ST. LOUIS—Industrial development has surged in the St. Louis metro area, and much like many other Midwest regions, supply and demand seem to be in balance. According to a new report from Cushman & Wakefield, the market recorded 2.2 million square feet of positive absorption in the second quarter of 2018, and as prices and rents keep rising, developers plan to soon launch several large buildings.
“Development activity has been the biggest story over the past several years with 4.6 million square feet of new industrial construction in 2017,” says Brian Ungles, managing principal, Cushman & Wakefield, St. Louis. “We expect that trend to continue, as we had 5.8 million square feet of industrial space under construction at the end of the second quarter of 2018.”
North County continues to be a strong submarket and accounted for 63.4% of all deliveries in the first half of 2018, according to C&W. St. Charles County recorded 297,000 square feet of positive absorption in the second quarter of 2018, largely due to new construction. Nearly 1.9 million square feet of space is under construction there with average net asking rates pushing $5.36 per square foot.
The St. Louis market has now seen 2.9 million square feet of positive net absorption year-to-date. Combined, North County and St. Charles account for 70.4% of the total leasing activity.
North County continues to see strong development, as NorthPoint Development started construction on a new 385-acre project. The company recently finished its final two buildings at Hazelwood Logistics Center, an industrial park that added more than 1.8 million square feet of speculative inventory to the Hazelwood submarket. The eight completed buildings are now 95.4% leased.
Developers in Metro East now have 2.8 million square feet under construction, including World Wide Technology’s 2.0 million square feet build-to-suit. Of the 1.9 million square feet under construction in St. Charles County, 77.4% is pre-leased.
Triple-net asking rents grew 5.7% year-over-year, C&W says, and “the latest trends suggest that pattern will continue into 2019.”