Newmark Zimmer’s St. Louis market reports provide a comprehensive overview of current real estate conditions by sector and submarket.

St. Louis Industrial Market Report Commercial Real Estate

St. Louis Industrial Market – 1Q24

The region’s labor market remained historically strong amid shifting macroeconomic conditions. February’s 3.5% unemployment rate was significantly lower than the 4.3% 10-year historical average. Year over year, job gains have been most pronounced in the services industry, which is still making up for lost ground during the pandemic. Education & Health led all sectors in job gains during the past 12 months. Industrial firms are continuing to adjust labor needs. Locally, two out of the three industrial sectors experienced growth during the past year: Construction, by 2.6% and Trade/Transportation/Utilities, by 1.2%.

Net absorption in the first quarter of 2024 totaled negative 1.1 million SF. Total net absorption during the past four quarters was 371,710 SF. The market is recalibrating as the economy slows and construction deliveries outpace net absorption, reversing the trend of the last two years. The 2.5-million-SF construction pipeline has trended downward over the past two quarters and is expected to accelerate towards 3.2 million SF in the next four quarters. Vacancy increased 60 basis points to 5.4% during the quarter as deliveries outpaced absorption. Asking rental rate growth for the overall market year over year has been below average, totaling only 1.7%.

  • Average Asking Rent: $5.98/SF 
  • Vacancy Rate: 5.4% 
  • Net Absorption: -1.1M SF 
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St. Louis Office Market Report Commercial Real Estate

St. Louis Office Market – 1Q24

The region’s labor market remained historically strong amid shifting macroeconomic conditions. February’s 3.5% unemployment rate was significantly lower than the 4.3% 10-year historical average. Year over year, job gains have been most pronounced in the services industry, which is still making up for lost ground during the pandemic. Education & Health led all sectors in job gains during the past 12 months. Professional business and technology firms are continuing to adjust labor needs. Locally, employment growth across two of the three office-occupying sectors displayed declines compared to the prior 12 months.

Absorption in the first quarter of 2024 totaled negative 190,589 SF. This was a retraction from the fourth quarter of 2023, which realized the largest quarter of net absorption during the previous three years. Net absorption during the past four quarters totaled 379,299 SF.  The non-owner-occupied construction pipeline has trended downward since the first quarter of 2023 due to recent deliveries and sharply decelerating new starts. There is currently 41,000 SF under construction. Vacancy increased 10 basis points to 14.6% during the quarter due to a slight decrease in leasing activity. Vacancy is expected to increase to 15.0% as the market continues to recalibrate. Asking rental rate growth for the overall market year over year has been stagnant, totaling only 0.2%.

  • Average Asking Rent: $22.76/SF 
  • Vacancy Rate: 14.6% 
  • Net Absorption: -190,589 SF 
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St. Louis Retail Market – 1Q24

The St. Louis retail landscape continues to see high demand for prime retail space in both the suburban and urban areas of the market. Tenants are right sizing their spaces, refining their real estate site selection process, and actively expanding where space is available. As the economy has shifted, we are seeing trends in Landlord’s providing concessions more in the form of free rent versus increasing out of pocket TI Allowance funds. Demand for retail space along the main corridors, with excellent visibility and strong co-tenancy, is at an all-time high and availability is extremely limited. This environment is creating premium rents across the board for retail space. A leveling-out is anticipated to start as we approach 2025.

  • Average Asking Rent: $14.71/SF 
  • Vacancy Rate: 4.0% 
  • Net Absorption: 199,044 SF 
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St Louis Capital Markets Research Commercial Real Estate

St. Louis Capital Markets – 1Q24

The pace of investment activity in the St. Louis market slowed during the past four quarters, with sales volume totaling $2.0 billion, a decrease of 36.3% compared with the prior five-year average. As a leading second-tier market, the St. Louis Metropolitan area ranked sixth out of the largest 13 Midwest markets in total sales volume during the past 12 months, with multifamily and industrial assets combining for 66.1% of the Metro’s activity. Capitalization rates decreased by seven basis points compared with the past 12 months, registering 7.1% in the first quarter of 2024.

  • 12-Month Capitalization Rates: 7.1% 
  • 12-Month Total Sales Volume: $2.0 Billion
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