Peter Krombach, President, Grubb & Ellis| Krombach Partners

The St. Louis retail market has experienced a lot of building recently. “THF Realty is one of the most active retail developers in the St. Louis metropolitan area,” says Peter Krombach, president of St. Louis-based Grubb & Ellis|Krombach Partners. Other local companies keeping busy with projects include Pace Properties, Novus Development, G.J. Grewe, Opus and The Sansone Group. In addition, Arlington, Virginia-based The Mills Corporation just entered the St. Louis market with its new 1.2 million-square-foot mega-mall.

Currently, retail vacancy rates range between 8 percent and 10 percent depending on the type of center, and the market has been dominated by three major trends: mixed-use developments, infill developments and discounters.

Mixed-Use Developments

Lifestyle centers include retail, multifamily and office properties, and have become popular as the “live, work, play” concept takes hold in the area. “Many residents, tired of commuting hassles, want to bring their retail, office and living needs closer together,” Krombach says. These high-end developments are primarily located in urban areas and use large sidewalks and public plazas to create an interconnected community.

This is the concept behind Pace Properties’ The Boulevard-Saint Louis. Construction recently began on this community located along the successful Brentwood/Clayton/Eager Roads corridor. The retail portion of the project will be anchored by market newcomer Crate & Barrel. Construction also started on MLP Investments’ Station Plaza in Kirkwood. This mixed-use development is in the heart of downtown Kirkwood and is scheduled for completion this summer. Another mixed-use project with a new retail component, Main Street-inspired Boardwalk Marketplace, is McEagle Development’s Winghaven located in O’Fallon, Missouri.

Infill Developments

“By pursuing infill sites, developers can bypass some of the guesswork associated with new construction,” Krombach says. Area market elements such as retail, utilities, restaurants and demographics are already established. These infill developments are sometimes located in struggling areas, which enables developers to use tax increment financing to help fund the project. Typically, these developments are power centers anchored by big-box retailers.

One of the most successful of these projects is Kirkwood Commons. This $56 million, 522,000-square-foot retail center was developed after assembling 296 separate residential and commercial parcels. The area has buying power and consumer counts of $1.75 billion in household income and 70,000 consumers within 3 miles; and $4.6 billion and 186,000 consumers within 5 miles.

Construction has begun on THF Realty’s $120 million Maplewood Commons. Developers purchased approximately 130 homes as part of the agreement and will receive tax increment financing to help defray costs. Major tenants include Lowe’s Home Improvement Warehouse, The Home Depot and Sam’s Club.

Discounters

Power centers anchored by major discounters, such as Target, Wal-Mart, Kohl’s and The Home Depot, are the most active retail projects. All of these retailers have recently opened and/or plan to open more stores this year. “This is turning out to be the decade of the discounter,” Krombach says. “As consumers continue to seek more for their dollar, there is no end in sight to this trend.”

Discount retailers carrying more specialized product lines are also active. Stores such as Best Buy, Circuit City and Ultimate Electronics continue to reach for more market share. Best Buy is nearing completion of its new store at the Meridian in Brentwood; Ultimate Electronics is adding an additional store in Fenton; and Circuit City is relocating three of its area stores in the coming year. American TV & Appliance is entering the St. Louis market with four 130,000-square-foot stores and a 150,000-square-foot distribution facility.

Discounters are also behind the St. Louis Mills project in Hazelwood, Krombach says. The mall has 18 anchors, 200 retailers, and a variety of restaurants and entertainment venues. Anchors include a Marshalls MegaStore, and outlets for Pottery Barn, Williams-Sonoma and Off 5th Saks Fifth Avenue.

“One of the most significant new developments in the area is THF’s Chesterfield Commons, the massive 1.2 million-square-foot strip center located in the Chesterfield Valley,” Krombach says. “The center is touted as the longest strip center in the United States, approximately 1.5 miles from one end to the other.” It continues to add more retailers. The Home Depot will soon join anchors Target, Wal-Mart and Sam’s Club.

Going farther west into St. Charles County, developers Opus, THF Realty, TriStar Business Communities and Two Rivers, have four new retail development proposals in the works that would bring more than 2 million square feet of space within 2 miles of the intersection at Highway 40 and Highway N.

Another large retail development is G.J. Grewe’s Gravois Bluffs located in Fenton. It is approximately 1.5 million square feet of space anchored by Shop ‘n Save, Lowe’s Home Improvement Warehouse, Target Stores, T.J. Maxx, Kohl’s, Ultimate Electronics and Wal-Mart.

“These developments are primarily being built in the far western and southern portions of the St. Louis metropolitan area,” Krombach says. “This area has seen an unprecedented increase in population. The new developments are not expected to adversely affect the overall market as they draw new consumers from the neighboring residential areas.”

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