C.B. Richard Ellis Third Quarter Report Show Slow Bounce Back

CB Richard Ellis has released its third quarter 2009 MarketViews for the St. Louis Office and Industrial markets. The MarketViews are comprehensive reviews of current leasing market statistics, including vacancy, availability, absorption and average asking rental rates. Both reports feature breakdowns of the St. Louis area's submarkets.

The results of CBRE research into the multitenant properties in the market show that the limited activity is beginning to effect the vacancy and lease rate numbers, with the vacancy rate trending upward in the office market and average asking lease rates falling.

On the industrial side, the vacancy rate stayed steady, decreasing by one-tenth of a percentage point, but the availability rate rose from 12.7% to 13.3%. The availability rate is a measurement of all space being marketed for lease, including currently occupied space where a landlord either knows a tenant is soon vacating or where a tenant has signed a short-term lease.

CB Richard Ellis brokers report that, while not back to previous levels, activity has started to increase, and there have been some positive signs in the market. A limited number of investment sales of properties have taken place, although the market is nowhere near its peak from a few years ago. Renewals are still being completed, albeit often at lowereffective lease rates because of concessions.

Downtown received some good news at the end of the third quarter, with Thompson Coburn completing its lease renewal at US Bank Plaza. The submarket, however, still has the highest vacancy rate among all office properties, as well as specifically within the Class A sector.

Construction continues to be slow across both the office and industrial market, which brokers say should help when more activity begins to take place. Currently, most tenants in the market are looking at consolidating operations into less space because of recent staff
reductions.

The St. Louis market has also begun to experience lender involvement in commercial properties, including some commercial foreclosures. The tactic the lender takes in such a circumstance could greatly impact the market, brokers caution. Should the lender choose to be aggressive to immediately fill the property with tenants to boost occupancy in the hope of a future sale, lease rates could continue to decrease.

To download a copy of the office report, click here.

To download a copy of the industrial report, click here.

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