The third quarter delivered more disappointing results for the St. Louis office market as the shift towards work-from-home continues to dictate the office environment. Vacancy continues to climb, reaching 20.65%, the highest percentage in recent history, while absorption dipped to negative 1.2 million square feet (MSF). A significant factor in vacancy and absorption continues to be the sublease market. Centene Corporation is the latest large space user committed to lowering its real estate footprint. They have vacated space in three submarkets totaling 592,261 square feet (SF). Large block sublease spaces have been challenging to fill, even with lower rental rates. Office subleases have reached 2.25 MSF this quarter and continues to grow.
The market continues to favor tenants as options remain plentiful for any user looking for space. Even though there are plenty of spaces to choose from, direct rental rates have remained relatively consistent. Overall, total market direct rates increased from $22.14 per square foot (PSF) in the previous quarter to $22.50 PSF this quarter. We may see a drop in direct asking rates in the coming quarters to combat the high vacancy rates across the entire St. Louis office market.