ST. LOUIS — Earlier this year, prominent architecture firm HOK eyed an exit from downtown after 70 years of operations here.
Then it toured Peabody Plaza, a 15-story glass tower at North Seventh and Market streets with a view of the Gateway Arch and Kiener Plaza.
“You have the Wainwright Building. You have the Arch. You have the ballpark. You have Citygarden,” said Margaret McDonald, HOK senior principal. “You feel so connected to the city.”
HOK will be one of roughly a dozen new tenants at the 38-year-old office building when the company moves in next September. Peabody Plaza, at 701 Market Street, is now nearly fully occupied, with more than 30 tenants. The building secured 15 leases and lease renewals over the past 18 months, its brokers said.
Peabody Plaza bucks trends of downtown vacancy
Snow falls over Kiener Plaza Park, the Old Courthouse, and the Gateway Arch as seen from office where HOK is soon to be located, on Monday, Dec. 2, 2024, at Peabody Plaza in St. Louis. The global architecture firm is set to move into the building in late 2025.
Zachary Linhares, Post-Dispatch
Meanwhile, the central business district continues to shrink: Downtown’s occupancy has fallen year-over-year from 78.1% last year to 77.4%, despite modest gains seen across the region, according to the latest data from Cushman & Wakefield.
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Not a decade ago, the only attention Peabody Plaza drew was calls for its demolition.
Then came a new owner, at the right time, with money to spend on upgrades.
Tenants like the Sandberg Phoenix law firm, Arcturis architecture firm, Ukraft Cafe and Gateway Arch Park Foundation have all moved to the building since New York-based owner Briar Meads Capital bought the property almost five years ago. They join the building’s namesake and longstanding tenant, Peabody Energy, which has planted its flag there since 1992.
“People are looking for parking, security and amenities like a fitness center, restaurants and banking,” said Rick Messey, one of the CBRE commercial real estate brokers that leases the building. “We have all of those.”
Its desirability marks an ironic turn for Peabody Plaza.
In the early 1900s, civic leaders sought to create a 2-mile grassy mall between Tucker Boulevard and Grand Avenue.
Over the decades, one idea bubbled up, to create a mall with an unobstructed view of the Gateway Arch. The concept morphed over time, and 2 miles became several blocks surrounding Kiener Plaza.
In the 1980s, a redevelopment corporation razed three historic buildings to clear the area for the new Gateway Mall. At the same time, business and union leaders pitched a series of new office towers to be built there.
In 1986, developers erected one, what would become the Peabody tower, at a cost of $70 million. Deep in debt, the developer later scrapped its plans for the other towers.
Ever since, preservationists and community members have called for the tower’s demolition, labeling it “urban barbarism,” a “monstrosity” and “the greatest insult to our built environment.”
Peabody Plaza bucks trends of downtown vacancy
Peabody Plaza as seen from Citygarden Sculpture Park on Monday, Dec. 2, 2024, in St. Louis.
Zachary Linhares, Post-Dispatch
In 2016, the tower was put into receivership after owner Triple Net Properties of California defaulted on a $44 million loan.
Four years later, days before a national emergency was declared and states shut down due to the coronavirus, Briar Meads Capital closed on its purchase of the building. It paid $36 million for it.
At that time, people were saying work from home was here to stay, that no one was coming back to offices, said Seth Berkowitz, managing director at Briar Meads Capital.
“There were hyperbolic headlines,” he said.
But Briar Meads, which specializes in real estate that needs investment, didn’t believe it.
And Peabody Plaza, Berkowitz said, had good bones: Decent occupancy. Unparalleled views. A 7,000-square-foot fitness center. Proximity to downtown’s courthouses.
The building needed better food options, maintenance upgrades and an engaged property manager, he said.
And Berkowitz, who lives in New York, is a St. Louis native, and knew the local real estate market. He and his partner, Sid Singh, regularly come to St. Louis to meet with tenants and prospective tenants.
There was a bump in 2022, when several downtown companies, including Peabody, threatened to leave after nighttime gunfire hit buildings, broke windows and injured and killed people.
Berkowitz said his company focused on what it could control, like upping building security and being on-call to tenants.
John Warren, senior director at Cushman & Wakefield, said Peabody Plaza’s success comes down to an owner who has been aggressive in attracting business through favorable rental rates, cash for tenants to improve their spaces and other rental concessions.
Peabody Plaza bucks trends of downtown vacancy
A man walks through the Market Street entrance of Peabody Plaza on Monday, Dec. 2, 2024, in St. Louis. Tenants at Peabody Plaza include Peabody, the Gateway Arch Park Foundation, and soon HOK.
Zachary Linhares, Post-Dispatch
Nearby, Bank of America Plaza on Market Street and the Equitable Building on Broadway are both in receivership after their respective cash-strapped owners couldn’t keep tenants.
Briar Meads has so far invested around $10 million in Peabody Plaza, including new elevators, Berkowitz said.
“When you buy an office building, you can’t buy it and then just expect the building to fund itself because then you can end up in a trap,” he said.
CBRE First Vice President Whitney Allen, who also handles leasing for Peabody Plaza, said the building’s 400,000 square feet isn’t so big Briar Meads had to find huge companies to fill the space.
“You’ve got an almost boutique, full-service building right in the heart of downtown St. Louis that we were able to get more traction to build where we didn’t have to land a 100,000-square-foot tenant,” she said.
Gateway Arch Park Foundation moved to Peabody Plaza in 2023 after its lease expired at One Memorial Drive, just steps from the Arch.
Peabody Plaza had the room to grow that his organization wanted, said Executive Director Ryan McClure. The ownership also was proactive in addressing issues at the building as well as helping to grow the foundation’s events, like Winterfest.
“The biggest thing is a building that is investing in itself,” McClure said.
Peabody Plaza bucks trends of downtown vacancy
