By Jom Nicholson
In the first quarter of this year, Colliers Turley Martin Tucker hosted its annual invitation-only Market Quest, examining local real estate trends and providing insight into trends for 2008. The highlights?
Clayton is hot with only three buildings currently offering full floor office space that are vacant and available. The Highway 40 corridor, thanks to medical-related concerns, is filled almost to capacity. The market for Class A office space is tight, while the
market for Class B office space faces a
challenge. The housing slump is not nearly as bad locally as it is nationally. And the destination plans of large legal firms will ultimately determine the Clayton/downtown fight for headquarter dominance.
The downtown/Clayton divide will continue to affect both sky and bottom lines. Clayton is an incredibly healthy market exhibiting both rent growth and lack of space. The combination serves to deliver large-scale development projects. The downtown market has slowed and continuous
residential growth has had little impact on the office market.
The battle for large firm tenants is hot,
as $225,000,000 worth of real estate
decisions concerning large law firms will be made within the next 18 to 24 months. The crux of the matter is:
Will the majority opt to stay downtown paying lesser rent and with more space available, or will they move to Clayton and pay more for the privilege? Or will Clayton choose to match the City's incentives
programs and reduce rent costs?
A corporate decision as to whether a view of the Mississippi or a view of the Forest Park Expressway best suits the firm's image will ultimately have a lot to say about the City's future.
In the suburban office market, Class A space is at a premium, while Class B space continues to struggle. Antiquated buildings with older internal systems coupled with absence of prime location account for the latter. The lack of available Class A space combined with the increased costs of new office developments will mean that rents for A space buildings will increase, and that the tenantÕs geographic parameters for such buildings will expand.
The Highway 40 corridor, whether or not Highway 40 is
actually functioning, is jam packed with tenants and expanding westward beyond Chesterfield to O'Fallon and Weldon Springs. The completed upgrades to Interstate 64 west into St. Charles County will contribute to major new developments primarily
due to availability of land. An expansion northward in the County is also anticipated.
The St. Louis housing market, predictably, is down—but only nine percent. As the national average is 23 percent, that's
actually good news. 2008 may be a very slow year for builders and sellers, but there is optimism for 2009. Those with money to invest will enjoy an extended buyer's market.
There is a substantial amount of zoned industrial land on the market, particularly in North County and on the East Side (with the East Side offering cheaper prices).
St. Charles County, in a word, is booming with a population that has increased a mere 853 percent between 1950 and 2000. Currently, it is home to 350,000 and the population is expected to be 450,000 in 2020. How many more high schools will emerge in the Fort Zumwalt and Francis Howell districts is anybody's guess.
While the housing market continues to grow albeit at a slower pace, the Class A office inventory is quietly growing, as well. In the past eight years, St. Charles County has absorbed more office space than the rest of the St. Louis metro and, with an eight percent vacancy rate, it is gaining momentum as a viable office alternative location. There is currently a lack of Industrial ground
available for development. Anticipated legal rulings may change that in the next few months. A coming reality will be a new
skyline with the County's first high rises at the former Noah's Ark site.
Mega-warehouses are driving the Industrial market with spaces getting bigger as supply chains are getting longer. St. Louis' location, labor force, inter-modal capabilities and the fact that it is the second largest inland port in the country will continue to fuel the
current momentum.
The credit crunch in the past four months has inevitably affected the Investment Sales market and investors can anticipate paying more for debt than before the crunch. Cash will be king for big time investors.
"As the region's leading experts on the commercial real estate market, we present The State of Real Estate as a service not only to our existing and potential clients, but also to business and civic leaders, as well as the media professionals who cover the industry. We are committed to sustaining our
leadership position as the most knowledgeable resource in the industry," says Dean Mueller, Managing Principal at Colliers Turley Martin Tucker.
For additional
information, go to www.ctmt.com
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