ST. LOUIS—The office market in the St. Louis area has seen a lot of robust activity in the past year or so, especially in the suburbs, and when its class A properties hit the market, national investors pay attention. El Segundo, CA-based Griffin-American Healthcare REIT III Inc., for example, has just acquired Corporate Plaza, a five-story, 210,409 square foot office building at 14528 S. Outer 40 Rd. in suburban Chesterfield for $36 million.
“I would say that we had very strong interest not just from institutional investors like Griffin, but also high net worth syndicated investors from New York and many others,” Transwestern managing director Gary Nussbaum tells GlobeSt.com. Nussbaum, principal Mike Donovan and senior associate David Matheis represented the seller, an entity owned by funds managed by Westport Capital Partners LLC, in the transaction. “It had a very broad appeal, particularly from investors that were attracted to the higher potential yield relative to comparable assets in a primary office market like Chicago.”
In many ways the big price tag, which at about $171 per square foot was a very strong one for the area, was not surprising. Although in regions like Chicago it’s the CBD that contains the strongest submarkets, in St. Louis the reverse is true, with the suburbs leading a weaker central core. And it’s the western suburbs such as Clayton, Creve Coeur and Chesterfield that are particularly attractive. “You would be hard-pressed to find a lower vacancy rate among any other office submarkets in the Midwest,” Nussbaum says.
As reported in GlobeSt.com, West County, which includes Chesterfield, was the St. Louis region’s best performing submarket in the second quarter, posting 118,000 square feet of absorption, according to a mid-year report by DTZ. And Mercy Healthcare’s long-term renewal of its 186,000 square feet of space at Corporate Plaza, the largest lease of the quarter, preserved the property’s 98% occupancy rate. Other tenants in the building include CPC Logistics Inc. and Penske Truck Leasing Co.
Mercy’s lease had been set to expire in 2017, but the extension means the new owner can count on it as a tenant until at least 2025. Considering the tightness in the Chesterfield market, says Nussbaum, “their options would have been limited a few years from now when they would have needed a very large block of space.”
“Corporate Plaza has the rare combination of class A space, a long-term, investment-grade tenant and a desirable location in a market with extremely low vacancy,” he concludes.