MARKETBEAT
Office Snapshot 2Q 2016
St. Louis
Economic Overview
ST. LOUIS OFFICE
Economic Indicators
St. Louis Employment*
2Q 15
2Q 16
1,341K
1,366K
St. Louis Unemployment*
5.1%
4.7%
U.S. Unemployment
5.4%
4.9%
2Q 15
2Q 16
Overall Vacancy
14.9%
12.6%
Net Absorption
258K
355K
Under Construction
116K
559K
$19.14
$19.52
12-Month
Forecast
*2Q data based on the average of March and April values.
Market Indicators
Average Asking Rent (FS)
12-Month
Forecast
St. Louis Office Market
St. Louis experienced record absorption in the second quarter
of 2016, ending with 355,000 square feet of positive absorption.
This brings the year-to-date absorption to 554,000 square feet
dropping the vacancy rate by 180 basis points in the last six
months to 12.6% (the lowest vacancy rate in St. Louis since
2001). As the St. Louis area’s economy continues to expand,
demand for additional office space will grow, causing increased
rents and lower vacancy.
Net Absorption/Asking Rent
Net Absorption/Asking Rent
4Q TRAILING AVERAGE
4Q TRAILING AVERAGE
350,000
$20.00
$19.75
250,000
$19.50
150,000
50,000
ST. LOUIS EXPERIENCED RECORD ABSORPTION
IN THE SECOND QUARTER OF 2016, ENDING
$19.25
WITH 355,000 SQUARE FEET OF POSITIVE
$19.00
ABSORPTION.
$18.75
$18.50
-50,000
-150,000
As the first half of 2016 comes to an end, the St. Louis labor
markets continue to show signs of strengthening. Since the start
of the year, the St. Louis area has seen employment grow by
12,100 jobs. The strongest months were February (7,100) and
May (5,800). As employment increases, the area’s seasonally
adjusted unemployment rate hit 4.9% and remains below the
five year historical average of 6.6%. The office using sector has
generated 10,300 payrolls since this time last year with a 3.2%
growth rate. This is double the national average growth rate of
1.6% over the same period.
$18.25
2010
2011
2012
Net Absorption
2013
2014
2015
$18.00
2Q '16
Asking Rent, $ PSF
Client Name | Cushman & Wakefield
Overall Vacancy
18%
17%
West County
Historical Average = 14.8%
Once again, West County posted the highest absorption with over
215,000 square feet of positive absorption in the second quarter
bringing the year-to-date absorption to 290,000 square feet.
Vacancy fell 130 basis points to end the quarter at 11.2%, the lowest
since mid-2009. Class A space is becoming increasingly hard to find
14%
13%
12%
11%
2010
Overall absorption for the second quarter in Clayton was 17,000
square feet split almost perfectly between Class A and B space.
Overall vacancy continues to decrease, falling another 30 basis
1points in the second quarter to 8.6%. Major moves this quarter in
Clayton were: NAI Desco relocated and backfilled a 15,000 square
foot sublease at 101 S. Hanley, Moneta relocated from West County
and expanded into 11,000 square feet in 1 N. Brentwood and AXA
Advisors relocated from 13,000 square feet in 8235 Forsyth to
10,000 square feet in 1 Cityplace in West County.
16%
15%
Clayton
2011
2012
2013
2014
2015
2Q '16
cushmanwakefield.com | 1
MARKETBEAT
Office Snapshot 2Q 2016
St. Louis
with vacancy rates 170 basis points lower than this time last year.
Strong absorption will continue, as Bunge broke ground on its
new headquarters building next to I-64 on Timberlake Manor
Parkway. Currently Bunge is in 105,000 square feet, and the
headquarters will consist of 145,000 square foot as the company
plans to add additional jobs over the next decade.
Vacant
Space
by Submarket
Vacant
Space
by Submarket
2%
5%
8%
Major moves for the quarter include: Enterprise purchased
Lakeside Crossing Office One and Two and moved into 116,000
square feet in Lakeside Crossing Office Two, Centene moved into
61,000 square feet at Timberlake Corp Ctr III, AEP River
Operations (formerly Memco Barge Line) vacated 42,000 square
feet at Central Park Square I, Charter moved into 15,000 square
feet at Corporate Hill I, Liberty Mutual expanded by 12,000
square feet at Manchester/270 Ctr II, Maxim Healthcare Services
moved into 12,000 square feet at Park 270 Building I.
St. Louis City has experienced over 139,000 square feet of
positive absorption year-to-date. For the first time since 2006
the vacancy rate is below 19% ending the second quarter at 18.1%.
Class A product in the City has fallen to 14.2%, down 450 basis
points since the end of 2014. While it is still above the Metro Class
A vacancy of 9.1%, the City has seen strong activity in the last
eighteen months including Nestle’s expansion of 60,000 square
feet at 100 N. Broadway this quarter.
10%
12%
30%
% of Total Vacant Space Q2 2016
3
Class A Contiguous Space
Class A Contiguous Space
FEW LARGE BLOCKS OF CLASS A SPACE AVAILABLE
Few Large Blocks of Class A Space Available
12
30K+
50K+
80K+
10
8
# of Buildings
St. Louis City
City
West County
North County
Clayton
St. Charles County
South County
Mid-County
33%
6
4
2
0
City
Clayton
North County
South
County
St. Charles West County
County
4
Outlook
Class
A Submarket
Comparison
Class
A Submarket
Comparison
SUBURBAN CLASS A OCCUPANCY CURRENTLY EXCEEDS 91%
Suburban Class A Occupancy Currently Exceeds 91%
• Tenant demand remains focused on premier space;
expect rental rate growth as the market continues its
streak of strong leasing velocity.
• Suburban markets will experience high absorption over
the next several years with the announcements of new
construction in Clayton and West County.
Vacant
8.00
MSF
• Class A space will continue to drive the market and
landlords will increase asking rates.
Occupied
12.00
4.00
0.00
Downtown
Clayton
North
County
South
County
St. Charles West County
County
cushmanwakefield.com | 2
5
MARKETBEAT
Office Snapshot 2Q 2016
St. Louis
SUBMARKET
TOTAL
BLDGS
INVENTORY
SUBLET
DIRECT
VACANCY
VACANT
VACANT
RATE
YTD NET
CURRENT NET
ABSORPTION ABSORPTION
UNDER
CNSTR
AVERAGE
AVERAGE
ASKING RENT ASKING RENT
(ALL CLASSES)
(CLASS A)
Downtown
62
11,163,000
41,000
1,981,000
18.1%
82,000
167,000
60,000
$16.83
$19.87
Clayton
64
6,835,000
5,000
584,000
8.6%
17,000
42,000
-
$23.84
$26.93
Mid-County
59
2,108,000
-
102,000
4.8%
(4,000)
(4,000)
-
$15.93
N/A
West County
247
16,547,000
67,000
1,792,000
11.2%
215,000
290,000
470,000
$21.51
$24.93
North County
55
5,484,000
119,000
624,000
13.5%
39,000
(20,000)
29,000
$17.12
$20.21
South County
58
2,775,000
-
329,000
11.8%
-
14,000
-
$22.50
$24.05
St. Charles County
79
3,815,000
-
482,000
12.6%
6,000
26,000
-
$16.14
$19.70
MARKET TOTALS
Class A
222
28,460,000
113,000
2,470,000
9.1%
284,000
401,000
530,000
$22.89
Class B
402
20,267,000
119,000
3,424,000
17.5%
71,000
152,000
29,000
$16.45
TOTAL
624
48,728,000
232,000
5,894,000
12.6%
355,000
554,000
559,000
$19.52
$22.60
The information contained in this report was provided by sources deemed to be reliable. However, no guarantee is made as to its accuracy or reliability. As new,
corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.
Key Lease Transactions 2Q 2016
PROPERTY
SF
TENANT
TRANSACTION TYPE
SUBMARKET
1390 Timberlake Manor Pkwy.
70,881
AMDOCS, Inc.
Renewal
West County
575 Maryville Centre Dr.
45,807
CenturyLink QC
Renewal
West County
1831 Chestnut
27,850
Momentum
New
City
12101 Woodcrest Executive Dr
23,514
Mpower Communications (dba Telepacific)
Renewal
West County
22,040
Deloitte LLP
Renewal / Downsize
City
3870 S. Lindbergh Blvd.
20,178
Mississippi Lime
Renewal & Expansion South County
308 N. Twenty-First St
18,000
USI
Renewal
City
14500 S. Hwy 40 Outer Rd.
17,625
Business Training Library, Inc.
New
West County
7701 Forsyth Blvd.
17,467
Capes, Sokol, Goodman, & Sarachan PC
Renewal
Clayton
Mexico Road
16,694
BioLife
BTS
St. Charles County
100 S. Fourth St
101 S. Hanley Rd.
15,191
The DESCO GROUP
New
Clayton
4695 Crossroads Industrial Dr.
13,500
NES Rental Holdings, Inc
New
North County
424 S. Woods Mill Rd.
11,463
Gross Financial Group
Renewal
West County
2 CityPlace Dr.
11,316
Aerotek, Inc.
Renewal & Expansion West County
Key Sales Transactions 2Q 2016
PROPERTY
1010 Market St.
SF
SELLER/BUYER
INVESTOR/USE
SUBMARKET
345,750
Naki Enterprises
Investor
City
2291 Ball Dr.
127,778
Enterprise Leasing Co.
User
West County
2291 Ball Dr.
116,000
Enterprise Leasing Co.
User
West County
cushmanwakefield.com | 3
MARKETBEAT
Office Snapshot 2Q 2016
St. Louis
61
61
OFFICE SUBMARKETS
ST. LOUIS
61
61
370
70
70
NORTH COUNTY
70
64
370
67
70 94
270
ST. CHARLES COUNTY
270
270
170
364
70
141
94
64
255
67
364
MID-COUNTY
70
270
64
170
94
CLAYTON
141
64
64
55
CITY
70
255
70
64
44
WEST COUNTY
94
94
64
255
94
47
55
67
44
55
44
100
255
141
67
270
47
44
100
SOUTH COUNTY
44
255
141
55
141
21
50
47
44
55
47
21
30
About Cushman & Wakefield
Cushman & Wakefield is a global leader in commercial real estate services, helping clients transform
the way people work, shop, and live. The firm’s 43,000 employees in more than 60 countries
provide deep local and global insights that create significant value for occupiers and investors
around the world. Cushman & Wakefield is among the largest commercial real estate services
firms in the world with revenues of $5 billion across core services of agency leasing, asset services,
capital markets, facilities services (branded C&W Services), global occupier services, investment
management (branded DTZ Investors), tenant representation and valuations & advisory. To learn
more, visit www.cushmanwakefield.com or follow @Cushwake on Twitter.
Brendan Dunbar
Research Manager
7700 Forsyth Blvd, Suite 1210
St. Louis, Missouri 63105
Tel: +1 314 801 9599
[email protected]
cushmanwakefield.com | 4