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ST. LOUIS-According to the latest Q1 reports from CB Richard Ellis’s Mark Harrington, St. Louis’s office market has seen a recent rise in vacancy, while the industrial sector fares better.

In the St. Louis area, office vacancy rose this past quarter to 15.1%, an increase from the year-end number of 14.8%. According to the report, “Most brokers view the market as being in a ‘wait-and-see’ period, as companies track economic indicators to find out when the business cycle may turn around.”

Companies that do have the wherewithal to upgrade to new space have been nervous to make the switch with the uncertainty of the economy. “The consensus is that several companies have the ability to upgrade to new space, but are concerned about conserving cash and cutting costs, and are therefore staying put or, in some cases, moving from class A to class B space to save money,” Harrington’s report states.

Still deals are getting done. Husch Blackwell Sanders leased 215,000 square feet at The Plaza in Clayton. While the law firm’s move will be a huge bonus to the Clayton area, which is now experiencing a shortage of big-block space, it was a large blow to the downtown market to lose such a large tenant. Additionally, as reported by GlobeSt.com, Scottrade purchased two buildings and two lands parcels at Maryville Centre from Duke Realty Corp. at the end of March.

Still average lease rates have fallen in Q1, after the market saw some potential upturn at the end of 2008. Short-term renewals are the new trend in leases. This allows a tenant to avoid a costly move to new space, while also helping to keep a building’s occupancy up.

“Because short-term renewals are so prevalent, very attractive rates are being offered for five-year leases, as these are seen as more long term and stable for landlords,” the report states.

The industrial market, which saw an incredible influx of property between 2006 and 2008, has managed to fill more than two-thirds of the newly online space. And while there seem to be fewer companies looking for large spaces in the market, the availability rate dropped to 11.9% in Q1 from 12.1% at the end of 2008. The drop in empty space bucks a year-long trend of rising availability. Still, the vacancy rate rose to 8.2% from Q4′s 7.7%.

The CBRE report on St. Louis’s Industrial market says the city is still on par with competitive cities such as Indianapolis, Memphis and Kansas City as regards vacancy.

Q1 was defined by a number of smaller deals, between 10,000 and 30,000 square feet, that pushed the sector forward. “These smaller-scale, often short-term leases are expected to continue in the future, with the strongest drivers of the industrial market being the defense and advanced manufacturing industries.

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