An influx of new workers and residents is expected in the Clayton submarket of St. Louis thanks to more than $630 million in office, residential and mixed-use development that is in the planning stages or currently under way.
Health insurer Centene Corp. has announced that it will build a new 16-acre, $450 million campus expansion on the east edge of downtown Clayton at Hanley Road, Forsyth Boulevard and Carondelet Plaza.
Jim Mosby, Cushman & Wakefield
The project, set to break ground early this year, stands to effectively shift the center of Clayton while adding a mixed-use, Class A office-anchored business and lifestyle development to the submarket. Delivery of the 500,000-square-foot Phase I tower is set for late 2019.
At the opposite end of the submarket, Koman Group expects to break ground on its proposed 330,000-square-foot, 14-story office and retail project, situated at the corner of Forsyth and Brentwood boulevards. Just across the street is another $68 million, 233,000-square-foot office project likely to begin in 2018.
Proposed by Jared Novelly and Apogee Associates, the project would bring the total proposed office development to a robust 1 million square feet of new Class A space in downtown Clayton.
As the premier office submarket in St. Louis, Clayton boasts nearly 7 million square feet of office space in 62 existing office buildings. Located at the heart of the St. Louis metropolitan region in the exclusive central West County corridor, more than 62,000 people work in Clayton.
In addition to Centene, several other notable corporations call Clayton home, including shoe retailer Caleres, wealth management firm Moneta Group, and Enterprise Holdings, the parent company Enterprise Rent-A-Car, National Care Rental and Alamo Rent a Car.
Danielle Grubbs, Cushman & Wakefield
Over the past three years, absorption in Clayton’s office market has been strong but constrained by lack of available space. Yet even with limited space, Clayton’s vacancy rate fell from 12.7 percent in 2013 to 7.7 percent at the end of 2016, outperforming the St. Louis market as a whole for the past decade. The vacancy rate across the metro area at the end of the fourth quarter stood at 12 percent.
Large blocks of Class A office space in Clayton are few and far between, with Class A vacancy sitting at 5 percent in the fourth quarter. That figure is expected to dip below 5 percent in 2017.
It has been more than two years since a contiguous 30,000-square-foot space has been available, and a user looking for upward of 15,000 contiguous square feet has no Class A options in today’s market.
Asking rates in Clayton average 24 percent higher than the rest of St. Louis, with the highest asking rates pushing $33 per square foot on a gross basis, over $3 per square foot higher than anywhere else in St. Louis.
With active tenant requirements totaling more than 1 million square feet of demand — and room to run on already record-breaking rental rates — Clayton has established itself as ground zero for St. Louis’ vertical expansion.
Magnet for Millennials
For those seeking a metropolitan lifestyle, Clayton not only features a vibrant downtown business district, but also high-end apartment living options, which attract the Millennial workforce as well as Boomers seeking a mix of work and play in an urban setting.
More than half (56 percent) of Clayton’s population of 34,806 is under the age of 35. The 45-75 age cohort is the next largest demographic group.
With a lack of inventory and price points high enough to justify new construction, several large multifamily developments totaling more than 1.96 million square feet are propelling growth in the area. Approximately $168 million in multifamily housing development is in progress.
One of these is a $70 million, 26-story luxury retail and apartment tower, located at 212 South Meramec Avenue. Owners CA Ventures of Chicago and White Oak Realty Partners of Rosemont, Ill., plan for 250 apartments and ground-floor retail space. The target date for completion is the fourth quarter of 2017.
Also, a $55 million project by Covington Development calls for 229 apartments in a new, five-story Vanguard Clayton building at 8500 Maryland Avenue, next to Caleres’ headquarters.
Nearly 5,000 square feet of retail space facing Maryland Avenue is planned as well. Delivery is estimated in the fourth quarter of 2017 or the first quarter of 2018.
Opus Development’s 25 North Central project is comprised of a six-story apartment building with 120 units and 13,000 square feet of first-floor retail at the southwest corner of North Central and Maryland avenues. Completion of the $41 million project is expected this March.
Convenience is essential
Increasingly, both Millennials and Boomers are targeting 360-degree lifestyles that allow them to reside near their workplace, with amenities and cultural and entertainment options within easy reach.
In this age of convenience and with the city’s expected continued growth across all commercial real estate segments, the cranes of Clayton stand to deliver on the promise of today’s lifestyle trifecta: live, work and play.
-By Jim Mosby, Executive Managing Director, Cushman & Wakefield, and Danielle Grubbs, Associate, Cushman & Wakefield. This article first appeared in the January 2017 issue of Heartland Real Estate Business magazine.