The COVID-19 pandemic, and the rise of people working from home, has dealt a blow to the St. Louis office market. For proof? Check out Newmark Zimmer’s fourth quarter St. Louis office market report.
According to the report, the office vacanacy rate in the St. Louis market hit 11.4 percent in the fourth quarter, an increase of 10 basis points from the previous quarter. That’s also a jump of 50 basis points from a year earlier.
Total net absorption in the sector during the fourth quarter came in at negative 97,691 square feet. For all of 2020? The St. Louis office market saw total net absorption of negative 212,014 square feet, according to Newmark Zimmer.
And in one more bit of negative news? Asking rents in the fourth quarter dropped to $21.11 a square foot, a dip from the third quarter.
These figures aren’t surprising. Office markets across the United States are struggling today. In March of 2020, companies across the nation told their employees to work from home to help stop the spread of COVID-19. A big chunk of these employees haven’t been back to their offices since.
The hope is that the office market will begin its recovery in the second half of this year as the vaccine rollout continues and, hopefully, COVID-19 cases, hospitalizations and deaths continue to fall.
There was some positive activity in the St. Louis office market last year, even with the down numbers, as one of the largest corporate campuses in the region traded in the fourth quarter. Propper International, a manufacturer of clothing and gear for law enforcement and public safety officers, purchased a 646,520-square-foot office building in South County.
Located at 13045 Tesson Ferry Road, the Class-B property delivered to the market in 1976 and sits on a 99.3-acre site. Life insurance and financial services firm MetLife sold the two-story building for an undisclosed price. In the third quarter of 2019, MetLife had signed a new lease for office space at the HBE building in Creve Coeur, Missouri, exiting the corporate campus.
And a big project for the future? City Foundtry STL is planning its $115 million second phase. The new phase calls for an additional 60,000 square feet of office space, 20,000 square feet of retail space, 282 apartments and 490-stall parking structure. A 14-story multifamily building will be built on top of the parking structure, while separate buildings will offer retail and office components. This second phase is scheduled to be complete by the spring of 2023.
And in another significant deal, Total Access Urgent Care in the fourth quarter purchased a 40,820-square-foot medical office building in Hazelwood, Missouri. Located at 975 Hornet Drive, the Class-B property delivered to the market in 1980 and sits on a 3.5-acre site.
Merritt Properties Inc. sold the two-story building for an undisclosed price. The building will be fully occupied by Total Access Urgent Care and will serve as an administrative office. The firm plans for up to 100 workers to occupy the space by early 2021.
