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Why St Louis is the next hot industrial market

For several years, Amazon has dominated the conversation in the St. Louis industrial market. Its 1.4 million square feet of Edwardsville distribution facilities came online in the summer of 2016 at the Lakeview Commerce Center and the Gateway Commerce Center. And in July 2017, the e-commerce behemoth leased 448,000 square feet of distribution space in the Hazelwood Logistics Center.

But St. Louis has yet to hit its prime. Colliers International named St. Louis one of the top 10 emerging industrial markets to watch, along with Las Vegas, Stockton, California, Memphis and others, as regions rich with opportunity for investors, developers and potential tenants.  

Locally, the vacancy rate in 2017 was 6.8 percent, nearly the same as it was a decade ago, at 6.7 percent. More than 4 million square feet was delivered in 2017, the second-most product delivered over the past 10 years. Developable land also is becoming harder to come by, with under-construction product declining to 2.3 million square feet last year, according to the Colliers report. With supply to remain low and interest high, vacancy rates are expected to drop and the average lease rate of $4.46 per square foot is expected to rise in 2018 and beyond.

“For the longest time, the market was fueled by local expansion,” Colliers St. Louis Senior Vice President Geoff Orf said. “E-commerce companies are looking hard at the St. Louis area and existing technology and consumer products companies here in town are still expanding."

The National Retail Federation projects online sales and other non-store sales to spike 10-12 percent in 2018 — on top of overall retail industry sales’ projections of 3.8 and 4.4 percent year-over-year (Overall retail sales hit $3.53 trillion in 2017.) It’s part of a multiyear trend in e-commerce that has impacted not just the retail landscape but also warehouse and distribution space.

Nationwide, 200 million square feet of new industrial space has come online and rental rates have jumped 7-9 percent year over year from 2016, SIOR Global President and Markward Group Principal Del Markward said at the SIOR Metro Market Forecast presentation this week. That growth has put the spotlight on St. Louis' assets. The region is served by six Class I railroads, seven interstate highways and two international airports. St. Louis Lambert International Airport in recent years has narrowed in on cargo’s potential, and Lambert’s total cargo volumes grew 8.3 percent from 2016 to 2017.

But St. Louis faces competition from its neighbors, many of whom were also named as ones to watch by Colliers. Indianapolis is home to the second-largest FedEx hub in the world and was shortlisted for Amazon’s second headquarters. Memphis is served by five Class I railroads, 490 trucking terminals, 11 highways and the country’s largest cargo airport. Meanwhile, Kansas City has Logistics Park Kansas City, its 1,700-acre master planned distribution and warehouse development served by BNSF. 

Orf sees growth potential in such submarkets as St. Charles County, the Metro East and Jefferson and Franklin counties. Finding a growing labor pool will be key, he added.

“Labor is tight everywhere,” Orf said.

Who St. Louis is competing with

Several of the region’s neighbors also were named to Colliers International’s report on the top 10 emerging industrial markets.


Home to the second-largest FedEx hub in the world and was shortlisted for Amazon's second headquarters

  • Inventory: 245,905,362 square feet
  • New supply: 8,493,018 square feet
  • Under construction: 5,473,128 square feet
  • Lease rates: $3.89, up 1.6 percent YOY


The Cincinnati/Northern Kentucky International airport is home to the Amazon Prime hub. It’s also one of the largest air cargo hubs in the U.S.

  • Inventory: 257,725,642 square feet
  • New supply: 3,587,518 square feet
  • Under construction: 4,503,628 square feet
  • Lease rates: $4.19, up 14.5 percent YOY

Kansas City

The city's biggest asset is Logistics Park Kansas City, a 1,700-acre master-planned distribution and warehouse development that is served by BNSF

  • Inventory: 257,393,326 square feet
  • New supply: 8,820,187 square feet
  • Under construction: 5,080,718 square feet
  • Average lease rate: $4.64, up 2.7 percent YOY


The International Port of Memphis is the fifth largest inland port in the United States. The city is the third-largest rail center in the U.S. behind Chicago and St. Louis

  • Inventory: 232,639,044 square feet
  • New supply: 3,167,531 square feet
  • Under construction: 5,331,404 square feet
  • Average lease rate: $3, up 2.7 percent YOY

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