Dan Merlo sat down with the St. Louis Business Journal to give an update on the St. Louis office market in a Q&A last week. Topics covered vacancy and rent rates from the past quarter, developments underway, forecasts for the future of the commercial office market and more:
How did the office market perform in the first quarter?
The office market for Q1 remained strong – the momentum from 2018 has driven lease rates to historical highs in many submarkets. The increased demand for space was and continues to be a major factor, thanks in part to economic strength and low unemployment. The growth in the medical industry has been a driver for our increased activity in office leasing recently as well.
Clayton and Cortex continue to be banner submarkets. Can we expect lease rates to increase in those submarkets?
Clayton has actually experienced some sporadic vacancy from the past few quarters, likely due to attrition and movement, but this isn’t a negative economic indicator. We may see slight increases in lease rates, but nothing nearly as aggressive as the previous 12 months.
Do you see any new submarkets emerging as new destinations?
Not necessarily new submarkets, but we’re seeing these creative reuses. Examples like the Armory, Foundry and other new Midtown projects, such as Cullinan’s Iron Hill are garnering national attention in the CRE space for St. Louis.
What economic conditions are driving the office market in St. Louis?
Low cost of capital, higher returns for out-of-town investors and low unemployment/growing workforces are all driving the office market.
View the full write-up in the St. Louis Business Journal here.