Skip to main content Skip to footer

2019 Q4 Industrial St Louis Report Colliers

Download Report
4Q19 Industrial Hero

New Construction Record

The St. Louis industrial market saw another record year for construction bolstered by record new build to suit construction and significant lease renewals that enabled continued high levels of absorption. Construction completions hit a new record high of 6.29 million square feet (MSF) in 2019, slightly higher than the previous record of 6.28 MSF in 2016. This new record was driven by build-to-suit construction deliveries and absorption, also at a record level of almost 4 MSF. Overall leasing and especially sales activity remain high as well.

Although speculative construction deliveries in 2019 were the lowest in five years, the projects that were delivered this year combined with existing vacant spec space to push vacancy rates up. The industrial market ended 2019 with an overall vacancy rate of 6.53%. This is a slight increase from 6.25% in 2018 but very close to the five-year average of 6.49%. The direct average asking rental rate at year-end was $4.35 per square foot (PSF). This is higher than third quarter’s rate of $4.29 PSF but lower than the $4.86 PSF rate from this time one year ago. The Metro East, St. Charles County, and North County submarkets had the highest concentrations of positive absorption in 2019. These same submarkets also experienced the highest levels of new construction. The Metro East submarket had one of the highest vacancy rates in the St. Louis industrial market with approximately 22% of the total vacant space in the market. This submarket has attracted the highest level of new construction over the last two years and currently offers almost 2.6 MSF of vacant bulk industrial space with an average building size of 645,000 SF.   

The 6.29 MSF of construction completions in the St. Louis market in 2019 is an historic high, coming in just 3,000 SF ahead of that in 2016. Construction deliveries were highest in the Metro East and St. Charles County submarkets each garnering 55.8% and 30.2% of total new construction respectively. The three largest deliveries of 2019 were all build-to-suits projects including the two-building, 2-MSF World Wide Technology campus in Gateway Commerce Center (in the Metro East), followed by the new 855,080-SF Amazon Fulfillment Center delivered in Premier 370 Industrial Park in St. Charles County. Build-to-suit construction contributed 63.2% of all construction deliveries in 2019 compared to 42.2% in 2018 and only 8.7% in 2017. Speculative development totaled 2.3 MSF in 2019.  As of year-end 2019, these newly delivered spec buildings were 86.7% vacant, adding over 2 MSF of vacant space to the market (with more than half of that in the Metro East submarket). In addition, at the end of 2019, 66.4% of the speculative space delivered in 2018 was still vacant.

World Wide Technology’s transactions had the greatest impact on the market in 2019. In addition to its new 2-MSF campus in Gateway Commerce Center, Worldwide Technology renewed leases in both of its existing buildings in Lakeview Commerce Center, bringing their total footprint in the Metro East to approximately 3.65 MSF. GEODIS renewed its lease of 763,471 SF at 27 Gateway Commerce Drive and Medline Industries, Inc. renewed its 375,200 SF at 1659 Sauget Business Boulevard, both in the Metro East. Pepsico leased 269,000 SF at 5400 North Hanley Road in NorthPark Business Park, the largest transaction in the North County submarket.

Industrial building sales have been incredible over the last three years with 11.6 MSF in 2017, 10.6 MSF in 2018 and a new record of a whopping 12.3 million square feet in 2019. The largest individual building sale of the year was the sale of 21-27 Gateway Commerce Center Drive to Exeter Property Group. This 1.06-MSF building sold for $48,500,000 and was 100% occupied. Colony Capital, Inc. sold its 60-MSF light industrial portfolio of 465 assets to Blackstone Real Estate Partners IX for an estimated $5.7 billion. The portfolio included nearly 1.4 MSF of industrial space in the St. Louis market. 

The U.S. economy added 145,000 jobs in December and ended the year with an average of 175,000 jobs added each month, per the Labor Department. This rate of job growth is strong but lower than the average of 223,000 jobs added each month in 2018. The Federal Reserve reported that the unemployment rate for the St. Louis region was 3% in November 2019. This is a slight rise from 2.7% in October of 2019 and 2.9% for November of 2018. The unemployment rate in the St. Louis Metro Area is still lower than the national rate of 3.5%. The U.S. Bureau of Labor reported manufacturing in the St. Louis Metro Area grew by 1.8% year-over-year (per November numbers) and the Trade, Transportation, and Utilities sector grew by 2.1% year-over-year. Both of these sectors are very sensitive to outside influences. Although uncertainty remains, the current trade war truce indicates a positive change for the future.

4Q19 Industrial

2019 Q4 Industrial St Louis Report Colliers

Download Report
Related Experts

Molly Mastin

Senior Director - Marketing & Research

St. Louis - Clayton

As Senior Director of Marketing & Research in St. Louis, Molly is responsible for the implementation of the Colliers International brand standards, oversight of the creation and development of marketing-related materials, and strategic marketing initiatives. She specializes in new business proposals, client presentations, event planning and property marketing.

Molly has worked in the commercial real estate industry since 2003. She has been involved in a wide range of responsibilities in both the marketing and research departments. Prior to joining Colliers International, Molly worked as the director of marketing and research with Gateway Commercial, a Cushman & Wakefield affiliate. She is a licensed salesperson in the state of Missouri.

View expert