00 $19.00 $20.00 $21.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 12.6% 12.1% 14.9% 15.8% 17.9% 17.9% 17.1% 15.8% 14.7% 12.7% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CBD Landlordleverage Tenantleverage Peaking market Falling market Bottoming market Rising market West County, Clayton 2,420,016 3,714,770 2,987,078 2,082,595 2,218,216 0 1,000,000 2,000,000 3,000,000 4,000,000 2012 2013 2014 2015 YTD 2016 Northwest County, St. Charles County, South County ©2016 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Blaise Tomazic | +1 314 261 7377 | blaise.tomazic@am.jll.com
  4. 4. Office Leasing Activity Report St. Louis Q4 2016 This report analyzes all closed office leases > 10,000 s.f. Leasing activity by size 750,061 17 2,218,116 71 672,648 77,413 - Growing Shrinking Stable 364,741 0 113,831 0 256,432 15,057 Notable leasing transactions Size Footprint Term (mos) 161,418 Shrinking - 91,994 Growing - 80,342 Growing - 63,000 Stable - 55,000 Shrinking - 47,233 Shrinking - 45,018 Growing - 31,562 Stable - 30,000 Stable - 24,528 Stable - Leasing activity by submarketLeasing activity by industry Total Class A s.f. leased Expansion in market Expansion in building Renewal Extension (< 36-month term) Relocation within market New to market Average term (mos) Total Class B s.f. leased Direct 7930 Clayton Rd Clayton At a glance Total s.f. leased QTD Total transactions QTD Total s.f. leased YTD Tenant footprint 7 4 5 Total transactions YTD Leasing activity by transaction type Type 701 Market CBD DirectPeabody Energy Tenant Address Submarket Direct 77 Westport Plaza Dr West County Direct 1 Progress Point Ct St Charles County 575 Maryville Centre Dr West CountyCushman & Wakefield Centene Aclara Allianz Insurance Direct Centene 7733 Forsyth Blvd Clayton Direct Direct AMN/Linde Healthcare 3668 S. Geyer Rd. South County Direct New Horizon Society 555 Washington Ave CBD Direct PGAV 200 N Broadway CBD Direct Ace Insurance Company 1 Progress Point Ct St Charles County 1 2 2 3 8 - 50,000 100,000 150,000 200,000 100,000+ 75,000-99,999 50,000-74,999 30,000-49,999 20,000-29,999 Total leased Number of leases 17.65% 11.76% 5.88% 5.88% 11.76% 47.06% CBD Clayton Northwest County South County St Charles County West County 7.69% 30.77% 7.69% 15.38% 7.69% 7.69% 15.38% 7.69% Real estate Insurance Marketing advertising communications PR Technology Architecture Engineering Other 300,000 400,000 500,000 600,000 700,000 800,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Historical leasing activity Source: JLL Research 2015 Jones Lang LaSalle IP, Inc. All rights reserved.
  5. 5. Office Statistics St. Louis | Q4 2016 Class Inventory (s.f.) Total net absorption (s.f.) YTD total net absorption (s.f.) YTD total net absorption (% of stock) Direct vacancy (%) Total vacancy (%) Average asking rent ($ p.s.f.) YTD completions (s.f.) Under construction (s.f.) Downtown Totals 10,357,224 26,510 184,025 1.8% 19.3% 19.6% $16.98 0 0 CBD Totals 10,357,224 26,510 184,025 1.8% 19.3% 19.6% $16.98 0 0 Clayton Totals 7,509,865 41,527 117,991 1.6% 6.4% 6.7% $24.21 0 0 Northwest County Totals 3,708,693 -7,751 -8,011 -0.2% 19.7% 20.7% $16.36 0 0 St. Charles County Totals 2,316,429 17,599 35,565 1.5% 15.1% 16.0% $18.25 0 0 South County Totals 2,763,102 39,394 63,214 2.3% 4.7% 4.9% $19.29 0 0 West County Totals 15,413,291 101,328 236,037 1.5% 9.7% 9.9% $21.12 0 0 Suburban Totals 31,711,380 192,097 444,796 1.4% 10.0% 10.4% $20.23 0 170,234 St. Louis Totals 42,068,604 218,607 628,821 1.5% 12.3% 12.7% $19.05 0 170,234 Downtown A 6,352,496 16,209 153,738 2.4% 15.8% 16.4% $19.58 0 0 CBD A 6,352,496 16,209 153,738 2.4% 15.8% 16.4% $19.58 0 0 Clayton A 5,166,182 32,603 72,698 1.4% 6.3% 6.7% $26.99 0 0 Northwest County A 1,699,549 524 -15,975 -0.9% 9.3% 11.5% $19.69 0 0 St. Charles County A 847,728 16,719 2,628 0.3% 12.5% 15.2% $21.10 0 0 South County A 691,964 49,899 56,158 8.1% 2.2% 3.0% $22.77 0 0 West County A 7,775,019 39,129 -10,363 -0.1% 8.4% 8.9% $24.49 0 170,234 Suburban A 16,180,442 138,874 105,146 0.6% 7.8% 8.6% $24.14 0 170,234 St. Louis A 22,532,938 155,083 258,884 1.1% 10.0% 10.8% $22.22 0 170,234 Downtown B 4,004,728 10,301 30,287 0.8% 24.7% 24.7% $14.46 0 0 CBD B 4,004,728 10,301 30,287 0.8% 24.7% 24.7% $14.46 0 0 Clayton B 2,343,683 8,924 45,293 1.9% 6.6% 6.6% $19.69 0 0 Northwest County B 2,009,144 -8,275 7,964 0.4% 28.4% 28.5% $15.41 0 0 St. Charles County B 1,468,701 880 32,937 2.2% 16.5% 16.5% $16.26 0 0 South County B 2,071,138 -10,505 7,056 0.3% 5.5% 5.5% $18.74 0 0 West County B 7,638,272 62,199 246,400 3.2% 11.0% 11.0% $18.72 0 0 Suburban B 15,530,938 53,223 339,650 2.2% 12.4% 12.4% $17.75 0 0 St. Louis B 19,535,666 63,524 369,937 1.9% 14.9% 14.9% $16.69 0 0 211 North Broadway Suite 2075 St. Louis MO 63102 tel +1 314 261 7377 fax +1 314 338 2081 blaise.tomazic@am.jll.com 2016 Jones Lang LaSalle IP, Inc. All rights reserved. Blaise Tomazic Research Manager
  6. 6. Total jobs (1,000s) vs. unemployment rate: St. Louis Source: BLS, JLL Research Industrial employment trends (12-month change) :St. Louis Source: BLS, JLL Research Job growth/loss by sector (12-month change): St. Louis Source: BLS, JLL Research Office employment trends (12-month change) :St. Louis Source: BLS, JLL Research Job growth (12-month change): United States vs. St. Louis Source: BLS, JLL Research Employment Update Metro St. Louis | December 2016 4.6%U.S. unemployment 1.6%U.S. 12-month job growth 4.3%St. Louis unemployment 2.4%St. Louis 12-month job growth 5.1%Missouri unemployment 1.8%Missouri 12-month job growth 0% 2% 4% 6% 8% 10% 12% 1,220 1,270 1,320 1,370 1,420 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Thousands Total Employment Unemployment (10) (5) 0 5 10 15 20 2011 2012 2013 2014 2015 2016 Financial Activities Professional and Business Services Information Government (15) (10) (5) 0 5 10 15 2011 2012 2013 2014 2015 2016 Mining, Logging & Construction Trade, Transportation & Utilities Manufacturing Other Services -1.0% 0.0% 1.0% 2.0% 3.0% 2011 2012 2013 2014 2015 2016 St. Louis U.S. (2,100) (700) 400 1,000 2,000 3,000 4,100 4,500 8,100 12,400 Manufacturing Information Other Services Government Financial Activities Mining, Logging & Construction Trade, Transportation & Utilities Educational & Health Services Professional & Business Services Leisure & Hospitality
  7. 7. Industry employment stratification St. Louis Source: JLL Research , BLS ©2016 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Blaise Tomazic | blaise.tomazic@am.jll.com Employment statistics St. Louis Oct-14 Oct-15 Oct-16 Total Non-farm Employment 1,340,300 1,365,900 1,398,600 Y-o-Y Change 1.8% 1.9% 2.4% Unemployment Rate 5.2% 4.4% 4.3% St. Louis Supersectors Oct-14 Oct-15 Oct-16 Mining, Logging & Construction 62,200 2.6% 67,100 7.9% 70,100 4.5% Manufacturing 113,800 2.6% 113,300 -0.4% 111,200 -1.9% Trade, Transportation, & Utilities 251,600 1.7% 255,600 1.6% 259,700 1.6% Information 28,600 -0.7% 28,300 -1.0% 27,600 -2.5% Financial Activities 85,400 -0.4% 85,800 0.5% 87,800 2.3% Professional & Business Services 205,800 2.3% 212,700 3.4% 220,800 3.8% Educational & Health Services 237,600 3.1% 246,400 3.7% 250,900 1.8% Leisure & Hospitality 145,500 3.3% 144,700 -0.5% 157,100 8.6% Other Services 47,000 2.0% 48,000 2.1% 48,400 0.8% Government 162,800 -1.3% 164,000 0.7% 165,000 0.6% Labor force and employment trends: St. Louis Source: BLS, JLL Research Non-farm payrolls by type: St. Louis Job growth (12-month change): Durable vs. Non-durable goods Source: BLS, JLL Research Source: BLS, JLL Research 13% 87% Goods producing Service providing -2.9% -0.2% -3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% Durable goods Non-durable goods 1,250,000 1,300,000 1,350,000 1,400,000 1,450,000 1,500,000 1,550,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 labor force employment 18% 18% 16%12% 12% 8% 6% 5% 3% 2% Trade, transportation and Utilities Educational and Health Services Professional and Business Services Government Leisure and Hospitality Manufacturing Financial Activities Mining, Logging and construction Other Services Information

×