Vacancy across the region is down 180 basis points from the third quarter of last year. Much of the gains have come in Class B properties, which have absorbed three times more square footage in 2016 than Class A properties. Find out more in our Q3 Office Outlook.
2. Office employment (12-month average): St. Louis
Source: JLL Research, BLS
Absorption by quarter
Source: JLL Research
Leasing activity by submarket
Source: JLL Research
Employment gains signal further growth
2,257
23.8%
23.8%
19.0%
9.5%
9.5%
9.5%
4.8% Clayton
West County
South County
CBD
Northwest County
St. Charles County
St. Louis City
465.0
470.0
475.0
480.0
485.0
2014 2015 2016
-100,000
-50,000
0
50,000
100,000
150,000
200,000
250,000
Q1 2016 Q2 2016 Q3 2016
Class A
Class B
Office Insight
St. Louis | Q3 2016
42,154,174
Total inventory (s.f.)
58,016
Q3 2016 net absorption (s.f.)
$19.44
Direct average asking rent
125,000
Total under construction (s.f.)
13.2%
Total vacancy
403,925
YTD net absorption (s.f.)
-1.2%
12-month rent growth
60.0%
Total preleased
Office employment surges ahead to new highs
Office employment is continuing a very strong run in 2016. Year-over-year
employment gains have averaged 9,300 jobs per month, nearly triple the 2015
average. This growth further strengthens the outlook for the office market.
Professional and business services (PBS) and financial activities have both
reached all-time highs this year, averaging more than 3.0 percent in annual
employment gains; each is considerably above prior years. Companies to
announce hiring plans this quarter include: MOHELA, The St. Louis Federal
Reserve, and law firm Tucker Ellis.
Occupancy gains shifting to Class B properties
Vacancy across the region is down 180 basis points from the third quarter of last
year. Much of the gains have come in Class B properties, which have absorbed
three times more square footage in 2016 than Class A properties. This does not
mean that Class A properties are struggling. Several vacant suburban buildings
have been purchased by users this year, removing 230,000 square feet from
Class A inventory. Two of the properties were in St. Charles, and one was
located in West County. Asking rates have started to move up as well; Class B
asking rates in St. Charles and West County have increased nearly 4.0 percent
compared to last year.
Leasing activity continues to rise
The third quarter had the highest leasing activity in 2016. Leases by Hub Group,
Siemens and Cigna led the way. Hub Group is expanding by a full floor at Park
270 and will now occupy 80,000 square feet. The Federal Reserve is expanding
by a full floor in the CBD and will now occupy four full floors at 500 Broadway;
the building is adjacent to its branch. With strong leasing activity continuing, the
probability of new development further increases. Clayton has several projects in
the planning stages, and other suburban submarkets have ground that is ready if
an anchor tenant is signed.
4. Office Leasing Activity Report
St. Louis
Q3 2016
This report analyzes all closed office leases > 10,000 s.f.
Leasing activity by size
558,552
21
500,000
54
264,833
283,043
-
Growing Shrinking Stable
246,411
0
49,676
10,266
77,438
159,626
Top 10 lease transactions during the quarter
Size Footprint Term (mos)
83,836 Stable -
80,871 Growing -
78,360 Stable -
37,540 Growing -
35,217 Stable -
23,591 Growing -
21,340 Growing -
20,178 Stable -
18,920 Growing -
18,843 Growing -
Leasing activity by submarketLeasing activity by industry
Total Class A s.f. leased
Expansion in market
Expansion in building
Renewal
Extension (< 36-month term)
Relocation within market
New to market
Average term (mos)
Total Class B s.f. leased
Direct
13690 Riverport Dr. Northwest County
At a glance
Total s.f. leased QTD
Total transactions QTD
Total s.f. leased YTD
Tenant footprint
13 0 7
Total transactions YTD
Leasing activity by transaction type
Type
13045 Tesson Ferry Rd South County DirectCigna
Tenant Address Submarket
Direct
4260 Forest Park St. Louis City Direct
622 Emerson Road West County
1801 Park 270 West CountyHub Group
Siemens Corporation
AAIPharma
Haskell
Direct
Centene 1390 Timberlake Manor West County Direct
Direct
Mercy 12200 Weber Hill Rd South County Direct
Mississippi Lime 3870 Lindbergh South County Direct
Federal Reserve Bank of St.
Louis
500 N Broadway CBD Direct
Riot Games 7777 Bonhomme Ave Clayton
- 3 - 2 16
-
50,000
100,000
150,000
200,000
250,000
300,000
100,000+ 75,000-99,999 50,000-74,999 30,000-49,999 20,000-29,999
Total leased Number of leases
9.52%
23.81%
9.52%
19.05%
9.52%
4.76%
23.81%
CBD Clayton
Northwest County South County
St. Charles County St. Louis City
9.52%
4.76%
9.52%
14.29%14.29%
4.76%
4.76%
9.52%
9.52%
Law firm Engineering
Energy and utilities Healthcare
Other Architecture
Other professional and business services Government
Insurance Transportation and freight forwarders
Telecom Technology
Banking and financial services
-
100,000
200,000
300,000
400,000
500,000
600,000
Q4 2015 Q1 2016 Q2 2016 Q3 2016
Historical leasing activity
Source: JLL Research 2016 Jones Lang LaSalle IP, Inc. All rights reserved.
5. Office Statistics
St. Louis | Q3 2016
Class Inventory (s.f.)
Total net
absorption
(s.f.)
YTD total net
absorption
(s.f.)
YTD total net
absorption (%
of stock)
Direct vacancy
(%)
Total vacancy
(%)
Average
asking rent ($
p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
Downtown Totals 10,442,794 6,697 157,515 1.5% 19.1% 19.9% $17.34 0 0
CBD Totals 10,442,794 6,697 157,515 1.5% 19.1% 19.9% $17.34 0 0
Clayton Totals 7,509,865 13,660 76,464 1.0% 6.9% 7.3% $24.17 0 0
Northwest County Totals 3,708,693 24,153 -6,549 -0.2% 19.5% 20.5% $16.43 0 0
St. Charles County Totals 2,316,429 3,642 17,966 0.8% 15.6% 16.8% $18.50 0 0
South County Totals 2,763,102 7,853 23,820 0.9% 6.1% 6.3% $19.86 0 0
West County Totals 15,413,291 2,011 134,709 0.9% 10.3% 10.6% $21.31 0 0
Suburban Totals 31,711,380 51,319 246,410 0.8% 10.6% 11.0% $20.53 0 125,000
St. Louis Totals 42,154,174 58,016 403,925 1.0% 12.7% 13.2% $19.44 0 125,000
Downtown A 6,352,496 -4,740 137,529 2.2% 15.4% 16.7% $19.61 0 0
CBD A 6,352,496 -4,740 137,529 2.2% 15.4% 16.7% $19.61 0 0
Clayton A 5,166,182 7,722 40,095 0.8% 6.9% 7.4% $26.17 0 0
Northwest County A 1,699,549 17,864 -16,499 -1.0% 9.3% 11.5% $20.37 0 0
St. Charles County A 847,728 1,791 -14,091 -1.7% 14.0% 17.2% $20.30 0 0
South County A 691,964 -5,830 6,259 0.9% 9.4% 10.2% $23.04 0 0
West County A 7,775,019 -56,259 -49,492 -0.6% 8.9% 9.4% $24.57 0 125,000
Suburban A 16,180,442 -34,712 -33,728 -0.2% 8.6% 9.4% $24.16 0 125,000
St. Louis A 22,532,938 -39,452 103,801 0.5% 10.5% 11.5% $22.35 0 125,000
Downtown B 4,090,298 11,437 19,986 0.5% 24.8% 24.8% $14.73 0 0
CBD B 4,090,298 11,437 19,986 0.5% 24.8% 24.8% $14.73 0 0
Clayton B 2,343,683 5,938 36,369 1.6% 6.9% 7.0% $20.20 0 0
Northwest County B 2,009,144 6,289 9,950 0.5% 28.0% 28.1% $15.42 0 0
St. Charles County B 1,468,701 1,851 32,057 2.2% 16.6% 16.6% $17.27 0 0
South County B 2,071,138 13,683 17,561 0.8% 5.0% 5.0% $18.83 0 0
West County B 7,638,272 58,270 184,201 2.4% 11.7% 11.8% $18.64 0 0
Suburban B 15,530,938 86,031 280,138 1.8% 12.7% 12.8% $17.89 0 0
St. Louis B 19,621,236 97,468 300,124 1.5% 15.2% 15.3% $16.96 0 0
211 North Broadway Suite 2075 St. Louis MO 63102 tel +1 314 261 7377 fax +1 314 338 2081 blaise.tomazic@am.jll.com
2016 Jones Lang LaSalle IP, Inc. All rights reserved.
Blaise Tomazic Research Manager
6. Total jobs vs. unemployment rate: St. Louis
Source: BLS, JLL Research
Industrial employment trends (12-month change) :St. Louis
Source: BLS, JLL Research
Job growth/loss by sector (12-month change): St. Louis
Source: BLS, JLL Research
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
1,220,000
1,270,000
1,320,000
1,370,000
1,420,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Total Employment
Unemployment
Office employment trends (12-month change) :St. Louis
Source: BLS, JLL Research
Job growth (12-month change): United States vs. St. Louis
Source: BLS, JLL Research
Employment Update
Metro St. Louis | September 2016
3.1%
5.0%U.S. unemployment
1.7%U.S. 12-month job growth
5.0%St. Louis unemployment
2.0%St. Louis 12-month job growth
5.2%Missouri unemployment
0.7%Missouri 12-month job growth
Peak: 1,439,149 jobs
(10)
(5)
0
5
10
15
20
2011 2012 2013 2014 2015 2016
Financial Activities
Professional and Business Services
Information
Government
(15)
(10)
(5)
0
5
10
15
2011 2012 2013 2014 2015 2016
Mining, Logging & Construction
Trade, Transportation & Utilities
Manufacturing
Other Services
‐3,800
‐1,000
200
500
1,600
2,200
3,400
4,300
7,100
11,700
Manufacturing
Information
Other Services
Government
Mining, Logging & Construction
Financial Activities
Educational & Health Services
Trade, Transportation & Utilities
Professional & Business Services
Leisure & Hospitality
-1.0%
0.0%
1.0%
2.0%
3.0%
2011 2012 2013 2014 2015 2016
St. Louis United States