By Jim Baer
Downtown St. Louis has shown extraordinary progress in recent years. Projects are budding up like daffodils in the springtime. There are all kinds of loft condominiums and apartments along Washington Avenue, and chic boutiques and fine dining establishments are calling downtown home these days. The district has a new baseball stadium, a brand spanking new $550 million casino development and a four-star Four Seasons Hotel on the edge of Laclede's Landing. Some activity reminds patrons of the 24-hour hustle and bustle found more commonly on the Miracle Mile in Chicago.
What, however is lacking downtown is an abundance of new speculative office space. Developers are reticent to make moves unless space is pre-sold. That follows a national trend that currently plagues the industry. Finding contiguous and prestigious office space for national firms is a rare commodity downtown. Firms have fled west to Clayton to find that necessary space. Experts in commercial real estate have their opinions on speculative office space, or the lack there of.
Richard Ward, vice president of Zimmer Real Estate Services, L.C. says the downtown market has been moribund for going on 20 years. The demand simply hasn't been there. In fact, as he outlined, two major St. Louis firms Ernst & Young LLP and Husch & Eppenberger, LLC relocated to Clayton to find more Class A contiguous space for their ever-increasing pay roll.
"I don't know where it (downtown office space) is headed, but there's only modest activity at best," he says. Though St. Louis is beginning to progress as a 24-hour city with downtown loft living and the recently-announced launch of a grocery store, the office market has not yet taken shape.
He points to the development of the Metropolitan Square building decades ago as a working model of what's currently going on. "Met Square was built in 1987 and was planned as a smaller, two tower project. That would have worked better," says Ward. "The project started too late for the market and was too big. It was all bad timing. The building merely sucked people out of the older buildings downtown," says Ward, and had no significant effect on square foot rental rates. "The immediate availability of one million square feet put a glut on the market," he reasons.
However, not all is doom and gloom downtown for Ward. He thinks the renovation of the Old Post Office is a grand project and tips his hat to the Schnucks family for adding a grocery store to the area.
"The genius of downtown is the use of historic tax credits. "What downtown lacks overall is critical mass. ThatÕs the weakest part of the office space (equation)," he says.
St. Louis economic developers note the "chicken/egg" dilemma of not having large blocks of multi-tenant class A space downtown, pointing to the recent surge of out-of-town tenant interest in St. Louis. In several recent cases, prospective new tenants requesting potential 100,000- to 150,000-square-foot immediate occupancy alternatives downtown, had none.
East Side Developers Weigh In
Darwin Miles, principal of Miles Properties in Illinois doesn't see much happening downtown either. "As far as speculative downtown office space, no one is going to do much without pre-sold space," he says.
"We don't do a lot of office space in Southern Illinois either," he says. He claims that at least 30.5 percent of space must be pre-leased before any construction begins.
"Our largest buildings in O'Fallon and Shiloh will be in the 60,000-square-foot range, and mostly for medical space," he says. Miles says Southern Illinois is a good place for companies to consider. "We have some economic hurdles to overcome, but development is coming to the eastside," he says, pointing to a new land development of a conference center and Hilton Gardens Hotel going up at Exit 16 on Greenmont Road in O'Fallon.
Bruce Holland, another eastside developer with a major construction and development company has his opinions on this matter. "There is a good healthy competition between downtown (St. Louis) and Clayton going on. My heart tells me the core of downtown St. Louis should be viable," but pointed to Centene's development as a lynchpin of what was needed to upstart the process.
"It will simply take good corporate citizens to make that kind of development happen. As a company we don't do that type of work (build tall office buildings), but someone will. Ninety five percent of our work is client negotiated," says Holland.
North Park Office Development Underway
In recent weeks, Chad Richardson was hired away from NAI-Desco to oversee all of the marketing of the North Park project on behalf of the Clayco Company. 'When I was hired, Bob Clark (Clayco president) told me I would eat, breathe and sleep this project," and I do," says Richardson.
Richardson, marketing manager for North Park oversees the five million-square-foot development that finds itself on both the north and south sides of Interstate 70 in North St. Louis County.
"This mass of land became available when the FAA deemed the residential property uninhabitable due to excessive airport noise," he says. Land that once made up communities the likes of Kinloch and Berkeley is becoming Class A office and light industrial. Express Scripts has opened its brand new campus at the University of Missouri-St. Louis, while Vatterott College recently relocated from St. Ann on the north side of the highway in 90,000 square feet of contiguous space.
Presently, North Park is developing 175 acres of an overall 550-acre tract of land. North Park is taking advantage of a rebuilt highway, accessibility to MetroLink and new access ways created through partnerships with MoDot.
"North Park is a very large project and the owners and developers feel it will take 15 to 20 years for everything to happen," he says. Right now, the newest development is an H-Pod building (meaning high performance office design). That project is expected to be complete by early summer. The emphasis is on the greening of this building," says Richardson. That particular building, 140,000 square feet in office space is Leed certified, meaning it meets all the new standards for energy efficiency.
Richardson says the whole North Park development is pleasing to the eye. "Normally you see four-foot setbacks along roadways and we have eight foot (ones) with a lot of nice landscaping. We are working with Ameren UE to bury our utility cables. Hanley Road has been widened along the project way and glass fa�ade buildings hide parking lots to the rear.
"We're hoping for a whole new culture to this project," rattling off amenities like fiber networking, addition of retail space and restaurants to the area. A Hilton Gardens Hotel with 125 rooms and a state-of-the-art conference center is already under construction. Richardson is slated to attend a lot of national brokerage meetings, looking for out-of-town tenants, along with moving existing
tenants from other parts of the region to North Park. "The key focus is job creation both in construction and permanent jobs," he said
Even in a down national economy, St. Louis is showing marginal gains in Class A and other office space. However, very little of that is coming to downtown St. Louis, at least for now.
| Bank of Washington Adds 50,000 Square Feet |
By Jim Baer
The Bank of Washington (Missouri) has been a wholly owned family concern, serving this city with a population of 13,000 since 1877. The bank, now in its third location downtown (a half block from where it was founded in 1877) is expanding upward with the addition of 50,000 square feet.
"It would have been more economical to start all over with a new structure, but we wanted to stay downtown, and make sure the downtown remains strong and vibrant," says L.B. Eckelkamp Jr. an attorney and president of the bank.
The present 36,000-square-foot building was not sturdy enough to support an additional two floors, so 13-foot steel trusses have been put into place to add the new footage atop the existing bank. "It's like we are putting a table on top of the existing building," he remarks.
The banking consortium has grown by leaps and bounds and is today a $612 million concern, with banks in Washington, Union (United Bank of Union) and a variety of locations in St. Louis (Citizen's Banks of Greater St. Louis) including locations in Maplewood, St. Charles, Affton, St. Peters and others. They are further expanding in Washington, adding branch locations on both the east end of town, and at the apex of I-44 and Highway-100 heading into Washington from the south.
The construction project totals $17 million and will create office space for 100 workers, many of which will be new hires upon construction completion. "We are growing. We need more loan officers and support people. We will be moving our data processing center into the two new floors once construction is complete," says Eckelkamp.
The present bank on Main Street has a traditional sandstone exterior, but once complete, the entire building will be refaced in red brick to match other historic downtown structures.
The new building will then have six floors. The existing bank is two stories high with a basement. The new addition has three floors, but the middle floor, with the trusses is for storage only.
HBD of St. Louis is the general contractor. "This has been a real challenge, especially for our customers to maneuver around the construction. When we are done, (end of 2008), we will still have a drive through facility, and we will be able to better serve our customers with a variety of new people," says the bank's president. |
|
