St. Louis Industrial Market – 4Q24
The region’s labor market remains historically strong despite shifting macroeconomic conditions. November’s unemployment rate of 3.9% was 30 basis points lower than the 10-year historical average of 4.2%. Year-over-year, job growth has been most notable in the services sector, which continues its recovery from the pandemic. Education and Health led all industries in job gains over the past 12 months, followed by Financial Activities and Leisure and Hospitality. Industrial firms are recalibrating their workforce needs. Locally, employment grew in two of three key industrial sectors: Manufacturing by 2.0% and Trade/Transportation/Utilities by 0.4%.
Net absorption in the fourth quarter of 2024 totaled 181,615 SF, following 2.1 MSF in 3Q24—the highest quarterly total since 2Q22. The construction pipeline currently stands at 3.2 million SF, with 79% consisting of build-to-suit (BTS) projects. Speculative construction is expected to remain limited in 2025. Vacancy held steady at 4.6%, supported by positive net absorption from various mid-sized deals and only 150,000 SF of new deliveries to the market. This stable vacancy rate underpins rental rate growth fundamentals and is likely to encourage developers to break ground in 2025. Year-over-year, asking rental rate growth for the overall market was negative, declining by 3.1%.
- Average Asking Rent: $5.76/SF
- Vacancy Rate: 4.6%
- Net Absorption: 181,615 SF
St. Louis Office Market – 4Q24
The region’s labor market remains historically strong despite shifting macroeconomic conditions. November’s unemployment rate of 3.9% was 30 basis points below the 10-year historical average of 4.2%. Year-over-year, job growth has been most significant in the services sector, which continues its recovery from the pandemic. Education and Health led all industries in job gains over the past 12 months, followed by Financial Activities and Leisure and Hospitality. Professional business and technology firms are recalibrating their labor needs. Locally, employment in two of the three office-occupying sectors declined compared to the previous year.
The market tightened during the quarter with 264,183 SF of net absorption, bringing the year-to-date total to negative 48,150 SF. This marks two consecutive quarters of positive absorption, as tenants capitalize on favorable conditions. The Clayton submarket closed 2024 with 460,864 SF of net absorption and is projected to lead all submarkets in 2025. The non-owner-occupied construction pipeline has remained dormant since the third quarter of 2022, with only 41,000 SF currently under construction. Vacancy decreased by 40 basis points to 13.5% during the quarter and is expected to remain steady over the next year as the market continues to recalibrate. Year-over-year, asking rental rates remained essentially flat, declining by 0.4%.
- Average Asking Rent: $22.71/SF
- Vacancy Rate: 13.5%
- Net Absorption: 264,183 SF
St. Louis Retail Market – 3Q24
Consumer habits combined with market demands for retail space will continue to be a driving force behind the acquisition and use of space. Location has always been a dominating factor in site selection, but a lack of desirable locations is leading to more flexibility in prototypes. Retailers are adjusting to smaller formats both in the food service and soft goods retail sectors. They are also moving away from a strict template as far as size and store frontage width, and stressing design of the space and how it translates to the brand, marketing and relevance among social media and consumers. We anticipate this continues to be a priority for retail and restaurants as vacancy will remain tight for the foreseeable future.
- Average Asking Rent: $14.82/SF
- Vacancy Rate: 3.6%
- Net Absorption: 132,106 SF
St. Louis Capital Markets – 4Q24
The pace of investment activity in the St. Louis market slowed during the past four quarters, with sales volume totaling $2.1 billion, a decrease of 32.7% compared with the prior five-year average. As a leading second-tier market, the St. Louis Metropolitan area ranked seventh out of the largest 13 Midwest markets in total sales volume during the past 12 months, with multifamily and retail assets combining for 62.0% of the Metro’s activity.
- 12-Month Capitalization Rates: 7.5%
- 12-Month Total Sales Volume: $2.1Billion
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