ST. LOUIS, April 17, 2017 – Cushman & Wakefield announced today that the St. Louis industrial market continued its hot streak, ending the first quarter of 2017 with 1.69 million square feet of net absorption and 1.74 million square feet (sf) of new inventory delivered.
“Over the last two years, developers have added 5.45 million square feet of speculative inventory, and tenants have quickly leased over 3.63 million square feet (66.7%) of that space,” said Brian Ungles, Managing Principal of the St. Louis office. “With the new inventory delivered in the first quarter, an additional 2.84 million square feet is now under construction, of which 87.8% is speculative.”
In reviewing the performance of the office market, suburban office space ended the first quarter with 112,000 sf of positive absorption, decreasing the vacancy rate to 9.7%, the lowest since 2001. Large blocks of space are scarce with only six Class A buildings able to offer contiguous space over 50,000 sf in suburban markets.
- Quick Summary: The vacancy rate ended the quarter at 6.7%, well below the historic average of 8.0%.
- Growth Areas: St. Charles County was the strongest driver of demand with more than 1.1 million sf of net absorption for the quarter, followed by North County with 411,000 sf.
- Asking Rents: The average asking rent was $4.45 per square foot (psf) as compared to $4.31 in the first quarter of 2016, a 3.25% year-over-year increase.
- Outlook: Developers are continuing to put their land inventories into production, preparing to bring more space onto the market, but they must closely watch demand. If construction activity stays in check, vacancy is expected to stay flat as demand keeps pace with supply.
- Quick Summary: The overall vacancy rate decreased by 120 basis points since the first quarter of 2016 to 12.0%.
- Growth Areas: The North County submarket had the highest amount of positive absorption in the first quarter with 125,000 sf, primarily due to Charter subleasing 119,000 sf from Boeing at 14000 Riverport Dr.
- Asking Rents: Class A suburban asking rates average $23.94 psf, which is 20% higher than CBD Class A rates.
- Outlook: Suburban markets will experience high absorption over the next several years with the announcements of new construction in Clayton and West County.
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