The last 12 months have been strong ones for the St. Louis office market. And while uncertainty now hangs over this market thanks to the COVID-19 pandemic — something certainly not unique to St. Louis — the last year brought plenty of new office space and deals to the St. Louis area, according to the latest research from Avison Young.
According to Avison Young’s first quarter St. Louis office report, the office market here saw 854,000 square feet of construction during the past 12 months and now has a 7.4 percent vacancy rate.
The St. Louis office market also had $514.1 million in sales in 2019, totaling nearly 4 million square feet of space. In the first two months of 2020, there were $96.7 million of transactions across eight properties, totaling 987,098 square feet.
Avison Young reviewed research from CoStar and Real Capital Analytics in compiling this report.
The market enjoyed a 3.5 percent increase in rent growth in the last 12 months, with the average asking rent rising to $20 a square foot at the end of 2019.
The St. Louis area also saw the construction of several large new office spaces during the last 12 months. One notable new asset on the market is a 181,631-square-foot Class-A office building at 12800 Corporate Hill Drive in St. Louis.
The six-story building is being marketed by Avison Young and is fully occupied on a long-term basis by a national corporate office user. Avison Young Principals Erik Foster and Mike Wilson, who are both based in the firm’s Chicago office and members of the company’s national capital markets group, are representing the seller, a regional institutional asset manager.
“This is a mission critical location for the tenant, a factor that provides tremendous stability and long-term growth potential for an investor,” said Foster. “The building’s strong location and cash flow security are significant draws for investors looking to gain a foothold in this growing Midwest market.”
The building is located directly off of I-270 in one of St. Louis’ strongest office markets. The Manchester/I-270 office submarket features 3.2 million square feet of office space spread across 70 buildings. Compared to other submarkets in St. Louis, the Manchester/I-270 Submarket historically performs well, with rental rates skewing higher than the market average.
According to Real Capital Analytics data, the vast majority of St. Louis office investors in 2019 were private buyers, accounting for 89.9 percent of the transactions. So far in 2020, private buyers made up 100 percent of the buyers.
Among the notable recent sales was Bank of America Tower at 100 N. Broadway St. in St. Louis, a 494,386-square-foot building sold by Hertz Investment Group to Larson Capital Management in January. In March, CapStone Holdings announced its $40 million investment in the 335,000-square-foot City Foundry STL retail, office and entertainment development.