It’s becoming common knowledge: In the Midwest, industrial and multifamily remain the hot commercial real estate sectors. New apartment buildings are rising in downtowns from Detroit to Minneapolis to Cleveland. And companies continue to push for more warehouse and distribution space across the Midwest as a way to deliver their products to their customers as quickly as they can.
And the best news of all? These two sectors remain as hot as ever in cities across the region as spring nears.
Just ask Chris McKee, principal and chief development officer with the St. Louis office of CRG. He said that during the last five years, the commercial real estate market in his city has steadily seen more sales, leases and new developments.
But during the last two years? That increase in activity has been even more dramatic, he said.
McKee said that multifamily development has led this surge, while industrial, too, has been strong in St. Louis and its surrounding communities. The office market has been a bit slower, with McKee describing the sector as a definite build-to-suit model.
“Multifamily has been the real leader in the city by far,” McKee said. “St. Louis has been underserved when it comes to apartments. Developers are addressing that now. So there has been tremendous commercial real estate activity in multifamily, in neighborhoods throughout the region.”
McKee pointed to such communities as the Central West End, the Grove and the Delmar Loop. The city’s ambitious Ballpark Village development, located next to the St. Louis Cardinals’ Busch Stadium, has its own multifamily component, while the neighborhoods surrounding St. Louis University are home to their own mix of multifamily units.
“Of all the sectors, the city of St. Louis has seen the most activity in multifamily,” McKee said.
McKee points to many reasons for this. Many people changed the way they looked at homeownership after the housing crisis of 2007 and 2008. Many people who would have bought homes turned to renting as an alternative.
As renting became a more viable alternative for more people, potential renters found that there weren’t enough options in the St. Louis area. That spurred developers, who began planning and building new multifamily properties throughout the region.
“There was a time when there weren’t a lot of opportunities for renters here,” McKee said. “That has changed dramatically during the last five to eight years.”
The good news for developers? The demand for multifamily here is still strong, and the market can still absorb new units.
McKee said that he doesn’t see the demand for new apartment units lessening any time soon in St. Louis and its surrounding communities, especially in the neighborhoods located close to the area’s downtown center.
The industrial market has a been a strong performer in St. Louis, too. The area hasn’t seen the same kind of industrial activity that red-hot markets like Portland, Seattle, Atlanta and many of the country’s port cities have seen. But St. Louis is still seeing plenty of industrial activity.
“We always talk about those markets with big highs,” McKee said. “St. Louis is not that kind of market. But we don’t have the big lows, either. We generally have good, steady growth.”
