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Cassidy Turley� offers a variety of commercial real estate services including sustainability consulting and property management for our clients.
Office Market Snapshot St. Louis • Second Quarter • 2013 Market Tracker Vacancy Net Absorption Deliveries Asking Rent *Arrows = Current Qtr Trend 16.0% 247,000 SF 0 SF $18.54 FS Strong Second Quarter Lowers St. Louis Office Vacancy to 16% The St. Louis office market had a very strong second quarter realizing 281,000 square feet of positive absorption. As a result, the St. Louis office vacancy rate decreased to 16.0%, a level not seen since the first quarter of 2011. The second quarter figures were closely watched after the first quarter disappointed with 34,000 square feet of negative absorption. The bifurcation of class A and class B office vacancy continued in the second quarter with ST. LOUIS OFFICE class A space realizing 295,000 square feet of positive absorption while class B space had negative absorption of 14,000 square feet. The varying performance between the two Economic Indicators classes is representative of a flight to quality as tenants use aggressive rental rates to upgrade the quality of their space. At of the end of the second quarter, vacancy in class Q2 12 Q2 13 A space was 12.0%, which is significantly better than the 21.7% vacancy in class B St. Louis 1310.4 1319.8 space. Furthermore, the spread in vacancy between class A and class B space has grown Employment to 9.7%, which is significantly higher than the 10-year average spread of 7.3%. St. Louis 7.30% 7.00% Unemployment The absorption gains in the second quarter were widespread with only the Clayton and St. Charles County markets realizing negative absorption (-4,000 and -17,000 square feet, U.S. CCI 65.4 81.4 respectively). This marks the second quarter in a row that the usually resilient Clayton market experienced negative absorption despite Fifth Third Bank increasing their U.S. Unemployment 8.20% 7.60% presence in Clayton by 23,000 square feet during the quarter. However, the concern in Clayton will be short-lived as a number of large deals were consummated in the second quarter that have yet to impact the market fundamentals. Net Absorption The West County market had the most significant growth in the region, realizing 220,000 square feet of positive absorption in the quarter, the majority of which was located in the 300 300,000 Chesterfield and Creve Coeur submarkets. The most significant transactions that led to 200 200,000 this growth were Cequel Communications leasing 46,000 square feet at 575 Maryville 100 100,000 Centre Drive, 58,000 square feet at 520 Maryville Centre Drive and the 55,000 square 0 - foot relocation of Brown Smith Wallace LLC to Creve Coeur from Olivette. (100) (100,000) The Downtown market continued to strengthen in the second quarter with 26,000 square (200) (200,000) feet of positive absorption, giving Downtown three consecutive quarters of growth. (300) (300,000) Although Downtown continues to have the areas’ highest vacancy rate at 20.7%, the 2008 2009 2010 2011 2012 2013 fundamentals have been steadily improving. The North County and Mid-County markets both realized positive absorption in the quarter with Mid-County absorbing 10,000 square feet and North County absorbing 39,000 square feet. North County should continue this positive trend as Equifax, Charter, and U.S. Bank all signed deals in the second quarter Vacancy Rate Absorption Net that will impact the submarket through the end of the year. 20% 20% 15% 15% The health of the St. Louis commercial real estate industry is often determined by the 10% 10% amount of available contiguous office space. In comparison to this time last year, the 5% 5% amount of available large blocks of space greater than 50,000 square feet has diminished 0% by about 33% as more local companies relocated or expanded within our city. As a result, 0% 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 the demand for these spaces increasing. This is particularly true for North and West County where these available blocks of space have decreased from 15 blocks to ten throughout the past year. Eighty percent of the diminished space has been class A. www.cassidyturley.com Cassidy Turley Office Market Snapshot St. Louis, Missouri • Second Quarter • 2013 UNDER AVERAGE AVERAGE TOTAL SUBLET DIRECT VACANCY CURRENT NET YTD NET INVENTORY CONSTRUC- ASKING RENT ASKING RENT BLDGS VACANT VACANT RATE ABSORPTION ABSORPTION TION (ALL CLASSES) (CLASS A) SUBMARKET Downtown 59 11,124,000 18,000 2,280,000 20.7% 26,000 77,000 - $16.61 $19.47 Clayton 64 6,831,000 40,000 848,000 13.0% (4,000) (36,000) - $23.44 $25.24 Mid-County 62 2,204,000 10,000 368,000 17.2% 10,000 (28,000) - $16.71 $19.91 West County 249 16,199,000 144,000 2,060,000 13.6% 220,000 156,000 405,000 $20.40 $23.39 North County 57 5,346,000 57,000 987,000 19.5% 39,000 28,000 - $17.24 $20.42 South County 59 2,514,000 - 369,000 14.7% 6,000 34,000 - $20.19 $22.07 St. Charles County 87 4,136,000 8,000 535,000 13.1% (17,000) 15,000 - $15.55 $18.51 MARKET TOTALS Class A 255 28,545,000 224,000 3,206,000 12.0% 295,000 262,000 405,000 $21.80 Class B 382 19,807,000 52,000 4,242,000 21.7% (14,000) (15,000) - $16.09 TOTAL 637 48,353,000 275,000 7,447,000 16.0% 281,000 247,000 405,000 $18.54 $21.80 Key Lease Transactions 2Q 2013 Office Submarkets St. Louis, Missouri PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET 3470 S. Rider Trail 99,000 Equifax New Earth City Solutia 92,000 Savvis Renewal & Expansion Chesterfield 70 2 13022 Hollenberg Dr. 78,000 Charter Communications New Hazelwood 1 64 4 170 Maryville 520 Building 58,000 Cequel III New Chesterfield 270 8 5 6 101 South Hanley Corporate 58,000 NISA New Clayton 3 Center 3301 S. Rider Trail 46,000 US Bank New Earth City 44 7 55 Solutia 46,000 Cequel III New Chesterfield The Woodfield Building 42,000 SSM Health Care Renewal & Expansion Olivette 1. St. Charles County 5. St. Louis City 2. North County 6. Downtown Laumeier Office Pk II 42,000 New Balance New Kirkwood South 3. West County 7. South County 4. Mid County 8. Clayton Riverport Tower 31,000 Altisource Solutions Inc. New Earth City 10 South Broadway Building 17,000 Hawkins, Parnell & Thackston LLP Renewal Downtown Tim Walsh Managing Principal About Cassidy Turley Cassidy Turley is a leading commercial real estate services provider with more than 3,800 professionals in 7700 Forsyth Boulevard 9th Floor more than 60 offices nationwide. Based in Washington, DC, the company represents a wide range of clients— St. Louis, Missouri 63105 from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm Tel: 314.746.0326 completed transactions valued at $22 billion in 2012, manages approximately 400 million square feet on Fax: 314.862.1648 behalf of institutional, corporate and private clients and supports more than 23,000 domestic corporate Email: email@example.com services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated The information contained within this report is gathered from multiple sources considered to be commercial real estate services—including capital markets, tenant representation, corporate services, project reliable. The information may contain errors or leasing, property management, project and development services, and research and consulting. Cassidy omissions and is presented without any warranty or representations as to its accuracy. Turley enhances its global service delivery outside North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets. Please visit Copyright © 2013 Cassidy Turley. All rights reserved. www.cassidyturley.com for more information about Cassidy Turley. www.cassidyturley.com
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