Allen Klippel, SIOR, First Vice President, CB Richard Ellis, gives commentary on the dominant trends in the 2009 St. Louis industrial real estate market. He also discusses the impact of this paradigm shift in the industrial market.
“Over the last several years, St. Louis, MO has become recognized as a distribution hub for such fortune 500 companies as Dial, Unilever, Proctor & Gamble, Hershey Foods, Save-A-Lot, companies supplying the Chrysler & GM plants have also been a positive factor in our market. The economic slow down has put the brakes on facility expansion for many big name companies and auto manufacturer’s are starting to give back space as well. But we still see local and regional companies anywhere from 25,000 to 50,000 square feet active in the market.”
As for the impact of the paradigm shift on the industrial market, “Most notable may be the over built situation that we currently have in the big box distribution projects. Even as demand began to slow, local and national developers continued to build. Today there are a number of state of the art distribution center buildings ranging in size from 200,000 square feet to 500,000 square feet available for lease. With a halt in new construction it is our opinion that supply and demand will balance in the foreseeable future and that this excess warehouse capacity will disappear. But I believe that today, matter of fact right now today, is a historic opportunity for tenants in the market place.”
What are the hot spots in the industrial market right now?
“In spite of the slow down, some industrial giants are still expanding, whether it’s stream lining their distribution operation or to serve the manufacturing plants. This can be seen in developments such as Gateway Commerce Center in the Metro East Illinois area where companies can achieve a cost of occupancy lower than the Missouri alternative due to low brown costs and tax abatement. Otherwise quite honestly the hottest spots in the market right now are places where tenants have leases rolling over or they’re busting at the seams and need to move.
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