ST. LOUIS—The St. Louis-area industrial economy has improved quite a bit in the past year. Owners have seen tenants' demand for space increase, pushing down vacancy rates and even enticing several industrial developers to begin new construction projects. Investors have also taken notice. Chambers Street Properties, for example, a real estate investment trust in Princeton, NJ that acquires net leased industrial and office properties, has just purchased a 502,000-square-foot class A distribution warehouse in Sauget, on the Illinois side of the river, for $21 million. This was its first purchase in the St. Louis metro area.

The building, at 1659 Sauget Business Blvd. adjacent to the St. Louis Downtown Airport, was constructed in 2008 and is 100% net leased to two tenants, a manufacturer and distributor of medical supplies, and a contract manufacturer that also packages chemical products. The leases run through 2019 and 2020 and include annual rental increases of about 2%.

“This acquisition is consistent with our strategy of focusing on US industrial assets located in primary and secondary markets with easy access to major highways, ports, rail and freight corridors, and intermodal facilities,” said Jack A. Cuneo, president and chief executive officer of Chambers Street, in a prepared statement. Company officials could not comment on other specific details of the transaction.

St. Louis has grown quite significantly as a regional distribution market, particularly on the Illinois side, also known as Metro East. According to statistics recently published by Xceligent, “the St. Louis industrial market finished the first half of the year on a high note as the market absorbed over 1.5-million-square-feet of space.” The momentum was fueled by six transactions of more than 100,000-square-feet. All six were for warehouse or distribution buildings. And just three user sales accounted for nearly 900,000-square-feet.

And this strong demand seems to have ended the post-recession pause in development. PCCP, LLC, a real estate finance and investment management firm, and TriStar Properties, for example, recently formed a joint venture to acquire 45 acres of land for the speculative development of a 673,000-square-foot bulk warehouse building at Gateway Center in the Metro East submarket.

Other big investors are likely to follow Chambers Street into the region. According to an Avison Young analysis of data from Real Capital Analytics, the Midwest saw its total industrial investments increase from $2.3 billion in the first half of 2012 to $3.8 billion in the first half of this year, and its national share increase from 15.1% to 16.5%. And Erik Foster, a Chicago-based principal with Avison Young and the national practice leader of the firm's industrial capital markets team, told GlobeSt.com that the region has not hit its peak. “I think it's going to continue to be steady,” especially considering the central role the region plays in the nation's distribution networks. “We're still in the early innings.”