HEARTLAND SNAPSHOT, APRIL 2005

St. Louis Industrial Market

There has been more than 6 million square feet of new bulk construction in the Metro East submarket of St. Louis during the last 36 months, according to Thomas Homco, a principal in Lee & Associates’ St. Louis office. “St. Louis is transforming into a major player in the national distribution market,” he says. “With Gateway Commerce Center and Lakeview Commerce Park, the Illinois side of the Mississippi River has more than 3,000 acres of low cost industrial ground offering economic benefits, rail service, excellent infrastructure and highway access in a pro-business environment.”

Panattoni is entering the St. Louis market with several significant industrial developments, such as Park 370 and Green Park. Park 370 is a 492,500-square-foot project planned for completion in the fourth quarter of 2005; Green Park is a 10-building business park between 10,000 square feet and 15,000 square feet, which is already completed. In addition, the largest development in St. Louis is a 350-acre site in the Lakeview Commerce Center that will feature 6.6 million square feet of bulk development located 15 miles northeast of downtown St. Louis in Illinois. Multi-Employer Property Trust (MEPT) also is a new developer to the area with its 500,000-square-foot speculative distribution building located in the Metro East market. 

By far, the most compelling area of industrial development in St. Louis is the Illinois-Metro East area with the continued growth of the Gateway Commerce Center and Lakeview Commerce Park. The area boasts a new 3,000-acre regional distribution park at the intersection of Interstate 270 and Interstate 255. The parks offer excellent interstate access, a 10-year tax abatement program and many other local and state incentives to induce companies to locate in the St. Louis area.

Although Proctor & Gamble and Unilever have been active in the market through consolidation and expansion, no one tenant has made up any majority of the space. “The St. Louis market is clearly becoming widely recognized as a regional distribution market,” Homco says. “As such, the product is trying to attract distribution and trucking companies of all types.”

Similarly, in a recent study evaluating various distribution centers’ network configurations by a leading logistics consulting firm, the St. Onge Company concluded St. Louis was cost-equal or lower to Chicago, Indianapolis and Memphis and was equal to or superior than Chicago, Indianapolis and Memphis in transit time to key destinations throughout the United States.

The range for rental rates in the St. Louis area is $7 to $9 triple net for service centers; $4.50 to $5.75 triple net for office/warehouse space; and $3.25 to $4.50 triple net for bulk distribution space. St. Louis’s vacancy rate for industrial space is 7.7 percent.

St. Louis offers regional distributors the second lowest cumulative travel mileage to the nations 62 largest cities and ranks among the nation’s top 10 distribution markets. “Looking forward, we will be watching for large chunks of rail served industrial ground in the Metro East to be taken down by land speculators and industrial developers,” Homco says.

©2005 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.