The office market continues to struggle in St. Louis, according to the latest research from Colliers International. But there is hope.
The St. Louis market saw negative 370,509 square feet of absorption at the end of the third quarter, according to Colliers. And, not surprisingly, office vacancies were up in the third quarter, rising to 12.55 percent from 12.32 percent in the second quarter.
There wasn’t much good news from Colliers on the rent side, either. In the third quarter of 2014, office rents averaged $17.51 a square foot for all classes. That’s flat, with office rental rates in the St. Louis market in the last several years ranging from $17.30 to $17.90 a square foot.
However, there is hope, according to the Colliers report. Unemployment is falling in the St. Louis market. This, Colliers says, should result in increased activity in the St. Louis office market. At the same time, companies in St. Louis are expanding and will soon need larger blocks of office space for their operations.
For these reasons, Colliers is expecting a stronger performance from the St. Louis office market in the fourth quarter of 2014. The company expects this improvement to carry over into 2015.
There is also some good news hidden in the current St. Louis market. Year-to-date, only three St. Louis submarkets have experienced negative absorption, the Central Business District, North County and the Creve Coeur/Westport market. This, Colliers says, is good news for strong office submarkets such as Clayton and Midtown, which combined have seen about 190,000 square feet of positive absorption so far this year.
