Research
ST. LOUIS
1Q15 INDUSTRIAL MARKET
Vacancy at
Pre-Recession Levels
The St. Louis industrial market continues with strong leasing and
development fundamentals despite the fact overall market statistics
initially convey a pause in the first quarter of 2015. Total net absorption
measured negative 266,588 square feet while average quoted rental
rates increased to $3.90 per square foot. Overall vacancy increased 9
basis points to 7.38% from the prior quarter. Indicative of a tightening
market, vacancy levels have generally decreased over the past 19
quarters dating back to the first quarter of 2010. Over the same time
period, the supply of 2.35 million square feet by means of new product
delivering to the market has been offset as demand has easily kept pace
with a total of 7.91 million square feet of positive net absorption. As
interest picks-up by regional and national credit tenants, new speculative
construction has begun and will continue for the foreseeable future.
Current Conditions
• Market continues to tighten as vacancy holds at 7.4%,
down 231 basis points since 1Q10
• Prologis sells multi-property industrial portfolio for $24 SF
• Speculative construction totals 1.3M SF at two industrial
parks
• Manufacturing sector outpaces all industries in 12-month
employment growth
Market Analysis
Asking Rent and Vacancy
$5.5
10.0%
$5.0
9.0%
7-Building Industrial Portfolio Sells for $13.0 Million
$4.5
8.0%
Prologis has sold a 7-building industrial portfolio to a joint venture
between Neland Investments Management and Nelson McBride
Development & Management. At $24-per-square, the buyers will focus
on updating and addressing deferred maintenance on the 40-year-old
structures. The properties, ranging from 41,000 to 129,000 square feet
in size, are concentrated in North County and West County.
$4.0
7.0%
$3.5
6.0%
1.3M SF of Combined Speculative Construction Underway at
Aviator Business Park and Gateway Commerce Center
Meeting the rising demand and lack of supply for high-end bulk industrial
space in the St. Louis market, Aviator Business Park recently announced
and began construction on two speculative buildings totaling over
600,000 square feet. Located in Hazelwood, the largest structure, a
535,500-square-foot multi-tenant distribution building will provide modern
bulk options on the Missouri side of the state line. A second speculative
warehouse/office structure will total 71,000 square feet. The largest
speculative building in the market, Gateway 673, will deliver a 670,000square-foot modern bulk warehouse next month at Gateway Commerce
Center in Madison County, IL. Located in the Metro East submarket
Gateway 673 is expandable up to 1.3 million square feet, contains a
ceiling height of 32-feet, ESFR sprinkler system and is located in the
Pontoon Beach TIF. With marquee corporate neighbors including Procter
& Gamble, Unilever, Dial Corp. and OHL Logistics interest should drive
from large-regional, national and/or global clients.
With nearly 25 million square feet of potential industrial space geared for
construction within the market’s prime business parks, expect developers
to be able to tailor and swiftly adjust construction plans to accommodate
users specific needs. Anticipate controlled-speculative and build-to-suit
construction to take place at Gateway Commerce Center, Aviator
Business Park, Lakeview Commerce Center, NorthPark and Fenton
Logistics Center.
$3.0
1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15
Average Asking Rent (Price/SF)
5.0%
Vacancy (%)
Net Absorption
Square Feet, Millions
3.0
2.0
1.0
0.0
-1.0
-2.0
1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15
Market Summary
Current
Quarter
Prior
Quarter
Total Inventory
255MSF
255MSF
254MSF

Vacancy Rate
7.4%
7.3%
8.6%

-266,588
347,712
968,909

$3.90
$3.84
$3.85

581,844

447,073

Quarterly Net Absorption
Average Asking Rent
Under Construction
Deliveries
1,529,137 1,529,137
0
81,844
Year Ago 12 Month
Period Forecast
Research
ST. LOUIS
1Q15 INDUSTRIAL MARKET
Employment Growth in Manufacturing Sector Outpaces Market
Payroll Employment
The local economy continued to improve through December 2014, with
Total Nonfarm, Not Seasonally Adjusted, 12-Month % Change
payroll employment growing 0.7% over the past 12 months to reach
1.326 million jobs. The private sector continued to drive growth, adding
12,000 jobs during the same time, while the government sector shed
3,400 jobs. Boding well for the overall industrial market, the
manufacturing sector realized the largest year-over-year growth among
industries, adding 2,600 jobs over the past 12 months. Contraction was
most evident in the government sector as it posted a -2.1% change in
employment growth over the past year.
3.0%
1.5%
0.0%
-1.5%
-3.0%
-4.5%
Dec-09
THE PACE of
Controlled-speculative
construction will
increase As developers
react to the tightening
market
Dec-10
Dec-11
Dec-12
United States
Dec-13
Dec-14
St. Louis
Source: U.S. Bureau of Labor Statistics
Employment Growth by Industry
St. Louis, December 2014, 12-Month % Change, Seasonally Adjusted
Total
Construction/Mining/Logging
Manufacturing
Trade/Transportation/Utilities
Information
Financial Activities
Prof & Bus Services
Education/Health
Leisure/Hospitality
Other Services
Government
Tenants will continue to demand larger spaces in Class A facilities which
supply modern amenities coupled with economical base rental rates on a
per-square-foot basis. In turn, although strong leasing activity will
continue for the remainder of 2015, average quoted rental rates should
remain flat or only slightly increase. The pace of controlled-speculative
construction will increase as developers react to the tightening market.
Market vacancy levels are expected to near 7.0% by year’s end.
-3.0%
-1.5%
0.0%
1.5%
3.0%
Source: U.S. Bureau of Labor Statistics
Lease/User Transactions
Tenant
Building
Submarket
Type
Executive Express, Inc.
5485 Brown Ave
St. Louis City
Renewal + Expansion
Square Feet
Fisher-Rosemount Systems, Inc.
5505 Natural Bridge Ave
St. Louis City
New
80,000
JW Logistics, LLC
11425-11445 Moog Dr
West County
New
29,200
Coinmach Corp.
12942 Hollenberg Dr
North County
New
24,000
148,100
Select Sales Transactions
Building
Submarket
Multi-Property Portfolio (8 Bldgs)
Central, North & West Counties
$55,913,000
$41
1,355,077
Multi-Property Portfolio (7 Bldgs)
North & West Counties
$13,000,000
$24
541,000
13600 Shoreline Dr
Central County
$25,000,000
$53
469,900
1555 Page Industrial Ct
Central County
$10,610,000
$50
211,000
St. Louis City
$1,900,000
$26
72,300
1629-1645 Manufacturers Dr
South County
$2,650,000
$45
59,200
11670-11698 Lilburn Park Rd
West County
$1,525,000
$63
24,200
800 N
17th
St
Sale Price
2
Price/SF
Square Feet
Research
ST. LOUIS
1Q15 INDUSTRIAL MARKET
www.ngkf.com
Submarket Statistics
Submarket
Cluster
Total
Inventory
(SF)
Central County
25,953,966
79,000
4.31%
-13,985
-13,985
$3.63
$5.70
$3.84
Metro East
37,386,445
1,083,137
3.44%
48,428
48,428
$3.68
$6.36
$3.71
North County
46,264,845
311,000
8.03%
-336,560
-336,560
$3.84
$10.73
$4.21
South County
17,074,544
0
5.38%
-80,618
-80,618
$4.83
$8.74
$4.86
St. Charles County
26,287,072
0
2.52%
-10,024
-10,024
$4.60
$7.09
$4.84
St. Louis City
75,613,478
56,000
12.23%
75,158
75,158
$2.93
$6.10
$2.99
West County
25,950,193
0
7.10%
91,013
91,013
$4.70
$8.64
$4.99
254,530,543
1,529,137
7.38%
-226,588
-226,588
$3.71
$8.24
$3.90
Warehouse
239,934,441
1,450,137
7.21%
-121,924
-121,924
-
-
-
Flex
14,596,102
79,000
10.13%
-104,664
-104,664
-
-
-
ST. LOUIS MARKET
Under
Construction
(SF)
Total
Vacancy
Rate
Qtr
Absorption
(SF)
YTD
Absorption
(SF)
WH/Dist
Asking Rent
(Price/SF)
Submarket Statistics by Subtype (Largest 3 Submarkets by Total Inventory)
Total
Inventory
(SF)
Warehouse/Distribution
Under
Construction
(SF)
Qtr
Absorption
(SF)
YTD
Absorption
(SF)
Total
Asking Rent
(Price/SF)
3.34%
48,428
48,428
$3.68
0
8.46%
0
0
$6.36
Metro East
37,386,445 1,083,137
3.44%
48,428
48,428
$3.71
Warehouse/Distribution
43,798,390
311,000
7.45%
-238,566
-238,566
$3.84
2,466,455
0
18.37%
-97,994
-97,994
$10.73
North County
46,264,845
311,000
8.03%
-336,560
-336,560
$4.21
Warehouse/Distribution
73,810,418
56,000
12.31%
83,680
83,680
$2.93
1,803,060
0
8.73%
-8,522
-8,522
$6.10
75,613,478
56,000
12.23%
75,158
75,158
$2.99
R&D/Flex
R&D/Flex
R&D/Flex
St. Louis City
36,652,997 1,083,137
Total
Vacancy
Rate
733,448
3
R&D/Flex
Total
Asking Rent Asking Rent
(Price/SF)
(Price/SF)
Research
St. Louis, MO
Newmark Grubb Knight Frank United States Office Locations
8235 Forsyth Boulevard
Suite 310
Clayton, MO 63105
314.254.4600
Kansas City, MO
1220 Washington Street
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Kansas City, MO 64105
816.474.2000
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1485 SW Market Street
Lee’s Summit, MO 64081
816.474.2000
Salina, KS
P.O. Box 3224
Salina, KS 67402
785.342.9106
Kevin McLaughlin
Executive Managing Director-Principal
St. Louis
314.628.0436
kmclaughlin@ngzimmer.com
Mike Carlson, SIOR, CCIM
Executive Managing Director-Principal
St. Louis
314.628.0438
mcarlson@ngzimmer.com
Andrew J. Garten
Director, Research Consulting
816.474.2000
agarten@ngzimmer.com
Newmark Grubb Knight Frank has implemented a proprietary database and our tracking methodology has
been revised. With this expansion and refinement in our data, there may be adjustments in historical
statistics including availability, asking rents, absorption and effective rents.
Newmark Grubb Knight Frank Research Reports are also available at www.ngkf.com/research
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