Apr. 7--The St. Louis area office real estate market moved from recovery to stability in 2005, as job growth fueled low vacancy rates and downtown revitalization stemmed the exodus of high-profile businesses to western suburbs, said speakers Thursday at the Society of Industrial and Office Realtors Metro Market Forecast.
Investors took note of the improving market by kicking millions of dollars into area commercial real estate in 2005, generating a 67 percent increase in transaction volume.
"Many regional and national investors have discovered that our region ... enjoys a diverse and balanced economy, with a highly skilled work force and a high quality of life and stability that have attracted new investment dollars into our region's real estate," said Carl Conceller, a principal with Coldwell Banker Commercial.
High profile deals, like the sale of One Metropolitan Square for $165 million and the Deloitte building, 100 South Fourth Street, for $26.3 million, fueled a record year. In total, the St. Louis area saw commercial property sales of $1.3 billion in 2005, a 70 percent increase from 2004.
Office-based employment rose 1.4 percent locally in 2005 and new construction of office space was held in check in 2005, delivering just 800,000 square feet of space. More than 75 percent of that new space is already leased.
"Job creation, coupled with discipline within the development community, has led to a healthy balance between space absorption and new space coming online," said Christopher Fox with Gateway Commercial.
The annual market forecast also touched on emerging trends in St. Louis area commercial real estate.
Industrial development is the major story in Illinois, where the conversion of greenfields into large industrial hubs keeps the area on the growth path, said Don Land, a principal with Balke Brown Associates.
Several new industrial parks are planned for the Metro East area -- in Dupo and Columbia, Ill., and the Lakeview Commerce Center in Madison County.
In Missouri, industrial parks to take shape include the Hazelwood Commerce Center, Lakeside 370 Business Center in St. Peters and the NorthPark development east of Lambert Field.
High profile eminent domain projects will also take a bigger stage in 2006.
Thomas Ermin, a principal with NAI Desco, said SIOR members needed to examine their stance on the controversial issue.
"Is the project truly a benefit for the public use or is it simply a grab of sales tax revenue?" Ermin asked. "Is it fair for a city that will directly benefit to have the ability to declare an area "blighted?" Ermin urged the group to contact their legislators to make their views on eminent domain known.
"We as a group cannot let the Missouri Legislature arrive at its own conclusions without our voices being heard," Ermin said.
(St. Louis Post-Dispatch (KRT) -- 04/10/06)