urbanSTL

Not all bad news from the latest Colliers report but ATT sure is a black eye for downtown....

CENTRAL BUSINESS DISTRICT
St. Louis’ CBD currently has an overall vacancy rate of 20.3%, down slightly from 20.8% last quarter. Class A vacancy rates declined from 20.1% a quarter ago to 19.8% currently. Though the vacancy rate is the highest of all the submarkets, absorption from first quarter to second was positive - nearly 140,000 square feet - which tells us some companies continue to expand following the major departure of AT&T’s 700,000 square feet of space earlier this year. Class A rents are up from $17.96 per square foot in second quarter 2013 to a current rate of $18.06 per square foot. Despite the positive absorption this quarter, AT&T is making plans to give back another 500,000-600,000 square feet over the next 24 months meaning absorption will most likely trend downward.

After almost 30-years, I don't see how the AT&T Tower - once unhinged by AT&T - will be considered a Class A building unless it is thoroughly renovated - inside and out.

If it is not renovated to secure multiple tenants looking for Class A space, downtown St. Louis will need new Class A space or it will continue to loose out to Clayton and Chesterfield.

My hope is the AT&T Tower will secure one major tenant for the whole building.

Laclede Group is leasing an additional 35,000 sf at Bank of America Plaza.

How much space did they have in their current building? Nice to see some space being absorbed but I would have rather them kept space in their current building in addition to their new one.

They're leaving behind 120,000 sq. ft. at the Laclede Gas Tower/720 Olive. Between the 128,000 they've leased at 700 Market and the 35,000 at B of A Tower, they seem to be pretty eager to be done with the LG Tower/720 Olive Street.

Great to see the net absorption. I'm sure this will help soften the blow as ConAgra downsizes in St. Louis and starts needing less space/has their leases expire.

roger wyoming II wrote:I'm surprised to see that Laclede appears to be taking up more space post-720 Olive; the general trend is for having smaller square footage per employee and moves are generally a time of downsizing space if not employees. So this is a nice exception.

It probably has something to do with Laclede nearly tripling its customer base in the last year. While apparently most/all of the Alagasco jobs are going to stay in Birmingham, the Missouri Gas Energy acquisition probably allows for some consolidation, but consolidation to the STL office. Regulatory compliance and government relations probably makes more sense in one office as opposed to two on either side of the state.

wabash wrote:

roger wyoming II wrote:I'm surprised to see that Laclede appears to be taking up more space post-720 Olive; the general trend is for having smaller square footage per employee and moves are generally a time of downsizing space if not employees. So this is a nice exception.

It probably has something to do with Laclede nearly tripling its customer base in the last year. While apparently most/all of the Alagasco jobs are going to stay in Birmingham, the Missouri Gas Energy acquisition probably allows for some consolidation, but consolidation to the STL office. Regulatory compliance and government relations probably makes more sense in one office as opposed to two on either side of the state.

Unfortunately, I don't think that's the case. There is some job growth and some job relocations from elsewhere in the City (Forest Park Ave), but not a whole lot. The real driving force is that the Gen Am building's weird design results in a lot of space that can't (or won't) be used to house employees. Basically, they can fit significantly more employees in 120,000 square feet at 720 Olive than they can in 128,000 square feet at the Gen Am.

^
And here, when a downtown law firm outgrows its space, it moves to Clayton. Thanks, Husch!

Not always. Polsinelli moved from clayton to Deloitte downtown and is taking another floor. 16/30 of the regions top law firms are headquartered downtown. Anders recently combined offices downtown at BOA Plaza, that building is almost now 100% leased. 500 Broadway is a huge success story and is gaining even more tenants. The sad story are the older office buildings like 720 Olive, 515 Olive, 1015 Locust, Frisco and Shell. Oh and 1010 continues to struggle as well, mostly do to strange ownership over the last decade and weak parking options. The older inventory continues to be converted or partially converted to residential. Now if we could get companies like Rawlings and RGA to consider downtown, we will see success. I think some STL firms/companies are FINALLY realizing that younger people under 35 don't want to work in places like earth city and chesterfield. This is a national trend and STL is finally starting to wake up, I hope...otherwise millennials will flock to urban, walkable cities.

^Real economic revitalization of downtown requires a positive feedback loop. True or false?

Only 350-500 residents? Keep in mind Denver is adding a few thousand a year. We have to do better.

When it comes to inter regional population job/residential location do jobs follow people or do people follow jobs?

I have always determined that office locations follow where people live. Boost residential growth and jobs will follow.

Topopps whose founder Jim eberlin was just written about in last weeks business journal recently leased 11,000 sq ft in the Curlee Building. They moved from T-REX and will soon have 40 employees downtown. The company was founded this past January.

^ good stuff.... I think we have maybe a half dozen or so t-rex grads now leasing elsewhere downtown?

The Post recently had a Commercial Real Estate Notes article that included the following from a Commercial Broker at Balke Brown Transwestern:

Metro is currently considering a move to more than 100,000 square feet in a “traditional” office tower downtown, as opposed to their current “untraditional” office facility on Laclede’s Landing. The combination of residential conversion and a Metro relocation would result in a significant positive absorption for the CBD.

While Metro moving from Laclede's Landing closer to OPO Plaza (assumedly) is something of a wash for downtown, it could still be a boost to job consolidation in the downtown core. Living on the Landing might not appeal to most, but I think those old cast iron warehouses, like the one Metro is currently in, could make for a great residential conversion. While 100,000 sq. ft. wouldn't be enough to keep the lights on in the AT&T building, it could be an major tenant for any of the other downtown core office buildings.

Stewart Title will be moving to 500 N Broadway and take up floors 8 and 9. Leaving the building across the street from Union station.