4563 02 Office Presentation Final

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2008 SIOR Metro Market Forecast Office Presentation

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  • 4563 02 Office Presentation Final

    1. 1. St. Louis Office Market Michael J. Wolken, SIOR Principal
    2. 2. Office Committee Dennis DeSantis, SIOR Gateway Commercial, a Cushman & Wakefield Alliance Dave Morris, SIOR Gundaker Commercial Scott Bazoian, SIOR Colliers Turley Martin Tucker Lynn Schenck, SIOR CB Richard Ellis
    3. 3. Office Presentation <ul><li>Review 2007 Predictions </li></ul><ul><li>Significant Transactions </li></ul><ul><li>Tenants in the Market </li></ul><ul><li>Taxes, Tenant Improvements & Trends </li></ul><ul><li>2008 Predictions </li></ul>
    4. 4. 2007 Predictions <ul><li>Area Absorption 1.35 Million SF </li></ul><ul><li>Area Vacancy Rate Dropping </li></ul><ul><li>Build-to-Suits and Health Care </li></ul>
    5. 5. Good to Great in 2008?
    6. 6. Large Tenants Moved in 2007 CityPlace Six 140,500 SF 40 West II Building 114,000 SF
    7. 7. Large Tenants Moved in 2007 1881 Pine Street 110,00 SF NorthPark 90,000 SF
    8. 8. Large Tenants Considering Options in 2008 Total potential impact – 1,000,000 SF
    9. 9. Tenant by Size Range
    10. 10. Tenants by Lease Expiration
    11. 11. Office Employment Growth 3.2% 3.8% 7% St. Louis 2.2% 9% 11.2% Washington 9.9% 8.3% 18.2% Tampa/St. Petersburg 10.6% 4.4% 15% Seattle/Puget Sound 7.3% 1.5% 8.8% New York City 5.9% 2.2% 8.1% Los Angeles 3.7% 4.3% 8% Denver 10.2% 6.4% 16.6% Dallas/Ft. Worth 3.8% 3.8% 7.6% Chicago 5.2% 2.5% 7.7% Boston 2.6% 6.3% 8.9% Atlanta Difference Inventory Growth Employment Growth Market
    12. 12. Vacancy Report 9.9% 7.2% 3.9% 9.5% 6.2% 6.5% 16.5% Class A 12% St. Louis Metro 12% St. Charles County 7.5% South County 17.9% North County 8.7% West County 10% Clayton 18.5% Downtown All Classes Submarket
    13. 13. Vacancy Report <ul><li>2007 Absorption 1.4 Million SF </li></ul><ul><li>5.4 Million SF Still Vacant </li></ul>
    14. 14. 2008 New Construction The Meridian at Brentwood 180,000 SF Lakeside Crossing Office One 127,000 SF
    15. 15. 2008 New Construction Central Park Square I 100,000 SF 825 Maryville Office 75,000 SF 580,000 square feet
    16. 16. Potential Major Office Developments 2008 and Beyond Ballpark Village Lakeside Crossing 2 Highlands II
    17. 17. Potential Clayton Developments <ul><li>Centene Site </li></ul><ul><li>Apex Oil Site </li></ul><ul><li>Koman Properties </li></ul><ul><li>Montgomery Bank </li></ul><ul><li>Conrad Properties </li></ul><ul><li>Orchard Development </li></ul><ul><li>Mehlman </li></ul><ul><li>Brown Shoe </li></ul>Potential new office – 1.5 – 2 million square feet
    18. 18. Taxes – T.I. and Trends <ul><li>A major component of office building operating expenses is real estate taxes. As a percent of the total, tenants are now paying 30% plus, including the surcharge. It is one of the items that erodes the value. </li></ul><ul><li>Five years ago, the typical tenant finish was $15 to $20 per square foot. We are now heading to $25 to $35 per square foot for new Class A buildings. </li></ul>$3.69 $682,223 1983-89 Old Town Exec Ctr $5.84 $1,900,000 2001 The Plaza in Clayton $3.30 $1,908,877 1965-70 Pierre Laclede I & II $3.68 $640,532 1982 Bemiston Tower PSF 2007 Tax Year Built Building
    19. 19. 2008 Predictions <ul><li>The four new projects currently under construction will be significantly leased at the end of 2008. </li></ul><ul><li>The financing market will have a profound negative effect on new office construction. </li></ul><ul><li>Speculative office is a distant memory. </li></ul><ul><li>Barring a recession, all Classes of office buildings should show a decrease in their vacancy. </li></ul>
    20. 20. Good
    21. 21. Great
    22. 23. Thank You

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