New Development, Healthy Leasing Activity Powers St. Louis Retail Market
Retail development in the St. Louis metro area continues to gain momentum. Rental rates are strong, with triple-net asking rents averaging $12.30 per square foot, and are expected to trend upward as the retail market continues to grow. Absorption of existing product along with multiple new developments has created a positive forecast for the St. Louis retail market.
In the second quarter of 2016, the St. Louis retail vacancy rate dropped to 5.9 percent from 6.1 percent the previous quarter with positive net absorption of 449,056 square feet.
Leasing ramps up
Contributing to the healthy retail market are several tenants moving into large blocks of space including two 41,921-square-foot Walmart Neighborhood Market stores now open in St. Peters. Among other store openings:
• At Home has announced two 100,000-square-foot locations on the site of a former Walmart in Town & Country and a former K-Mart in O’Fallon, Mo.
• Academy Sports will open two 62,000-square-foot locations in Manchester and O’Fallon, Ill.
• Camping World will move into 34,710 square feet in Wentzville.
• Stein Mart will occupy 31,000 square feet in Town & Country.
• Bob’s Discount Furniture has signed a 28,035-square-foot lease in Manchester and a 30,000-square-foot lease at The Crossings at Northwest in St. Ann.
• Menards recently opened a 215,000-square-foot, two-story store in Richmond Heights.
• Hobby Lobby has a 55,000-square-foot store under construction in South County.
• A 19,250-square-foot Cavendar’s Boot City is being built in Chesterfield Valley.
• Gold’s Gym is opening a 65,932-square-foot store in Crestwood, and K&G Fashion Superstore recently began occupying 16,028 square feet at Clocktower Place in Florissant.
The St. Louis retail market has also experienced several store closures in the second quarter, but we are still seeing overwhelming activity and heavy interest in new opportunities that have entered this tight market.
Store closures include a 100,000-square-foot Kmart in Bridgeton; four 15,000-square-foot Hancock Fabrics stores; multiple 42,000-square-foot Sports Authority stores throughout metro St. Louis; and select Office Max/Office Depot stores averaging around 20,000 square feet each.
Developers get to work
In addition to the absorption of existing product, over the past four quarters a total of 1.2 million square feet of retail space has been built in St. Louis, and developers continue to be active with several new projects on the drawing board.
Tennessee-based GBT Realty Corp. is planning a $54 million retail project on 28 acres in St. Peters at the northeast corner of I-70 and Mid Rivers Mall Drive. The Shoppes at Mid Rivers will total 300,000 square feet and include three anchor tenants, five to seven junior anchors, small shop space and multiple outparcels.
Local architecture firm The Lawrence Group has revealed plans to break ground on City Foundry Food Hall & Market at the former 14-acre Federal-Mogul brake plant in mid-town just south of St. Louis University. This mixed-use development will include office space, a residential tower, structured parking, retail and a food hall to be located in the
Federal-Mogul factory building.
Similar to New York’s Chelsea Market and Philadelphia’s Reading Terminal Market, City Foundry Food Hall & Market will feature approximately 40 spaces for retail, two dozen food-related kiosks and multiple full-service restaurants that will be a first for the region. This exciting development builds on the success of the ever-growing Cortex Innovation District and the recently opened IKEA a few blocks west.
Union Station transforms
Lodging Hospitality Management (LHM) has announced plans to add a $45 million aquarium to St. Louis’ historic Union Station. The 75,000-square-foot aquarium will be located in the former mall area of Union Station and will anchor the development and transform Union Station into a family attraction destination similar to Chicago’s Navy Pier.
The station opened in 1894 and was once the world’s largest and busiest train station. It was converted in the early 1980s into a hotel, shopping center and entertainment complex, and will continue that legacy.
Other recent plans for the National Historic Landmark, in addition to the 539 existing hotel rooms, will include a 200-foot Ferris wheel and dining and recreation areas under the facility’s train shed. LHM purchased the property in 2012 for $20 million and has invested $40 million in upgrades since the acquisition.
Capital Land Co., the developer behind Edwardsville Crossing, one of the largest retail developments in Edwardsville, Ill., has an additional 120 acres under contract in neighboring Glen Carbon. The developer is currently going through the zoning and entitlement process.
A 50-acre site across from Edwardsville Crossing is slated for the delivery of three anchor tenant boxes, multiple junior anchor bays, small shop space and up to 12 outparcels for restaurants and pad-site retailers.
Just south of this on the east side of Route 159 at the intersection of I-270, a 70-acre tract will also deliver a large anchor tenant pad along with multiple junior anchor bays and pad sites along Hwy 159. The Edwardsville/Glen Carbon retail trade area is one of the most highly sought-out retail corridors in Southwest Illinois.
Currently, there is 560,000 square feet of retail space under construction in metro St. Louis, and the property sector’s performance and vitality continue to trend upward.
— By Bill Barnes, principal, NAI DESCO. This article first appeared in the September 2016 issue of Heartland Real Estate Business magazine.