Market Reports

E-Commerce Growth, Restaurant Oversaturation Shape St. Louis Retail Market

by Kristin Harlow September 30, 2021

By Tim McFarland, Sansone Group It is hard to describe 2020 as anything other than a lost year. COVID-19 brought us quarantines, social distancing, masks and plenty of uncertainty. The pandemic pushed our healthcare system to the brink, stressed our supply chain and caused a global economic slowdown. The St. Louis commercial real estate market certainly felt the effects of COVID-19, with retail and hospitality being hit the hardest. The retail sector was turned upside down by lockdowns that transformed homes into virtual offices, mandates that forced the closure of non-essential businesses and capacity restrictions that required restaurants to learn how to survive without dine-in business for a large portion of the year. These factors have caused an increase in vacancy to nearly 5 percent, and average asking rates to soften to $13.02 per square foot, off by 15 cents per square foot from this time last year. Perhaps most intriguing was seeing trends in the retail market accelerated by COVID-19. E-commerce For years now there has been a trend toward e-commerce. That is true now more than ever as the pandemic has accelerated the drive to digital. More than five years of e-commerce adoption was compressed into a three-month …

September 30, 2021

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Kansas City Multifamily Market Poised for More Growth in 2021

by Kristin Harlow February 18, 2021

By Gabe Tovar, John Duvall and Kyle Tucker of NorthMarq The Kansas City multifamily market has proved it is more than resilient in the face of adversity. Throughout 2020, the market ranked consistently in the top 10 of 30 markets tracked by Yardi. It logged higher occupancies and rent growth, all while welcoming a record level of new supply. That stellar performance is likely to attract even more capital to the market in 2021. The story dominating the Kansas City market in recent years has been its booming development pipeline. Despite shutdowns and delays caused by the pandemic, developers delivered nearly 5,900 new units in 2020. That volume represents a record-high growth rate of 4.1 percent added to Kansas City’s market-rate inventory, compared with an annual average rate of 2 to 3 percent throughout the past decade. Looking ahead, that supply wave has crested, and the pipeline is shifting to the suburbs. NorthMarq forecasts completions over the next two years to average closer to 4,000 units with 70 to 75 percent of those opening across the suburban submarkets. In recent years, between 40 and 50 percent of total deliveries were concentrated in the urban core, so while this data supports …

February 18, 2021

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Kansas City Industrial Market Slated to Continue Positive Momentum in 2021

by Kristin Harlow February 11, 2021

By David Zimmer, SIOR, Newmark Zimmer The industrial real estate market in the metropolitan Kansas City area ended 2020 on a high note. 2021 will pick up right where 2020 ended, with no outward or visible signs of a slowdown. New industrial construction is visible in every geographic sector of the metro area, with upwards of 2.5 million square feet of buildings under construction. Without exception, all these are high cube, modern distribution-type facilities intended to capture the ever-growing e-commerce, logistics and food and beverage sectors of the economy. With the one possible exception being the 880,000-square-foot office and distribution building for Urban Outfitters in Wyandotte County, all industrial construction underway is on a speculative basis with lease-up taking place before the buildings are placed into service. Development activity is being sponsored by both local development entities and regional and national developers who state that Kansas City’s geographical central location, coupled with a skilled workforce and extensive transportation infrastructure, are the primary reasons why Kansas City has attracted numerous companies to establish major distribution operations over the past decade. Investor appetite In addition to new development activities, the investor market for industrial properties has also reached record levels. In one …

February 11, 2021

Industrial Market Reports Midwest Midwest Market Reports Missouri

St. Louis Market Poised to Capitalize on Industrial Demand

by Kristin Harlow January 28, 2021

By Jake Corrigan, Sansone Group As we reflect on the tumultuous year of 2020 and the COVID-19 restrictions that decimated the retail real estate sector, those of us on the industrial side of the equation are breathing a sigh of relief. While there have been small pockets of industrial users and owners that have been adversely affected, the industrial market has remained strong as a sector. We anticipate this trend to continue. Statistics continue to show the conversion of the brick-and-mortar shopper to online is on the fast track. In the last 10 years, the meteoric shift to online shopping has increased from 7 percent in 2010 to just under 25 percent at the end of 2020, according to the U.S. Census Bureau. COVID-19 has forced the otherwise reluctant online shopper to shop for goods they had never thought to have delivered to their door. As a result, online retailers have dramatically improved web-based interfacing and ease of shopping. Active development These realities have supply chain experts, third-party logistics (3PL) companies, owner/users, and of course, mega online retailers clamoring for blocks of vacant space to house their inventories. Developers active in the St. Louis metropolitan statistical area (MSA) …

January 28, 2021

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Kansas City Is Key Location for Warehousing, Distribution

by Kristin Harlow October 22, 2020

By Ora Reynolds and Mike Bell, Hunt Midwest Kansas City industrial real estate is trending upward with no shortage of leasing activity. The city’s location in the heart of America, with 30 percent more interstate miles per capita running through it than any other city, offers efficiency and redundancy for global e-commerce and distribution operations. With over 270 million square feet of existing industrial space in both surface and underground business parks, ample land for new buildings, a skilled logistics workforce and robust power and fiber infrastructure, Kansas City is one of the preferred geographic locations for distribution centers and is poised for continued growth based on these strong fundamentals. The nation’s transition to online purchasing at an unprecedented pace has created ripples of change. The increase in e-commerce is driving demand for more distribution space at a rate of 1.25 million square feet for each $1 billion increase in online sales, and this demand puts an increasing pressure on the supply chain for resiliency. Americans are purchasing everything online, from food and essential supplies to clothing and gifts. In the second quarter of 2020, Americans increased their online purchasing by $211.5 billion, according to the U.S. Department of Commerce. …

October 22, 2020

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Missouri, Illinois Ports Collaborate to Grow Business on Inland Waterways

by Kristin Harlow October 15, 2020

By Mary Lamie, Bi-State Development The key to current and future success for four ports in Missouri and Illinois is collaboration. As ports continue to play a critical role in the global supply chain, the special working relationship between the directors of the ports in St. Louis and Kansas City is helping to keep operations flowing on the inland waterways, even in the midst of the COVID-19 pandemic. Significant investments in each port are also fueling growth at each facility. “Like many others in the freight industry, we are classified as essential. We have access to six Class I railroads, two multimodal harbors, four interstate highways and millions of square feet of warehouse space, plus manufacturing areas and developable sites,” says Dennis Wilmsmeyer, executive director of America’s Central Port (ACP), where the constant level of activity reinforces the significance of all ports as the COVID-19 pandemic continues. With its location just north of St. Louis on the Illinois bank of the Mississippi River and its many transportation and logistical advantages, ACP has attracted 80-plus commercial tenants. Its harbor operators transport more than 3 million tons of goods valued at more than $1.1 billion annually. Though the pandemic has resulted in …

October 15, 2020

Industrial Market Reports Midwest Midwest Market Reports Missouri

Demand Drives Bulk Industrial Construction in St. Louis Region’s I-70 Corridor

by Kristin Harlow October 8, 2020

By Allison Gray, Steadfast City Economic & Community Partners The growing demand for distribution space and the related importance of freight logistics and a healthy supply chain have remained steady even though the COVID-19 pandemic continues to shake up markets across the U.S. and around the globe. This demand is evident in the bi-state St. Louis region, where more inventory of bulk distribution space has been added in the five-year period between 2015 and 2019 than at any other point in St. Louis history, totaling more than 18 million square feet of top-of-the-line modern bulk space. Recent construction and development trends in the bi-state St. Louis area reveal that bulk distribution buildings — those that top 250,000 square feet — have been the highest growing sector for the regional inventory. Since 2016, 94 percent of all bulk construction has been focused along the vital I-70 corridor, while 90 percent of the new major industrial parks with significant construction are located within 10 minutes of the I-70 corridor. This corridor, which includes portions of I-170, I-270 and I-370, is a development hotspot that links Illinois and Missouri. It has emerged as a major logistics corridor supported with more than $600 million …

October 8, 2020

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St. Louis Office Market Remains Flexible Amid COVID-19

by Kristin Harlow October 1, 2020

By Brandon Wappelhorst, Sansone Group In nearly every aspect of our personal and professional lives, 2020 could unequivocally be summarized as certainly uncertain. The rapid onset of the COVID-19 pandemic has taken its toll on the world and has caused significant disruption to everyday life. While likely further down the list of today’s topical issues, the overall effect of COVID-19 on the office market in St. Louis is still to be determined — but it will undoubtedly have an impact. Over the last few years, the commercial real estate market in St. Louis, much like the rest of the country, had been riding a wave of economic success. Demand for office space was high and the region was experiencing record-low vacancy rates, increasing rental rates, positive absorption, increased volume of office sale transactions and new buildings coming out of the ground. Construction of Edge@West, a 110,000-square-foot office building in Creve Coeur, began in late 2019 after a lease was signed with lead tenant SM Global. Breaking ground at less than 25 percent pre-leased was indicative of the strength of the office market at the time. Clayton, the strongest submarket in the St. Louis metro area, also saw the beginnings of …

October 1, 2020

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Office Occupiers in Kansas City Face the Short-Term Cost Versus Long-Term Benefit Dilemma

by Kristin Harlow January 30, 2020

With Kansas City unemployment hovering at cyclical lows around 3.5 percent and the war for talent at an all-time high, companies must leverage their real estate to attract and retain top talent. At the height of the corporate office boom in the late 1990s and early 2000s, the average space per employee ranged from approximately 275 to more than 325 square feet. Today, that number has shrunk to 175 square feet per employee and some predictions see that number moving even closer to 100 square feet. These changes are driven by a recognition that companies are adopting better workplace strategies. These newer, more efficient spaces deliver a more engaging experience for employees and provide a stronger return on real estate costs for companies. There is no denying that these new spaces cost more on a per-square-foot basis. Cushman & Wakefield research reported that the weighted average asking rate for Class A space in the Kansas City market was $25.04 per square foot on a full-service basis in the third quarter of 2019. Yet the net asking rates for the buildings with this new class of product range anywhere from the high $20s to the high $30s. Occupancy costs for new …

January 30, 2020

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Capital Continues to Flow to the City of Fountains

by Kristin Harlow January 23, 2020

Private capital delivered several new investors to Kansas City in 2019 and the new year will undoubtedly see plenty of competitive bidding and elevated pricing. Overall, the investment market continues to be supported by Kansas City’s diversified economy, with job growth weighted on the Kansas side at 2.7 percent over Missouri’s 1.1 percent (as of August 2019). Targeting talent Kansas City’s low cost of living, educated workforce and business-friendly environment attracted several coastal employers to the Heartland. This trend will likely continue in 2020. The U.S. Department of Agriculture announced the relocation of two research agencies from Washington, D.C., representing a landmark win with 525 total jobs. Other wins in 2019 included Honeywell’s centralization of its operational offices from Seattle to Kansas City; Niagara Bottling moving 50 jobs from California; Hostess Brands relocating a distribution center from Illinois; and CarMax announcing 300 jobs for its Customer Experience Center after completing a nationwide search. Annual employment growth (as of August 2019) delivered nearly 20,000 jobs with additions in healthcare, biotech and business services, substantiating the selling point of a diversified economy capable of weathering future storms. Employers have found their fit, but more importantly, their talent is seeing reasons they can …

January 23, 2020

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