HEARTLAND SNAPSHOT, MAY 2010

St. Louis Industrial Market

The St. Louis metro industrial market, like most other national markets, continues to face economic challenges as we await job growth, demand and consumer spending.

Decreasing trade, both international and domestic, as well as job loss has forced a decreased demand for industrial space. The Bureau of Labor Statistics reported that employment in motor vehicle manufacturing in the St. Louis metro market had decreased by 1,800 jobs or 61 percent during the last 12 months and 5,500 jobs or 75 percent during the previous 24 months.

These factors played the major roles in the St. Louis industrial market ending fourth quarter 2009 with a vacancy rate of 10.6 percent, the highest vacancy in the past decade. A large portion of this vacancy can be attributed to the 5 million-square-foot Chrysler plant closing down. This closing also caused a negative absorption figure never before seen in St. Louis.

Although speculative construction is non-existent, there has been a reasonable amount of large bulk warehouse leases recently completed. Some of these include 502,000 square feet leased by Proctor and Gamble, World Wide Technology’s 700,000-square-foot lease, 513,000 square feet leased by Ozburn Hessey Logistics and Fiserv’s 182,000-square-foot lease.

One of the unique, potential developments is the Aviator Business Park, a 155-acre infill development on the former Ford Motor Company manufacturing plant site — where the Ford Explorer and Ford Aviator were produced. Located adjacent to Lambert International Airport, the project, which is being developed by Panattoni Construction, offers rail service, LEED certification and 25-year tax abatement options. In light of the economic downturn, this project has the potential to create more than 1 million square feet of newly constructed industrial space in the heart of St. Louis County.

Future expansion and development will most likely take place in the now shuttered Chrysler Plant, the aforementioned Aviator Business Park and in the Metro East submarket, which is located on the Illinois side of the Mississippi River.

— Thomas Homco is a principal at the St. Louis office of Lee & Associates.

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