Market Reports

E-Commerce Drives Demand for Modern Bulk Distribution Centers in Kansas City

by Jeff Shaw September 3, 2015

E-commerce and business-to-consumer companies could overtake the automotive industry when it comes to driving growth in Kansas City’s modern bulk distribution segment of the industrial market. Auto suppliers filled the first wave of new space in the Kansas City industrial market. But now that those needs have primarily been met, new industry sectors are needed to fill the second wave of development. E-commerce and business-to-consumer companies could be the dominant users. These companies are capitalizing on the fact that 85 percent of the U.S. population can be reached from Kansas City in a two-day truck drive, according to KC Smart Port, a nonprofit organization that works to attract freight-based companies to the Kansas City area. Through in-house transportation studies, KC Smart Port is coming to the conclusion that it strategically makes sense for the distribution centers of e-commerce companies to be located in Kansas City. Recommendations from UPS, FedEx and third-party consultants also help e-commerce companies — located on both the East and West coasts — make that decision. Business-to-consumer companies operating a one-, three- or five-building model find that Kansas City works well logistically as it is in the middle of the country. Inherent Advantages Locating in Kansas City allows …

September 3, 2015

Market Reports Midwest Midwest Market Reports Missouri Retail

Hungry to Expand, Fresh-Format Grocers Boldly Enter St. Louis Market

by Jeff Shaw August 27, 2015

Family-owned grocers Schnucks and Dierbergs solidified their position as the primary grocers across the St. Louis metro area when Schnucks acquired 57 stores from National Supermarkets in 1995. But after several years of these two chains dominating the grocery sector, an influx of fresh-format grocery stores is shaking up the market by offering shoppers fresh, local, organic — and in some cases more affordable — whole food choices. These new chains — typically half the size of traditional grocers — appeal to a younger customer, as well as those looking to supplement their grocery shopping or find items for special occasions. Consumers interested in the offerings of fresh-format grocers are willing to drive farther to shop at their stores. New Entrants Abound Fields Foods, a “homegrown” fresh-format grocer, opened its first location in the Lafayette Square neighborhood in January 2014. The newly constructed 37,000-square-foot, stand-alone building is just south of downtown’s central business district. The grocer markets produce provided by farmers within 100 miles of the store, and also features a wine bar and personal shoppers. This unique, full-service grocer is locally owned and was the first fresh-format store to enter the metro area. Fields Foods has plans to expand …

August 27, 2015

Market Reports Midwest Midwest Market Reports Missouri Retail

Shopping Center Developers are Increasingly Active in Metro St. Louis

by Danielle Everson May 14, 2015

Statistically speaking, retail real estate market conditions have remained relatively stable in St. Louis throughout 2014 and early 2015. Close to 88,000 square feet of new retail space was delivered in the first quarter of this year, resulting in a slight uptick in vacancies. At the end of the first quarter, the overall vacancy rate stood at 7.3 percent, up 10 basis points from the prior quarter, according to CoStar Group. The pace of new development is expected to escalate this year, with several new projects on the drawing board: • Pace Properties is under contract in Midtown — across from the IKEA that will soon open — to develop Midtown Station. The project will include 150,000 square feet of retail space. • Summit Development Group is under contract in Richmond Heights to develop a mixed-use project totaling 120,000 square feet that will feature a combination of restaurant and retail space — possibly even a grocer — and a hotel. The project will be known as The Crossings at Richmond Heights. • The city of Kirkwood has approved plans to redevelop the southeast and southwest corners of Lindbergh Boulevard and Manchester Road to make way for a Fresh Thyme Farmers …

May 14, 2015

Market Reports Midwest Midwest Market Reports Missouri Office

A New Round of Office Development Appears Imminent in Metro St. Louis

by Danielle Everson February 26, 2015

The big story in the St. Louis office market is that available Class A space continues to become more scarce. As we watch the larger blocks of space being absorbed, and as Class A asking rates continue to increase, the probability for new development seems inevitable, leaving some property owners wondering if they should move forward and build. Although little new office construction is underway, the tightening market has undoubtedly prompted conversations. Expect projects to surface once developers land their first major tenant. The most likely submarkets for new development are in Clayton and West County, where many tenants requiring more than 25,000 contiguous square feet of office space are looking. You cannot have a full recovery for office occupancy until employment increases and the abundance of empty desks is absorbed. The local unemployment rate reached its peak of 10.9 percent in February 2010. The good news is that the unemployment rate hit a six-year low of 5.4 percent in October 2014. This significant drop can be attributed to the gain of over 11,000 jobs since January 2014 in the professional and business services sector. The St. Louis office market ended the year at a 10.5 vacancy rate, with Class …

February 26, 2015

Industrial Market Reports Midwest Midwest Market Reports Missouri

Speculative Industrial Construction is Making a Comeback in St. Louis Market

by Danielle Everson February 12, 2015

After a recession-induced lull, speculative construction is back in full swing in the St. Louis industrial sector. Record-setting absorption in 2014 drove vacancy rates to near record lows, and spurred speculative construction on both the Missouri and Illinois side of the Mississippi River. With activity on both fronts, it’s clear that the St. Louis industrial market is well past recovery mode and into growth mode. The St. Louis industrial market posted net absorption of 5.2 million square feet in 2014, passing the all-time record for annual absorption set back in 2005 by more than 20 percent. This is more than double the square feet absorbed in 2013, which itself was a banner year. The positive absorption figure has significantly affected the market’s overall industrial vacancy rate, dropping it to 6.3 percent — the lowest rate since 2005. The Class A vacancy dropped to an impressive 4.1 percent and modern bulk vacancy rate stands at 4.6 percent. Just as in 2006-2007 when nearly 5 million square feet of new construction was delivered, St. Louis is seeing a surge of new construction with these historic vacancy rates. The lack of available industrial space has drastically changed the landscape for tenants during the …

February 12, 2015

Industrial Market Reports Midwest Midwest Market Reports Missouri Uncategorized

E-Commerce, Auto Industries Drive Speculative Development in Kansas City

by Danielle Everson January 7, 2015

The Kansas City industrial market continues to be an incredibly strong performer. At the end of the third quarter of 2014, the industrial vacancy rate stood at a tight 6.1 percent. Absorption totaled more than 2.5 million square feet during the first nine months of the year, while new deliveries were slightly over 2.6 million square feet in the same period. Let’s examine some contributing factors that are encouraging new deliveries while still driving vacancy rates down and absorption up. Spec Is King The biggest story in the Kansas City industrial real estate market during the first three quarters of 2014 was the delivery of over 2.5 million square feet of Class A distribution facilities on a speculative basis. It can be argued that, in the past, many prospective tenants considered locating a distribution center in Kansas City, but they ultimately selected a different market based on a lack of available inventory and the inability of some companies to wait on the extended timetable for a build-to-suit project. Developers that took notice of this trend and reacted by delivering space to the local market are currently being rewarded for their actions. Much of the speculative development in 2014 centered around …

January 7, 2015

Market Reports Midwest Midwest Market Reports Missouri Multifamily

Shades of 2007? Kansas City Apartment Vital Signs are Remarkably Strong

by Danielle Everson October 8, 2014

Today’s Kansas City apartment fundamentals resemble the height of the 2007 market as jobs, deliveries, building permits, occupancy and rents are up. The availability of financing for developers and investors, along with the temperate economic recovery, portends further operational strength and investment activity in the near term. Job growth in the metro area this year has been positive. The end of the first quarter saw a full rebound of the job losses that occurred in late 2013. Through the first half of 2014, total payroll employment expanded by 5,200 jobs, an increase of 0.5 percent compared with the end of 2013. The local unemployment rate at the end of the second quarter of 2014 was 6.3 percent. Some 4,200 additional new jobs are projected for the second half of 2014, which would bring the area nonfarm job count to only 1,800 under its 2007 high of 1,018,300. Supply and Demand Apartment developers are expected to deliver new product in time to meet the demand created by the new jobs. By year’s end, construction is scheduled to be completed on 3,750 new apartments for multifamily properties of 100 or more units. New construction has been ramping up since the first quarter …

October 8, 2014

Market Reports Midwest Midwest Market Reports Missouri

A Rebirth of Kansas City’s Downtown Multifamily, Office Market

by admin September 24, 2014

It’s a trend that’s happening across the country. Millennials are fleeing the suburbs of their childhood and choosing to work and live in the urban areas of every major American city. But there’s a unique twist to this story in Kansas City. While Millennials are moving downtown in droves, many have a reverse commute. Most Fortune 500 companies have remained in the suburbs after their flight from downtown beginning in the 1970s. In addition, several large companies have jumped the state line due to favorable tax incentives. In the second quarter, the downtown office vacancy rate stood at an unhealthy 29.9 percent. Only one office submarket posted a higher vacancy rate. Meanwhile, the leading submarket, South Johnson County, recorded a 12.8 percent vacancy rate. It’s been difficult for older office buildings with smaller floor plates of 10,000 to 15,000 square feet to compete as companies look for larger floor plates of 25,000 to 30,000 square feet. Companies are also finding that surface parking in the suburbs is more economical. Building Conversion Wave The good news is that a slow reversal in both the multifamily and office markets is occurring as older and historic office buildings are adapting to the demands …

September 24, 2014

Market Reports Midwest Midwest Market Reports Missouri

Kansas City Industrial Market Rides Development Wave

by admin September 17, 2014

It’s been a remarkable 18-month run in the Kansas City industrial market. Developers are being rewarded for their patience and long-term land positions, and larger tenants finally have several options from which to choose among Class-A distribution facilities. In January 2013, the vacancy rate in the Kansas City industrial market was a tight 6 percent, with barely any product available for users searching for modern distribution space of 200,000 square feet or more. At that time, I made some predictions about new construction, vacancy and absorption. Let’s review what happened. Market Drivers Kansas City recorded more than 3.5 million square feet of positive absorption in 2013 alone, adding another 800,000 square feet during the first two quarters of 2014. This demand was driven in large part by the automobile suppliers, online retailers and by governmental agencies. At mid-year, the vacancy rate for Kansas City warehouse product had fallen to 5.6 percent, well below the national average of 7.3 percent. Average lease rates have moved up to pre-recession levels, as regional distributors and third-party logistics companies attempt to secure large blocks of space for their national footprints. In 2013, the market delivered 2.4 million square feet of new industrial product, with …

September 17, 2014

Market Reports Midwest Midwest Market Reports Missouri

Why Real Estate Investors are Increasingly Drawn to St. Louis

by admin August 28, 2014

Momentum continues to build in the St. Louis commercial real estate investment market across all major product sectors. As private and institutional investors search for higher yields, they are drawn to secondary markets like St. Louis. Investors are seeing a yield premium of 100 to 150 basis points as measured by the initial cap rate. Office Market Grows Hotter The suburban office sector has generated the most momentum, building on a strong 2013. Suburban office investment sales activity could exceed $450 million in 2014, which would be a 90 percent increase over 2013. The largest office deal is the sale of Cityplace, an 884,000-square-foot Class A office complex in Creve Coeur that is under contract and expected to close for approximately $141 million. New Boston Fund and the Koman Group are the sellers. The buyer is undisclosed. While the search for higher yields is certainly a factor driving increased suburban office investment activity, another big part of the story is the continued occupancy growth supported by job gains. The St. Louis unemployment rate, which in May 2014 stood at 6.96 percent, is rapidly approaching the pre-recession level of 5.7 percent set in November 2007. Growth in industries such as technology, …

August 28, 2014

Newer Posts

Older Posts