Office Scott Savacool, SIOR, CCIM Sansone Group
Office Committee Jim Mosby, SIOR, CCIM Senior Managing Director, Principal, Cassidy Turley Chris Fox, SIOR, CCIM Executive Vice President, Gershman Commercial Tom Bajardi, SIOR, CCIM Senior Associate, Sansone Group Art Kerckhoff, CCIM Vice President, CBRE Ruth Sergenian St. Louis Regional Chamber
Agenda 2013 Market Highlights Leasing Investment Sales / User Sales The Results 2014 Market Drivers Forecast & Predictions
2010-2012
2012
2013
Office Summary Office Inventory 48,920,872 SF 2013 Net Positive Absorption 727,543 SF Four consecutive quarters of positive absorption (first time since 2004) All office submarkets ended 2013 with positive absorption (first time since 2000) Overall vacancy of 15.7% (lowest since 2008)
Overall Unemployment 11.00% 10.00% 9.00% 8.00% 7.00% U.S. St. Louis 6.00% 5.00% 4.00% 2008 2009 2010 2011 2012 2013 Source: St. Louis Regional Chamber
St. Louis Office Employment 315,000 310,000 305,000 300,000 295,000 290,000 2008 2009 2010 2011 2012 2013 2014 Total St. Louis MSA Office Using Employment Source: St. Louis Regional Chamber
Major St. Louis Employers 2008 2013 1. BJC Health Care 2. Boeing Defense Systems 3. Washington University 4. SSM Health Care 5. Scott Air Force Base 6. Wal-Mart Stores, Inc. 7. Schnucks Markets, Inc. 8. United States Postal Service 9. St. John s Mercy 10. McDonald s 1. BJC Health Care 2. Boeing Defense, Space, Security 3. Washington University 4. Scott Air Force Base 5. SSM Health Care 6. Mercy 7. Schnucks Markets, Inc. 8. Wal-Mart Stores, Inc. 9. McDonald s 10. AT&T Source: St. Louis Business Journal Book of Lists
Healthcare, which never shrank, has added 28,000 jobs since 2007 Financial Services, fueled by firms like Wells Fargo, Stifel, Scottrade and Edward Jones, is the only sector to replace all jobs lost in the recession St. Louis is 2 nd only to New York in concentration of brokerage and financial services firms
St. Louis Office Occupancy 92.00% 90.00% 88.00% 86.00% 84.00% 82.00% 80.00% 78.00% 76.00% 74.00% 72.00% 70.00% 68.00% 66.00% 2008 2009 2010 2011 2012 2013 Class A Class B Statistics are a blended number from a variety of business sources
Absorption 800,000 600,000 400,000 200,000 0-200,000-400,000-600,000-800,000 2008 2009 2010 2011 2012 2013 Statistics are a blended number from a variety of business sources
$26.00 Average Asking Rent Trends $24.00 Clayton $22.00 $20.00 Suburban $18.00 $16.00 City $14.00 2008 1Q 2008 3Q 2009 1Q 2009 3Q 2010 1Q 2010 3Q 2011 1Q 2011 3Q 2012 1Q 2012 3Q 2013 1Q 2013 3Q
Market Statistics Inventory Occupancy Absorption Rental Rate Class A Occupancy Class A Rental Rate Downtown 11.6 MSF 79.9% +160,000 SF $16.62 86.4% $19.12 Clayton 6.9 MSF 87.8% +5,000 SF $23.70 90.8% $25.79 West County 16.8 MSF 87.1% +276,404 SF $20.69 92.5% $23.68 South County 2.6 MSF 86.8% +70,129 $20.79 86.3% $22.74 North County 6.2 MSF 83.7% +169,475 SF $17.38 89.3% $20.78 St. Charles 4.4 MSF 88.1% +46,535 SF $17.24 92.2% $19.10 Statistics are a blended number from a variety of business sources
Sublease Space 600,000 500,000 550,223 SF 453,971 SF ½ of 1% 400,000 300,000 200,000 262,200 SF 100,000 0 Statistics are a blended number from a variety of business sources
1000 900 800 700 600 500 400 Large Blocks of Space Clayton City Suburban 300 200 100 0 5 in CBD 4 in CBD 10 7 <10,000 10,000-20,000 20,000-50,000 50,000-100,000 >100,000 Statistics are a blended number from a variety of business sources
Large Leases
St. Louis City 130,000 SF renewal at St. Louis Place 110,000 SF renewal at 10 S. Broadway 44,000 SF new lease at Bank of America Plaza
Northwest County 99,000 SF new lease at 3470 Rider Trail 78,000 SF new lease at 13022 Hollenberg 46,000 SF new lease at 3301 Rider Trail South 43,000 SF new lease at Riverport Office Center
South County 42,000 SF new lease at Laumeier II 17,158 SF renewal at Southwest Exec 12,758 SF new lease at Laumeier II
West County 58,494 SF new lease at 520 Maryville Centre 45,688 SF new lease at 575 Maryville Centre 46,161 SF new lease at 575 Maryville Centre 51,000 SF new lease at CityPlace 6
St. Charles County 90,000 SF new lease at The Crossings in Wentzville
Clayton 56,000 SF new lease at 101 S. Hanley 30,000 SF sublease at Pierre Laclede II 26,000 SF new lease at Shaw Park Plaza
Investment Sales
Tryperion Partners 6 building portfolio from Duke Realty South County, West County, Westport 637,000 SF $84,000,000 $131.87 / SF
Metonic Real Estate Solutions Cityplace 6 from Koman Group Creve Coeur 224,000 SF $40,300,000 $180 / SF
Westport Capital Partners 14528 S. Outer Forty from IPERS West County 210,500 SF $16,750,000 $80.00 / SF *This value was impacted by the pending vacancy of Mercy (187,000 SF) which represents 89% of the building
Griffin Capital Essential Asset REIT 13655 Riverport Drive from Columbia Property Trust Earth City, Riverport 205,107 SF *Portfolio sale of 23 properties across 9 markets resulting in an averaged value of $129.25 SF for this building
Hogan Trucking 2150 Schuetz from TriStar Properties Maryland Heights 80,000 SF $7,280,000 $91.00 / SF Owner / User Purchase
2013 Results
2014 Market Drivers
Employment Forecast Office Using Employment Growth of 2.8% 8,562 Additional Jobs in 2014 Double the Growth of 2013 @ 100 SF per employee = 856,200 SF of absorption US Bureau of Labor Statistics
Large Tenant Effect
Large Tenant Effect St. Louis City AT&T vacating over 1 million SF of space between 2015-2017 Laclede Group moving from Laclede Gas Building to Gen Am Building and vacating 100,000 SF
Large Tenant Effect St. Louis City Bank of America vacating approximately 100,000 RSF at Bank of America Tower (100 N Broadway) by the end of 2014
Large Tenant Effect West County RGA vacating 180,000 SF at Timberlake Corporate Center and moving to their new corporate headquarters Mercy vacating over 200,000 SF leased space throughout St. Louis and moving to their new corporate headquarters
Forecast & Predictions
Market conditions The Forecast Balanced market equal playing field Limited supply of large blocks of space will force large users to rethink their requirements Financial services sector will continue to grow Healthcare sector will continue to increase