
St. Louis Industrial Market – 2Q23
The region’s labor market remained historically strong amid shifting macroeconomic conditions. May’s 2.7% unemployment rate was significantly lower than the 4.6% 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. Leisure/hospitality 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: manufacturing, by 2.3%, and trade/transportation/utilities, by 0.2%. The construction industry registered negative 6.8%.
Absorption in the second quarter of 2023 totaled 1.3 million SF. This was a decent turnaround after a slow start to the year as the market realized negative 204,927 SF of absorption during the first quarter of 2023. Total net absorption during the past four quarters totaled 3.6 million SF, equating to a decrease of 34.9% compared with the average annual absorption during the pandemic period. The 2.8-million-SF construction pipeline trended upward from the first quarter of 2023 and is expected to accelerate towards 4.0 million SF throughout 2023 and 2024. Vacancy and rents both increased year-over-year. Vacancy grew to 4.6% as deliveries outpaced absorption. Higher-priced space delivered to the market and demand drove strong yet decelerating 12-month rent growth of 14.1%.
- Average Asking Rent: $5.97/SF
- Vacancy Rate: 4.6%
- Net Absorption: 1,331,985 SF

St. Louis Office Market – 2Q23
The region’s labor market remained historically strong amid shifting macroeconomic conditions. May’s 2.7% unemployment rate was significantly lower than the 4.6% 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. Leisure/hospitality led all sectors in job gains during the past 12 months. 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 second quarter of 2023 totaled 14,131 square feet. This was the best quarter total compared to the previous six quarters, as tenant demand has decreased since the third quarter of 2020. Total net absorption during the past four quarters totaled negative 1.2 million square feet. The 107,000-square-foot construction pipeline trended downward from the first quarter of 2023 upon recent deliveries and sharply decelerating new starts. Vacancy and rent both increased year-over-year. Vacancy increased to 15.2%, as negative net absorption continued across multiple submarkets. Higher-priced space delivering to the market during the past year, combined with solid demand for prime Class A space, drove a slow but positive 12-month rent growth of 2.0%.
- Average Asking Rent: $22.82/SF
- Vacancy Rate: 15.2%
- Net Absorption: 14,131 SF

St. Louis Retail Market – 2Q23
In St. Louis and beyond, the outlook for retail real estate is optimistic. Increasing rental rates, decreasing availability and new development projects lacking in the pipeline have created a landlord’s market in the world of retail. We are continuing to see tenants and landlords get creative in filling space, including conversions of office to multifamily, hotel and mixed-use development projects. Entertainment concepts are actively seeking big-box space, and drive-thru concepts are continuing to seek out prime pad sites.
- Average Asking Rent: $14.34/SF
- Vacancy Rate: 4.4%
- Net Absorption: 17,468 SF

St. Louis Capital Markets – 2Q23
The pace of investment activity in the St. Louis market slowed during the past four quarters, with sales volume totaling $2.5 billion, a decrease of 21.9% compared to the prior five-year average. As a leading second-tier market, the St. Louis Metropolitan area ranked seventh out of the largest thirteen Midwest markets in total sales volume during the past twelve months, with multifamily and industrial assets combining for 65.4% of the Metro’s activity. Capitalization rates increased 133 basis points (bps) compared to the past twelve months, registering 7.45% in the second quarter of 2023. Top quantile capitalization rates increased 163 bps compared to the past twelve months, registering 6.65% in the second quarter of 2023.
- Class A Capitalization Rates: 7.5%
- 12-Month Total Sales Volume: $2.5 Billion
- 12-Month Total Transactions Volume: 212 Transactions
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