The 28.4-million-square-foot St. Louis community-neighborhood shopping center market was about as flat as a pancake in the second quarter of 2012. The vacancy rate was unchanged at 13.0%, with zero net absorption and new supply. The average asking rent added a penny to $14.68 psf, while the average effective rent was unchanged at $12.04 psf. July saw a repeat of the second quarter, with the exception that the penny gain was in the effective average. Rents had increased 0.1% by both measures in 2011.
With demand limited, community-neighborhood construction has stopped. Just 12,000 square feet was added in 2011, and just 16,000 square feet is under construction. Reis predicts an upturn in demand late in the year will allow the vacancy rate to slip to 12.9%, as rents rise 0.6% by both measures. Both supply and demand are forecast to be slightly more robust in subsequent years, as the vacancy rate falls toward 11.0% and annual rent gains eventually surpass the 3.0% mark.
Big-boxes are doing better, as the second quarter power center vacancy rate is 6.5% according to Reis, down 20 basis points for the quarter and 130 from a year earlier. The average asking rent for power centers is $18.78 psf, up 0.5% year-over-year but down from the previous quarter. Aside from the dueling outlet malls (see Special Real Estate Factors), the 370,000-square-foot retail portion of the Streets at St. Charles in St. Charles mixed-use project is the largest under construction. It is expected to complete construction in May 2013. The 125,000-square-foot third phase of the Shoppes and Hawk Ridge power center is under construction with an uncertain completion date. Heartland Real Estate Business reports three Walmart stores in the planning phase, in Ellisville, Shrewsbury, and Florissant, along with a Sam’s Club in Glen Carbon.
“Retail operations will turn around this year,” Marcus & Millichap predicted for St. Louis. The source expects the vacancy rate to slip 10 basis points to 10.4% during 2012, as the average asking rent rises 0.2% to $14.24 psf.