The St. Louis office market experienced more decline this past quarter as both users and owners navigate these uncertain post-pandemic times. Vacancy rates continue to rise, from 18.00% in Q1 to 18.45% in Q2. This is the highest vacancy rate since 2013. Net absorption dropped by 322,909 square feet (SF), with the most significant decrease in the South County submarket with 158,520 SF of negative absorption. North County saw the second-largest reduction in net absorption posting negative 119,180 SF. Nearly 70% of this negative absorption was due to new subleases hitting the market. Subleases climbed to 1.55 million square feet (MSF) in Q2. Despite these declines, rental rates remain steady. Average asking rentals rates are hovering around $22.00 per square foot (PSF) overall, an encouraging sign for landlords. Building sales reached a record high this past quarter with over 2.5 million square feet (MSF) sold, the largest recorded sales volume in a quarter, beating 2.3 MSF sold in Q2 2015.
Landlords hope to see the market shift in their favor soon. Large office users continue to weigh their options and physical office needs. With 1.1 MSF under construction, more inventory will be added to the market over the next one to two years. Two new buildings totaling approximately 500,000 SF are on track for completion this year in the Clayton submarket with only 58% of this space pre-leased.