Research & Forecast Report ST. LOUIS OFFICE Second Quarter 2017 Testing the Waters In the second quarter 2017, an increasing number of Class A office property owners have begun testing the waters and placing their assets on the market for sale. The Plaza in Clayton, Black s Ridge, Atrium at Chesterfield and Park Place on S. Brentwood to name a few. Vacancy in the suburban markets is low, rental rates are high and quality investment opportunities in St. Louis are in demand. At the end of second quarter 2017, direct vacancy rates for all suburban Class A inventory landed at 7.0%. For historic perspective, suburban Class A vacancy in second quarter 2016 was 8.2% 10.3% in 2015 second quarter. St. Louis City has another story to tell. In the last few years Class A vacancy in the City has fluctuated between 15% and 17%, currently at a rate of 15.5%. Though the City s office market has struggled in the past few quarters, there are still some exciting things happening in the Central West End, Cortex Innovation Community and Central Business District. The new 180,000-square-foot building at 4220 Duncan Avenue and the 55,000-square-foot mixed-use office/multifamily development The Euclid where Shake Shack will be located are well underway. The former Bi-State Development Agency s building in Laclede s Landing will soon be getting a makeover as well according the St. Louis Business Journal. Market Indicators Q1 2017 Q2 2017 Q3 2017 FORECAST VACANCY CONSTRUCTION RENTAL RATE Vacancy & Rental Rates 20% 15% 10% 5% 0% Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017 Total Market Asking Rent Total Market Vacancy Rate Class A Asking Rent Class A Vacancy Rate $23.00 $22.00 $21.00 $20.00 $19.00 $18.00 $17.00 $16.00 Overall, the St. Louis office market remains steady but promising. The leasing market is healthy, investment sales have increased and construction is up. Additionally, the job market continues to trend in a positive direction, companies are expanding and quality space is becoming scarce. Colliers office experts predict strong activity for the remainder of 2017 quite possibly into 2018.
Q2 2017 Submarket Snapshot Greater St. Louis Region MARKET EXISTING INVENTORY (SF) OVERALL VACANT SF OVERALL VACANCY % VACANT SF VACANCY % OVERALL NET (Q2 2017) OVERALL NET (YTD) AVERAGE RENT CLASS A St. Louis City 5,557,440 899,625 16.2% 862,996 15.5% (10,920) (113,994) $18.89 Clayton 4,608,770 253,183 5.5% 246,454 5.3% 44,511 74,336 $26.74 Westport 1,083,264 60,835 5.6% 51,735 4.8% 85,137 90,410 $21.55 Olive/ I-270 2,297,900 207,626 9.0% 180,360 7.8% 15,516 43,813 $25.58 Chesterfield 4,291,748 294,787 6.9% 219,233 5.1% 28,563 (54,077) $27.18 Manchester/ I-270 1,032,634 62,857 6.1% 62,857 6.1% 7,512 12,106 $23.97 I-44/ I-270 365,127 6,665 1.8% 6,665 1.8% (1,136) 2,652 $23.38 Earth City 1,613,798 299,561 18.6% 212,527 13.2% 980 980 $20.68 Airport 715,275 47,947 6.7% - 0.0% 0 0 - St. Charles County 968,016 236,236 24.4% 209,005 21.6% (50,311) (55,527) $20.79 Class A Totals 22,533,972 2,369,322 10.5% 2,051,832 9.1% 119,852 699 $21.86 CLASS B St. Louis City 4,888,660 1,226,665 25.1% 1,169,905 23.9% (42,831) (71,470) $13.44 Clayton 3,291,431 315,345 9.6% 305,856 9.3% 2,589 (11,368) $19.51 Westport 1,869,915 264,248 14.1% 264,248 14.1% 53,320 39,303 $18.69 Olive/ I-270 3,413,485 364,518 10.7% 364,518 10.7% (20,029) (24,649) $17.73 Chesterfield 2,153,278 240,324 11.2% 224,937 10.4% (6,781) 5,271 $20.22 Manchester/ I-270 1,157,474 103,703 9.0% 100,938 8.7% (2,546) 5,005 $18.09 I-44/ I-270 2,600,355 214,610 8.3% 188,508 7.2% 3,907 (22,397) $20.37 Earth City 1,214,043 219,822 18.1% 217,862 17.9% 383 (19,314) $16.41 Airport 1,576,175 418,392 26.5% 418,392 26.5% 92,763 107,284 $16.30 St. Charles County 1,451,565 191,682 13.2% 188,527 13.0% (475) (8,209) $17.28 Class B Totals 23,616,381 3,559,309 15.1% 3,443,691 14.6% 80,300 (544) $17.15 CLASS C St. Louis City 1,845,222 385,949 20.9% 385,949 20.9% 0 (2,486) $13.40 Clayton 545,033 82,611 15.2% 82,611 15.2% (7,731) (11,771) $16.64 Westport 48,100 5,865 12.2% 5,865 12.2% 0 (1,225) $20.31 Olive/ I-270 207,598 10,250 4.9% 10,250 4.9% 1,750 1,750 $14.81 Chesterfield 68,630-0.0% - 0.0% 0 0 $15.00 Manchester/ I-270 44,322 9,026 20.4% 9,026 20.4% 0 1,552 $13.77 I-44/ I-270 193,889 35,931 18.5% 35,931 18.5% (2,403) (3,085) $16.21 Earth City - - - - - 0 0 $13.95 Airport 55,462 9,700 17.5% 9,700 17.5% 0 0 $18.15 St. Charles County 370,995 41,238 11.1% 41,238 11.1% 2,043 22,268 $14.63 Class C Totals 3,379,251 580,570 17.2% 580,570 17.2% (6,341) 7,003 $15.07 MARKET TOTALS 49,529,604 6,509,201 13.1% 6,076,093 12.3% 193,811 7,158 $19.19 2 Research & Forecast Report Q2 2017 St. Louis - Office Colliers International
Leasing & Sales Transactions Notable Q2 2017 Sales Transactions PROPERTY SUBMARKET PRICE SF PRICE SF CLASS 12200 Weber Hill Rd & 12250 Weber Hill Rd I-44/I-270 $15,000,000 109,197 $137.37 A 8580 Evans Ave Airport $15,229,800 90,000 $169.22 A 3165 McKelvey Rd Earth City $1,100,000 51,067 $21.54 B Notable Q2 2017 Lease Transactions TENANT SUBMARKET PROPERTY RSF CLASS TYPE St. Louis County Earth City 700 Northwest Plz 140,000 A New Lease Centene Clayton 7930 Clayton Rd 80,342 A New Lease Aclara Technologies Westport 77 Westport Plaza 63,250 A New Lease ACE American Insurance Company St. Charles County 1 Progress Point Pky 47,233 A New Lease Centene Clayton 7733 Forsyth Blvd 45,018 A New Lease Historic Rental Rates & Vacancy Activity $19.40 20% RENTAL RATES $19.20 $19.00 $18.80 $18.60 $18.40 18% 16% 14% VACANCY RATES $18.20 $18.00 12% $17.80 2Q13 2Q14 2Q15 2Q16 2Q17 10% Direct Avg Rent Overall Vacancy Rate 3 Research & Forecast Report Q2 2017 St. Louis - Office Colliers International
Greater St. Louis Region SUBMARKET MAP 270 270 170 70 55 64 255 55 44 N ST. LOUIS CITY # of Buildings - 85 CHESTERFIELD # of Buildings - 85 AIRPORT # of Buildings - 32 CLAYTON # of Buildings - 101 MANCHESTER/ I-270 # of Buildings - 46 ST. CHARLES COUNTY # of Buildings - 96 WESTPORT # of Buildings - 50 I-44/ I-270 # of Buildings - 67 OLIVE/ I-270 # of Buildings - 102 EARTH CITY # of Buildings - 24 4 Research & Forecast Report Q2 2017 St. Louis - Office Colliers International
$2.6 billion in annual revenue 68 countries 2.0 billion square feet under management MARKET CONTACT C. Kevin Gallagher, CCIM, SIOR Executive Vice President and Managing Director St. Louis REGIONAL AUTHORS Allison Gray Director of Research Pam Boelhauf Director of Marketing & Public Relations Colliers International St. Louis 101 S. Hanley Road, Ste. 1400 St. Louis, MO USA +1 314 863 4447 15,000 professionals and staff 72,000 lease/sale transactions $105 billion total transaction volume About Colliers International Colliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry leading global real estate services company with 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 global outsourcing firms by the International Association of Outsourcing Professionals for 12 consecutive years, more than any other real estate services firm. colliers.com/stlouis Copyright 2017 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.