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

St. Louis Industrial Market – 4Q23

The region’s labor market remained historically strong amid shifting macroeconomic conditions. November’s 3.4% unemployment rate was significantly lower than the 4.4% 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 2.7% and trade/transportation/utilities, by 1.0%.

Absorption in the fourth quarter of 2023 totaled negative 32,702 SF. Total net absorption during the past four quarters totaled 1.4 million SF, equating to a decrease of 75.7% compared with the average annual absorption during the pandemic period. The market is recalibrating, as the economy slows and construction deliveries outpace net absorption, reversing the trend of the last two years. The 2.8-million-SF construction pipeline has trended upward over the past two quarters and is expected to accelerate towards 3.4 million SF in the next four quarters. Vacancy and rents both increased year-over-year. Vacancy grew to 4.8% as deliveries outpaced absorption. Both higher-priced space delivering to the market, as well as overall demand, drove strong yet decelerating 12-month rent growth of 5.1%.

  • Average Asking Rent: $6.01/SF 
  • Vacancy Rate: 4.8% 
  • Net Absorption: -32,702 SF 
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St. Louis Office Market – 4Q23

The region’s labor market remained historically strong amid shifting macroeconomic conditions. November’s 3.4% unemployment rate was significantly lower than the 4.4% 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 fourth quarter of 2023 totaled 462,425 SF. This was the largest quarter of net absorption compared to the previous three years and was primarily due to the transaction at 1245 J.J. Kelley Dr. in Des Peres, which added 216,978 SF of net absorption during the quarter. Total net absorption during the past four quarters totaled 489,462 SF. The 41,000-SF non-owner-occupied construction pipeline has trended downward from the first quarter of 2023 upon recent deliveries and sharply decelerating new starts. Vacancy decreased 60 basis points to 14.5% during the quarter. Higher-priced space delivering to the market, combined with solid demand for prime Class A space, drove a slow but positive 12-month rent growth of 1.1%.

  • Average Asking Rent: $22.67/SF 
  • Vacancy Rate: 14.5% 
  • Net Absorption: 462,425 SF 
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St. Louis Retail Market – 4Q23

In the fourth quarter of 2023, St. Louis continued to see average asking rents climb as total vacancy rate remained low with small shop space averaging 2.0% and big box averaging 4.7% vacancy. Small shop space continues to see a wide variety of interest from service-based retailers (salon, nail, massage, etc.), boutique fitness, and fast casual food type users. Fitness, entertainment, and grocery have been the most active players in backfilling big box space. Drive-thru space, whether freestanding or end-cap, continues to be highly sought after by brands. In addition, QSR concepts are continuing to look for opportunities to convert or relocate spaces to a drive-thru concept.

  • Average Asking Rent: $14.80/SF 
  • Vacancy Rate: 4.1% 
  • Net Absorption: 330,052 SF 

St. Louis Capital Markets – 4Q23

The pace of investment activity in the St. Louis market slowed during the past four quarters, with sales volume totaling $1.9 billion, a decrease of 41.3% 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 71.7% of the Metro’s activity. Capitalization rates increased 85 basis points compared with the past 12 months, registering 7.5% in the fourth quarter of 2023. Top-quantile capitalization rates increased 47 bps compared with the past 12 months, registering 6.0% in the fourth quarter of 2023.

  • Class A Capitalization Rates: 7.5% 
  • 12-Month Total Sales Volume: $1.9 Billion
  • 12-Month Total Transactions Volume: 186 Transactions
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