St. Louis Industrial Market – 2Q25
The region’s labor market stabilized as macroeconomic conditions shifted. May’s unemployment rate fell to 3.6%, 50 basis points below the 10-year historical average of 4.1%. Year-over-year, job growth was strongest in the Construction sector, followed by Education and Health. Information and Leisure and Hospitality posted the largest job losses over the past 12 months. Professional business and technology firms are reassessing their workforce needs, with local employment declining in two of the three office-occupying sectors compared to the prior year.
Net absorption in the second quarter of 2025 totaled negative 880,985 SF, bringing the past four quarters’ total to 3.7 MSF. This marks the reversal of four consecutive quarters of positive absorption, as tenants capitalized on favorable conditions. The construction pipeline currently stands at 3.7 MSF, with 69% consisting of build-to-suit (BTS) projects. Speculative construction is expected to remain limited in 2025. Vacancy increased 30 basis points to 4.5% in 2Q25 but has decreased 80 bps year over year, driven by positive net absorption from various mid- and large-sized deals in North County, Metro East and St. Charles County submarkets. This stable vacancy rate supports rental rate growth fundamentals and is likely to encourage developers to break ground on select projects during the next four quarters.
- Average Asking Rent: $5.93/SF
- Vacancy Rate: 4.5%
- Net Absorption: 880,985 SF
St. Louis Office Market – 2Q25
The region’s labor market stabilized as macroeconomic conditions shifted. May’s unemployment rate fell to 3.6%, 50 basis points below the 10-year historical average of 4.1%. Year-over-year, job growth was strongest in the Construction sector, followed by Education and Health. Information and Leisure and Hospitality posted the largest job losses over the past 12 months. Professional business and technology firms are reassessing their workforce needs, with local employment declining in two of the three office-occupying sectors compared to the prior year.
The market tightened during the quarter with 33,245 SF of net absorption, bringing the four-quarter total to 393,671 SF. This marks six out of the past nine quarters with positive absorption, as tenants continue to capitalize on favorable conditions. The West County and Downtown submarkets registered 341,630 SF and 130,484 SF of net absorption, respectively, over the past year. The non-owner-occupied construction pipeline has remained inactive since the third quarter of 2022, with just 41,000 SF currently under construction. Vacancy declined 10 basis points to 13.0% during the quarter and is expected to remain stable in 2025 as the market recalibrates. Year-over-year, asking rental rates dropped by $0.26 to $22.62/SF.
- Average Asking Rent: $22.62/SF
- Vacancy Rate: 13.0%
- Net Absorption: 33,245 SF
St. Louis Retail Market – 2Q25
St. Louis faced headwinds in the second quarter of 2025 as consumer sentiment dipped significantly, part of a national trend that saw declines in 45 of 47 U.S. metro areas. Although net absorption remained positive, tariff-driven uncertainty weighed on leasing activity, particularly in discretionary retail categories. Regional tenants have become more cautious, lengthening deal timelines and demanding additional landlord concessions. Retail landlords in St. Louis are navigating a more restrained climate. Construction and operating costs continue to climb, and tenants are requesting shorter lease terms or increased flexibility to manage potential slowdowns.
- Average Asking Rent: $14.61/SF
- Vacancy Rate: 3.5%
- Net Absorption: 101,680 SF
St. Louis Capital Markets – 2Q25
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 33.4% 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 industrial assets combining for 69.8% of the Metro’s activity.
- 12-Month Capitalization Rates: 7.6%
- 12-Month Total Sales Volume: $2.1 Billion