ST. LOUIS—KBS Real Estate Investment Trust III just bought 101 S. Hanley, a 346,451-square-foot tower in suburban Clayton, from Duke Realty for $62.25 million. The purchase is yet another sign that investors from across the nation consider the St. Louis region an attractive bet. It has staged quite a recovery since 2013, and as reported in GlobeSt.com, the markets in many of its western suburbs like Clayton have been especially strong.
According to a report published last autumn by JLL, six years after reaching a peak in May 2008, office employment in the region finally returned to its pre-recession level in the third quarter.
“It's been especially strong in the last 12 to 18 months,” Blaise Tomazic, a St. Louis-based senior research analyst with JLL, told GlobeSt.com. The data showed that professional and business services, which represent 45% of office employment, had increased by 19,800 jobs since January 2013.
“We consider Clayton to be the most dynamic and attractive submarket in St. Louis,” says Ken Robertson, regional president of the Newport Beach, CA-based KBS. “Clayton offers a strong amenity base embodying the live-work-play environment that tenants desire most.”
KBS-affiliated companies own other St. Louis assets: Plaza in Clayton, a 325,172-square-foot office tower; Lofts at the Highlands, a 200-unit mid-rise apartment community and Pierre Laclede Center, a two-building office complex in Clayton. KBS recently brought the Laclede Center up to a 95% occupancy rate, and also plans to make improvements to 101 S. Hanley. The property was approximately 92% leased to 28 tenants at the time of the acquisition.
“In this market and across the country, we've seen an increase in demand for amenities. In that respect and others, we see a lot of potential in the property,” says Brett Merz, senior vice president of KBS. “We have plans to introduce modern amenities and design elements to this well-maintained building. We believe positioning this asset with an attractive set of on-site amenities will add a great deal of value for our tenants.”
The tower already has an on-site coffee shop and deli and a restaurant. KBS officials plan to add a new fitness center and design a new conference lounge with an outdoor patio. They will also modernize the lobby and elevators and update the building's entrances, select common area corridors, and restrooms.
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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.
