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HEARTLAND SNAPSHOT, AUGUST 2006
St. Louis Industrial Market
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Sheldon Johnson, Executive Vice President, Johnson Group/TCN Worldwide
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There are three prominent trends defining St. Louis’ industrial sector including construction of speculative high-bay bulk warehouse spaces, spot development of 8,000- to 20,000-square-foot warehouse buildings, and a continued strong market for build-to-suit developments for national and regional credit users. The bulk warehouse constructions typically have 28- to 32-foot ceilings and are equipped with ESFR sprinkler systems, high-bay metal halide lighting, large bay column spacing and the maximum amount of loading dock positions. The marketing plan, targeted at manufacturers and bulk users — especially related to automotive, food and medical industries — has proven successful with leases ranging from 32,000 to 250,000 square feet. Some of the recently closed leases include Western Extralite taking 77,000 square feet at Riverport Distribution; Thomas Construction’s 35,000-square-foot lease at Dukeport 7 in Riverport; Mitek’s 160,000-square-foot deal at Elm Point in St. Charles; Emerson Electric’s 90,000-square-foot lease at Lambert Pointe in Bridgeton; and Coca-Cola moving into 250,000 square feet at 1010 Turner Dr. in St. Peters.
As the St. Louis area is welcoming a few new developers, including Panattoni, HSA and Welsch Development, current tenants, such as Chrysler suppliers in Fenton/South County and Procter & Gamble in Gateway Commerce Center, are absorbing much of the developing space. With industrial centers developing throughout the region, new opportunities and spaces will soon impact the market. Some of these developments include Gateway Commerce Center in Madison County, Illinois, with low ground cost and real estate taxes; Park 370 in Hazelwood and Earth City, Missouri, offering airport access; Hazelwood Commerce, a 150-acre future development site; and the Fenton area with limited sites near the Daimler Chrysler plant.
The majority of industrial development is occurring along Interstate 70 and Interstate 370 in northwestern St. Louis and St. Charles counties, says Sheldon Johnson, executive vice president of Johnson Group/TCN Worldwide in St. Louis. This development is due to zoning and available ground, which can be re-zoned, located on the Missouri side of the Mississippi River. Madison County, on the Illinois side near Interstate 270, has seen a concentration of more than 5 million square feet of bulk inventory being built during the last 4 years.
Industrial rental rates in the St. Louis area range from $3.50 to $9.50 triple-net depending on the type of product. The area vacancy rate stands at approximately 7 percent.
For future developments, Johnson suggests looking to St. Peters, Missouri, especially Lakeside 370 at Highway 370 and Truman Road which has 500 acres of build-to-suit and leasing options available through Duke Realty Corp. beginning in late 2007 or early 2008. Johnson notes that Lakeside 370 is located in western St. Charles County, where job growth is increasing, and near the General Motors’ Wentzville plant. Johnson also recommends watching Gateway Commerce Center in Pontoon Beach, Illinois, and Lakeview Commerce Center in Edwardsville, Illinois, because of inexpensive ground costs and access to Interstate 270. Northpark at I-70 and I-170 in North County is also noteworthy because of its excellent airport access.
The multiple options for new big box retailers to locate in the Midwest provide evidence of the market’s steady and continued improvement.
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