The 45.9-million-square-foot general purpose, multi-tenant St. Louis office market went nowhere in the second quarter according to Reis. The vacancy rate was unchanged at 17.6%, as net absorption was close to zero and no new space completed. The rate had fallen 30 basis points in the first quarter. There was no change in either Class A or B/C vacancy, leaving the respective rates at 15.2% and 19.7%. The peak rate for the cycle was 18.5% in the third quarter of 2010; the rate hasn’t been much below 15.0% since 2001.
The vacancy rate was essentially unchanged in July as well, but Reis predicts a decrease to 17.3% by year-end 2012. Demand is expected to pick up, and no additional space beyond the 94,000 square feet added during the first quarter is expected to complete construction. In fact no general purpose, multi-tenant space is under construction. Limited new supply and improving demand are forecast to push the rate back under 15.0% by the end of 2016, if only barely.
Rents are flat. In the second quarter both the average asking rent and the average effective rent were unchanged at $20.42 psf and $15.59 psf, respectively. Rents are up just 0.5% asking and 0.7% effective from a year earlier, the same pace of gain reported for all of 2011. The respective Class A and B/C asking averages for the second quarter of 2012 were $23.86 psf and $17.27 psf, down and up 0.1% for the period. Although the asking average was unchanged and the effective average went up just a penny in July, Reis predicts respective gains of 1.0% and 1.5% for all of 2012. Subsequent increases are forecast to be somewhat larger year-by-year.
Cassidy Turley reports a vacancy rate of 16.5% and an asking rent of $18.87 psf. The first quarter Express Scripts expansion accounts for most of the occupancy growth in the first half of 2012, according to this source.