St. Louis’ industrial market is getting bigger, both in the number of buildings and the sheer size of these facilities.
A new report from the St. Louis Regional Freightway, a bi-state development enterprise, says that since 2014 more than 18 million square feet of industrial space has been built or is under construction in the St. Louis region. More than 50 percent of this space is made up of bulk distribution buildings of 250,000 square feet or more.
According to the report, this new construction has been split evenly between speculative developments and build-to-suit projects. During the past five years, 85 percent of all construction and 70 percent of the new major industrial parks in the region have been focused on the North I-270 Corridor, a major logistics corridor for local and national manufacturers, suppliers and distributors.
The St. Louis Regional Freightway is especially interested in this. The enterpirse was formed to help create a regional freight district and authority for freight operations and opportunities within the eight counties in Illinois and Missouri that make up the St. Louis metropolitan area.
Katie Haywood, vice president on the Industrial & Logistics, Advisory & Transaction team at CBRE, said that she isn’t surprised by this surge in new construction or by the amount of large industrial space hitting the St. Louis area.
“The St. Louis region’s central location in the United States and its logistics capabilities has made the metro area a coveted destination for industrial users,” Haywood said. “As consumers demand faster shipping times, the St. Louis region becomes very attractive to e-commerce users.”
In the last two years, several e-commerce and third-party logistics companies have leased large amounts of space in the St. Louis region. At the same time, existing companies have expanded, including World Wide Technology, Medline and FedEx.
The St. Louis region is expected to see more than 5.5 million square feet of new industrial space in 2019, with more than 50 percent of that being spec construction. Haywood says that this is a good sign that developers are not seeing any slowdown in demand.
The triple net lease rates of $3.75 a square foot for the bulk distribution market in St. Louis are lower than the average rate of similar Midwest cities, including Kansas City, Louisville and Nashville.
Mary Lamie, executive vice president of multi modal Enterprises for St. Louis’ Bi-State Development, pointed to the availability of space, speed of delivery, job-ready workforce and strong freight options as four key reasons for St. Louis’ industrial strength.
“There’s an overwhelming amount of data that helps to illustrate the historic growth trend we’re in the midst of, and that’s what prompted us to develop our latest report,” Lamie said.