St. Louis Office Market Relatively Buoyant

Vacancy rates in the metro St. Louis office market have actually decreased in the first quarter of 2008, according to a new report by CB Richard Ellis Inc., despite more difficult times in the nationwide commercial real estate market. The area’s industrial market, however, showed a rise in availability rates, according to the report. Metro St. Louis’ overall vacancy was 14.54 percent, down somewhat from the fourth-quarter 2007 vacancy rate of 14.99 percent. The report noted that the South County submarket had the lowest vacancy rate, at 8.87 percent, including a 4.24 percent vacancy rate in the Class A sector. Downtown St. Louis had the highest office vacancy rate, at nearly 21 percent. One reason for the relative health of the office market, the report posits, is that little speculative office space has been completed in the area recently. “Spec development in the St. Louis market has been very slow until very recently,” Lynn Schenck, senior vice president in the St. Louis office of CB Richard Ellis, told CPN this afternoon. “But it’s also true that demand for office space, especially among major local corporations such as Monsanto, has been growing recently.” Monsanto, an agricultural biotechnology company headquartered in the St. Louis suburb of Creve Coeur, Mo., recently took 240,000 additional square feet in the market, Schneck noted, and other area companies such as Scottrade and Brown Shoe Co. Inc. are expanding. She added that developers have taken note of the demand, and that a number of spec office properties have broken ground in the market recently — but that she expects demand to keep pace with supply for the foreseeable future. The industrial market, by contrast, has seen considerably more new construction, with more than 1.2 million square feet of industrial space under construction during the first quarter in the Metro East submarket alone. The first-quarter 2008 industrial availability rate for the St. Louis area was 11.37 percent, up from 10.89 percent in the fourth quarter of 2007. Availability rates were lowest in the Fenton submarket, at 5.38 percent, and highest in the Metro East market, at 19.82 percent.