Vacancies are down and absorption is up in St. Louis’ industrial real estate market. That’s the good news from the fourth quarter industrial report from Cushman & Wakefield|Gateway Commercial.
How strong was St. Louis’ industrial market last year? Gateway Commercial reported that the St. Louis market saw a record amount of industrial absorption in 2014 and that vacancy rates are down to pre-recession levels.
The overall industrial vacancy rate in the St. Louis market fell to 6.5 percent by the end of 2014, according to Gateway Commercial. That is nearly two percentage points lower than where this figure stood at the end of 2013, and ranks as the lowest industrial vacancy rate here since 2006.
The low vacancy rates, though, haven’t had much of a positive pull on rental rates in this market. According to Gateway Commercial, the direct average asking rent at the end of 2014 hit $3.60 a square foot. That is only a bit higher than in 2013. It is also much lower than the average asking rent of $4.68 a square foot for this sector in 2006, when the industrial vacancy rate stood at a similar level.
Leasing activity was strong, though, in 2014. The St. Louis industrial market absorbed more than 5.5 million square feet last year, 19 percent higher than the market’s five-year average of 4.6 million square feet.
The Earth City submarket was especially strong, accounting for 30 percent of the overall leasing activity in the market. The Metro East submarket came in second, with 17 percent of the overall leasing activity here.
The good news has spilled over into the new-construction sector of the industrial market. Gateway Commercial said that the first speculative industrial building since 2008 is currently under construction in the Metro East submarket.