Falling Vacancies, Strong Demand Spur Industrial Construction in St. Louis
The St. Louis industrial market is in the midst of historic development and deal making. As witnessed in many markets, “big bombers” — industrial facilities 500,000 square feet and larger — are coming out of the ground at a record pace. Better still, they are being leased and pre-leased at a record pace.
By all accounts, the driver here is the new e-commerce phenomenon with major players like Amazon taking nearly 1.5 million square feet in the Metro East submarket. The two major developments in this submarket are Gateway Commerce Center, developed by TriStar, and the adjacent Lakeview Commerce Center, developed by Panattoni.
In addition to Amazon, Gateway Commerce Center boosts a host of big box users such as P&G, Unilever and Saddle Creek Corp, the latter of which took 673,137 square feet last year at the Center. Tri-Star is in the process of completing two additional buildings in the Center: Gateway East 520 containing 520,000 square feet, and Gateway East 624 containing 624,000 square feet.
In neighboring Lakeview Commerce Center, Amazon occupies additional space along with World Wide Technologies, occupying 769,500 square feet in the Center.
Analyzing the data
Let’s drill down further and let the numbers speak for themselves.
The overall industrial vacancy rate in metro St. Louis dropped to 6.5 percent at the end of the third quarter. Absorption year-to-date has totaled more than 3.5 million square feet despite a whopping 3.2 million square feet of new inventory this year.
This velocity has captured the attention of local, established St. Louis developers as well as new names to our market.
In north St. Louis County, local developer Clayco is in the midst of bringing 538,000 square feet out of the ground at North Park, a 550-acre business park located minutes from Lambert-St. Louis International Airport. That new building will join Schnuck Markets, which is now occupying a new 915,000-square-foot distribution center and SKF in a new 311,000-square-foot facility, both at North Park.
Adding to its Metro East successes, Panattoni is building full blast with a new 548,000-square-foot distribution center in Aviator Business Park, developed at the site of the former Ford plant in north St. Louis County.
KP Development is another longtime St. Louis-based developer that recognized opportunity in a closed auto plant. Once the location of the Chrysler Plant in south St. Louis County, the 295-acre Fenton Logistic Park has been reborn with the first industrial building, containing 158,400 square feet, scheduled for delivery in mid-2017.
Also in the southern half of the our market, this time in south City, nationally recognized developer Phil Hulse and his Green Street St. Louis company has built a new speculative 125,000-square-foot distribution building in River City Business Park, located a stone’s throw from the Mississippi River. Hulse plans to develop over 700,000 square feet at River City and breathe new life into a former and long vacant heavy industrial site.
New to our market is NorthPoint Development, headquartered in Kansas City but gaining ground in the St. Louis development game. NorthPoint has been active in the Hazelwood Logistics Center, located near Lambert-St Louis International Airport, with three separate projects: a recently completed 79,000-square-foot office/warehouse building, which is 80 percent leased; an under-construction 420,000-square-foot distribution center; and a planned 500,000 square foot distribution center, currently undergoing grading.
On top of that, NorthPoint is completing a 1.1 million-square-foot distribution center in Wentzville, a western suburb of St. Louis and location of the GM plant. This new distribution center is 100 percent leased and will provide warehousing for the GM Plant and GM suppliers.
Not all development in the St. Louis market is speculative. Boeing is completing a 367,000-square-foot expansion of its tooling center near the company’s north St. Louis County campus.
Meanwhile, Duke Realty is constructing a 714,780-square-foot distribution center for Reckitt-Benckiser and a 250,000-square-foot distribution center for Best Buy, both in Premier 370, Duke Realty’s business park located in St. Charles County just west of St. Louis.
All this new construction by local, regional and national developers — both speculative and user-driven — points to the emergence of St. Louis as a serious contender in the rapidly expanding distribution center arena.
-By Allen Klippel, Senior Vice President, NAI DESCO. This article first appeared in the January 2017 issue of Heartland Real Estate Business magazine.