John Shuff, Gershman Commercial Real Estate
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 Market, a CVS drugstore and Midwest Regional Bank.
• Opus Development has broken ground on its project in the Central West End, which will include 217 luxury apartments as well as more than 10,000 square feet of retail. Further, Opus is also looking to redevelop the southwest corner of Maryland and North Central avenues in downtown Clayton.
A few other potential development sites have garnered a lot of attention as well. At just under 2.5 acres, the St. Louis Public Library site in South County — located at the corner of Lin Ferry Drive and South Lindbergh Boulevard — is generating a lot of interest from developers and grocery users.
Meanwhile, an unnamed developer, most likely local, is expected to announce plans soon for a 15-acre site in Frontenac, an affluent St. Louis suburb.
The site was formerly occupied by the Shriners Hospitals for Children- St. Louis. (A replacement hospital is slated to open in May on the campus of the Washington University School of Medicine in the city.)
The site is adjacent to Plaza Frontenac mall, which generates over $500 per square foot in sales, second only locally to the St. Louis Galleria, which produces sales of $585 per square foot. Both of these sites will likely be under contract in the near future.
Grocery Wars
The grocery sector also remains extremely active in St. Louis. Fresh Thyme Farmers Market is currently open in Fairview Heights and will soon open stores in Ballwin, O’Fallon and Kirkwood. Meanwhile. Lucky’s Market opened in Ellisville and will be opening its second store in Rock Hill.
The Fresh Market, a chain of gourmet supermarkets, recently opened in Creve Coeur. Fresh Market seeks to penetrate into four or five other markets within St. Louis and St. Charles counties. Walmart’s Neighborhood Market is expected to announce two or more sites for stores in the near future. All of this grocery activity will be the catalyst for new retail development in our market over the next two years.
Other non-grocer retailers that continue to expand and look for new developments include Gander Mountian, PF Chang’s, Tim Horton’s, Total Wine and More, Raising Canes, Chipotle, Panda Express, Chick-fil-A, Hobby Lobby, HereToday and Academy Sports, to name a few.
Currently the St. Louis metro area has more than 650,000 square feet of retail space under construction, of which 515,000 will be delivered in the fourth quarter of 2015 and occupied by only two tenants, Walmart and IKEA. All in all, the retail sector is trending up in metro St. Louis.
— John Shuff, Senior Vice President, Gershman Commercial Real Estate. This article originally appeared in the May 2015 issue of Heartland Real Estate Business magazine.