How big of an impact can one company have on a submarket’s vacancy rate? It depends on the size of the company. And in downtown St. Louis, few companies had as a big presence as AT&T.
So when the communications giant moved from One AT&T Center in the heart of the downtown St. Louis CBD, it left a big hole. As Colliers International reported in its most recent St. Louis office report, AT&T’s move from downtown caused the office vacancy rate in the city’s CBD to jump from 11.6 percent in the fourth quarter of 2013 to 12.7 percent in the first quarter of this year.
But here’s the surprising part: The St. Louis region’s overall office vacancy stayed relatively flat on a year-over-year basis despite AT&T’s move. This rate stood at 12.6 percent at the end of the first quarter of 2013. At the end of the first quarter of this year, that number had risen only slightly to get to 12.7 percent.
And Colliers has good news for brokers working the St. Louis market: It expects office leasing activity to pick up throughout the rest of 2014 and into 2015 as economic conditions in the region and the nation continue to improve.
AT&T moved its employees from the 44-story One AT&T Center on 900-928 Pine Street in downtown St. Louis to other properties across the St. Louis region, vacating about 700,000 square feet of office space in the heart of downtown. AT&T officials made the move in part because many of its employees were now working from home or remotely and it no longer needed as much central office space.
That left a hole in the CBD. But other St. Louis-area submarkets have seen their vacancy rates fall, according to Colliers. Asking rents, though, have remained mostly flat. Colliers reports that in the first quarter of 2013, asking rents in the St. Louis-area office market stood at $17.55 a square foot. They had fallen a bit, to $17.53 a square foot, at the end of the first quarter of 2014.
Colliers says that Class-A rental rates are averaging $21.38 a square foot, while Class-B rents are at $16.35 a square foot.
According to Colliers’ report, the Midtown submarket saw nearly 81,000 square feet of positive absorption in the first quarter of 2014. Much of this is because of the Cortex Innovation Community, which continues to attract start-up tech companies such as TechShop.
Year-over-year, the West County and North County submarkets saw the biggest decreases in office vacancy rates.