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 – 1Q25
The region’s labor market weakened as macroeconomic conditions shifted. February’s unemployment rate reached 4.4%, 30 basis points above the 10-year historical average of 4.1%. Year-over-year, job growth was strongest in the Other Services 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 120,441 SF of net absorption, bringing the four-quarter total to 531,811 SF. This marks three consecutive quarters of positive absorption, as tenants continue to capitalize on favorable conditions. The Clayton and West County submarkets registered 317,143 SF and 313,271 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 53,700 SF currently under construction. Vacancy declined 10 basis points to 12.9% during the quarter and is expected to remain stable in 2025 as the market recalibrates. Year-over-year, asking rental rates held steady, dropping by $0.01 to $22.76/SF.
- Average Asking Rent: $22.76/SF
- Vacancy Rate: 12.9%
- Net Absorption: 120,441 SF
St. Louis Retail Market – 4Q24
The St. Louis retail market in Q4 2024 remained stable, with vacancy rates showing minimal fluctuations and steady leasing activity across various retail sectors. Rental rates reflected consistent demand, while new developments and redevelopments contributed to market growth. Investment activity saw notable retail property sales, indicating continued interest from investors.
- Average Asking Rent: $14.95/SF
- Vacancy Rate: 3.6%
- Net Absorption: 121,470 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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