March 15, 2012
Top commercial real estate brokers predicted 2012 will be a year of absorbing vacant office and industrial space in St. Louis.
A consistent theme in the 28th Annual SIOR Metro Market Forecast presentation was that the office, industrial, and retail markets will have little appetite for new construction until they have absorbed more of the excess space sitting vacant. Staying competitive and filling space, however, will create renovation work for contractors.
James Mosby, senior managing director, Cassidy Turley, expects the office market to digest more unused space in 2012.
He ticked off several positive signs for the office market:
• The conversion of 100 N. Tucker into a law school building for St. Louis University, and of 1915 Olive into a new police headquarters building and jail, take inventory out of the market;
• The unemployment rate is coming down and the office vacancy rate tracks the unemployment rate;
• Recent tenant surveys show that tenants are looking for 11 percent more space than they currently occupy.
Sheldon Johnson, vice president, Johnson Group, Inc., expects the vacancy rate for industrial properties in the St. Louis area will fall as well in 2012. He thinks sale prices hit bottom in 2011. He looks for a modest increase in construction by owner users, such as General Motors' announced plan to invest $450 million in its Wentzville, MO, facility; and said there even is the possibility of new, speculative, bulk warehouse construction in Illinois.
Jim Rosen, vice president, Pace Properties, said the St. Louis retail market is past the bottom and is doing better than the overall national market. The economy is growing and unemployment is falling, so the market should continue on the upswing in 2012. There won't be much new development, but as retailers fight for greater sales and market share, they will consume construction services for store renovations, sometimes in new locations vacated by other stores.
"Retailers will continue to find new ways to enhance the shopping experiences as they compete for consumers' attention and retail dollars," he said.