New economic reports indicate that the city of St. Louis is leaping forward in real estate circles, with office rents jumping to newfound heights that haven’t been seen since the Great Recession of 2008. Members of the real estate industry are expecting the remainder of 2019 to continue being a banner year, with a number of promising signs indicating that the real estate boom shows no signs in slowing down anytime soon.
The biggest indicator that the real estate market of the city of St. Louis is thriving is that office rents are soaring upwards; according to reporting from the St. Louis Post-Dispatch, the asking price for local office space is finally hitting prices not seen since the Great Recession tanked the value of real estate holdings across the country. The city enjoyed a 6.1 percent year-over-year bump in the average asking price for office rents, with the new average of $19.65 per square foot being the best in any Midwestern market in the top 10.
“The Clayton market is very, very tight. West County’s very tight,” Dennis DeSantis, a longtime office broker with Colliers International, said in an interview with the Post-Dispatch. “The other markets seem to be getting tighter because we just haven’t seen any new buildings.”
Brokers across the city are indicating that the soaring prices for rent, especially for that of office spaces, is an indication that new construction projects are needed across the region. Already, at least $8 billion in construction projects are already underway from Forest Park to the Arch in St. Louis, according to information compiled by St. Louis Public Radio.
Real estate developers and construction project managers alike are eagerly expecting a spate of new building to keep occurring for years to come in order to sate rising demand.
“There’s so much going on right now in a positive way. We can finally all come here and smile and say, ‘It’s working, we’re getting things done,” Chip Crawford, chair of ULI St. Louis, told St. Louis Public Radio.
Data compiled by pwc also indicates that the near-future of the St. Louis real estate market is looking positive. According to a public report from the Urban Land Institute and pwc, for instance, nearly 2,400 real estate experts and investors expect the region to keep undergoing growth with shared office space for the remainder of the year. The report ranks St. Louis as the 46th real estate prospect in the nation, higher than the national average.
Despite the high ranking, real estate industry professionals expect a number of challenges to stymie growth in the forthcoming future, especially when it comes to recruiting young talent. While pwc’s public report list cities like Dallas/Fort Worth and Brooklyn near the top because of their access to youthful workers, St. Louis is facing difficulties attracting young talent to the city for long-term employment.
“You’re not necessarily going to go out and lure Amazon to every city,” Andy Warren, co-author of the report, told St. Louis Public Radio in a reference to the company’s recent decision to open two new headquarters. “I think many people are looking at what they have as an intrinsic advantage, and they are trying to build on that, instead of mimicking the next city.”
Nonetheless, the report and experts alike continue to expect the St. Louis real estate market to keep ticking upwards. Microsoft recently moved from Creve Coeur to a new office space in a blow to St. Louis, for instance, but a replacement tenant was found almost immediately.
“I do feel that this is a great showing for, not necessarily just Clayton, but St. Louis that we can deliver a 550,000-square-foot building and have it nearly 100 percent occupied before it’s delivered,” local broker Nick Fiquette noted to the Post-Dispatch.