ST. LOUIS—As reported in GlobeSt.com, the US industrial market just had one of its best years, largely due to the intense demand for new distribution facilities, and that dynamic is apparent in several key Midwest markets. Cushman & Wakefield just released its year-end study of the St. Louis industrial market, and found that it experienced the highest amount of annual positive absorption for the past 30 years, with 4.97 million square feet. In the fourth quarter alone, tenants absorbed 1.83 million square feet.
“On top of a record year of absorption, we also saw a record year of inventory,” says Brian Ungles, Cushman & Wakefield managing principal. “After adding 3.20 million square feet of new inventory in the first three quarters, another 2.82 million square feet were added in the fourth quarter – bringing the total new inventory to 6.01 million square feet for the year. This is the highest amount of new construction since 2001 when 6.05 million square feet were delivered.”
The vacancy rate did tick up, but that due to the massive amount of new construction. After developers added 3.66 million square feet of new speculative inventory in 2016, the vacancy rate ended the year at 6.6%, well below the historic average of 8%.
St. Charles County was the strongest driver of demand with 735,000 square feet of net absorption for the quarter, followed by North County with 504,000 square feet. And the average asking rent was $4.28 per square foot as compared to $4.22 in the fourth quarter of 2015.
C&W expects that tenants in the market will continue to expand and soak up the new space coming online in 2017. In the coming months, developers will complete several significant spec projects in the Metro East, North County and St. Charles County submarkets. And although vacancy rates will rise temporarily due to new inventory being added to the market, asking rates will continue to increase.
Panattoni, for example, should finish its 549,000 square foot Aviator X Distribution Center in North County by mid-year. “Tenants are eager for large blocks of space,” C&W notes, “and it is anticipated these new spaces will be leased quickly.”
ST. LOUIS—As reported in GlobeSt.com, the US industrial market just had one of its best years, largely due to the intense demand for new distribution facilities, and that dynamic is apparent in several key Midwest markets. Cushman & Wakefield just released its year-end study of the St. Louis industrial market, and found that it experienced the highest amount of annual positive absorption for the past 30 years, with 4.97 million square feet. In the fourth quarter alone, tenants absorbed 1.83 million square feet.
“On top of a record year of absorption, we also saw a record year of inventory,” says Brian Ungles, Cushman & Wakefield managing principal. “After adding 3.20 million square feet of new inventory in the first three quarters, another 2.82 million square feet were added in the fourth quarter – bringing the total new inventory to 6.01 million square feet for the year. This is the highest amount of new construction since 2001 when 6.05 million square feet were delivered.”
The vacancy rate did tick up, but that due to the massive amount of new construction. After developers added 3.66 million square feet of new speculative inventory in 2016, the vacancy rate ended the year at 6.6%, well below the historic average of 8%.
St. Charles County was the strongest driver of demand with 735,000 square feet of net absorption for the quarter, followed by North County with 504,000 square feet. And the average asking rent was $4.28 per square foot as compared to $4.22 in the fourth quarter of 2015.
C&W expects that tenants in the market will continue to expand and soak up the new space coming online in 2017. In the coming months, developers will complete several significant spec projects in the Metro East, North County and St. Charles County submarkets. And although vacancy rates will rise temporarily due to new inventory being added to the market, asking rates will continue to increase.
Panattoni, for example, should finish its 549,000 square foot Aviator X Distribution Center in North County by mid-year. “Tenants are eager for large blocks of space,” C&W notes, “and it is anticipated these new spaces will be leased quickly.”
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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.
