Dramatic Rise in Tech Jobs Propels Growth in St. Louis Office Market
Rapid growth in the tech sector is dramatically impacting the St. Louis office market. The city boasted an increase of 6,220 high-tech jobs during the last four years, over 2,000 of which were generated in the past year alone. Given the total number of tech jobs in St. Louis is 57,300, this amounts to a healthy growth rate of 10.9 percent.
From well-known companies like Square Inc., Yurbuds and Answers.com to newer ones such as LockerDome, Aisle411 Inc. and MediBeacon Inc., the St. Louis region is a growing hot spot for innovative, new and expanding companies.
These companies include leaders in the areas of plant and life sciences as well as financial services, information technology, advanced manufacturing and even rapidly growing pet care industries.
Significant healthcare and biotechnology institutions in the region include Pfizer, Donald Danforth Plant Science Center, Solae Co. and Sigma-Aldrich.
As capital injections slow in the coastal markets, St. Louis’ startup scene is thriving, attracting talent, new companies and investors from across the globe. According to Forbes, the city was named the fastest-growing metropolis for startups in 2016.
Analytical website fivethirtyeight.com reaffirmed St. Louis’ increased appetite for startups, attributing the uptick in part to a combination of strong “incubators, accelerators, venture funds and tax breaks.”
In the past few years, more than 700 bioscience companies have settled in the region and have connected with the city’s universities and medical institutions, accounting for more than 15,000 local jobs. Yet healthcare is the true standout in terms of the majority of new businesses, with more than one-third of the total new businesses launched in Missouri in 2016 falling under the burgeoning sector.
Several recent major company announcements are changing the office market landscape. Microsoft announced that it would make a transformative move from the suburban submarket of Creve Coeur to the Midtown submarket. The tech giant plans to open a new regional headquarters and be the lead tenant in a new building at the Center of Research, Technology and Entrepreneurial Exchange (CORTEX) innovation district. Microsoft will house 150 employees in 29,000 square feet within Cortex’s new $21 million tech building, developed by Wexford Science and Technology and slated for delivery in 2018.
Founded by several area universities, the CORTEX district has transformed St. Louis’ previously struggling Midtown area into a highly sought after 200-acre, multi-phase development boasting rents in the mid-$20s per square foot triple net, negligible vacancy and an impressive national tenant roster.
The $2.1 billion master plan calls for 4.5 million square feet of mixed-use space and an estimated 13,000 technology jobs. So far, 1 million square feet of space has been constructed, renovated or is under construction, and 2,500 employees are working tech jobs in the district.
Notable tenants include Pfizer, Ikea, Washington University Genome Center, Washington University School of Medicine and Cambridge Innovation Center, Purina, Boeing and Square, among others. Upon completion, CORTEX will offer a walkable, 360-degree lifestyle experience with a mix of residential, retail, hotel, office and leisure facilities.
Other recent announcements include:
• Nestlé USA’s relocation of its headquarters from California to northern Virginia that will result in IT operations being centralized in St. Louis; 300 net jobs will be added.
• Advertising company LockerDome has announced the hiring of 300 more employees for its new Washington Avenue headquarters offices.
• KPMG is adding 175 new information technology jobs to its downtown office at 10 S. Broadway.
• Clayton-based Enterprise will move nearly 450 of its 2,000 IT staff to a 116,000-square-foot building recently acquired at 2281 Ball Drive in Maryland Heights.
Additionally, downtown’s T-REX innovation center is poised to become the Midwestern hub of India’s largest business incubator, T-Hub, due to a trade agreement between the St. Louis Regional Chamber and the state of Telangana in India. It has been named 39 North — after the latitude that cuts through the region — and will encompass nearly 600 acres in Creve Coeur.
Plans call for St. Louis’ top plant science and ag-tech companies to reside at the center, including Monsanto Co., the Donald Danforth Plant Science Center, BRDG Park and the Helix Center Biotech Incubator. AgIdea, an Argentinian research and development company in the ag-tech sector, has also selected St. Louis for its future North American headquarters.
City plans for growth
In order to continue to survive and thrive, St. Louis’ business leaders and policy makers know that an aggressive growth plan is vital to the city’s future success. The goal, according to Downtown STL Inc., is to add 1,000 new companies and 10,000 new workers to downtown by 2025. The strategy revolves around creating a downtown environment that offers a true live/work/play lifestyle that many employees desire. Plans have been developed to improve daytime office density as well as residential density in order to keep areas active after hours, particularly downtown and in the CORTEX district.
The downtown community has benefitted from public and private investment of over $5 billion since 2000. Development plans are already underway for more than 2,700 additional new housing units.
As the workforce shifts from Baby Boomer bosses to millennial managers, cities must plan for their impact on everything from commercial real estate to housing to technology and physical infrastructure.
With affordable housing, strong job growth and a flurry of new developments, the Gateway to the Midwest stands poised to claim its place among the top metropolises of tomorrow.
— By Jim Mosby, Executive Managing Director, Cushman & Wakefield, and Danielle Grubbs, Senior Associate. This article first appeared in the August 2017 issue of Heartland Real Estate Business magazine.