ST. LOUIS—Last week, GlobeSt.com reported that the city of Kansas City has begun experiencing an industrial boom largely due to the expansion of the local auto industry, but just across the state, St. Louis is also undergoing a bit of a boom led by its industrial markets. In the first quarter, the market absorbed 1,795,283-square-feet in the first quarter, according to Cassidy Turley. This was more than the total net absorption in 2013 and the most since 2005.
“If you followed the media hype during the first quarter of 2014, you probably think that the economy took a step backward,” says Dean Mueller, managing principal for Cassidy Turley in St. Louis. “The truth is that bad weather wreaked havoc on the way economic metrics are measured and reported, not on the economy itself.”
The St. Louis metro area, which includes submarkets across the river in Illinois, has now experienced seven straight quarters of positive absorption, and the vacancy rate has now declined steadily since 2012. Over the first quarter of this year, the industrial vacancy rate finally returned to its pre-recession level by sinking 80 bps to 7.2%.
As in many US cities, modern bulk buildings continued to lead the way. In the first quarter, these buildings were responsible for 1,297,124-square-feet of positive absorption, or about 72% of the total. In fact, in the past 12 months, the modern bulk segment has absorbed more than two-million-square-feet and the vacancy rate for these properties dipped to a new historical low of 7.5%, Cassidy data show.
The North County submarket saw the most activity. True Manufacturing signed the largest new lease with 542,600-square-feet at 13330 Lakefront Dr., and SSM Health Care signed a lease with 96,480-square-feet at DukePort VIII. In total, North County saw 858,841-square-feet of positive absorption in the first quarter.
In the Metro East submarket on the Illinois side of the river, Medline Industries, Inc. signed a 302,500-square-foot lease in the 255 Logistics Center complex, and FedEx completed their 198,773-square-foot distribution facility located at 1602 Vincent Dr. in the Sauget Business Park.
The pace of recovery in the South County submarket recently increased. In the first quarter, the area saw 310,630-square-feet of positive absorption. This submarket could begin to get more attention in the near future. KP Development, a St. Louis-based build-to-suit developer, purchased the 294-acre former Chrysler plant in Fenton last year and will develop a master plan for its redevelopment.
“Currently, the industrial market has a few interesting dynamics that are developing very rapidly,” Cassidy researchers note. Speculative construction has started, large users have become more interested in build-to-suit construction, and sinking vacancy should increase rents in highly demanded locations. “As a result, this will lead to additional speculative construction announcements, which will most likely be located in North County or St. Charles County.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
