St. Louis Office Market
The market recorded 264,183 SF of net absorption this quarter, reducing the annual total to negative 48,150 SF. Vacancy remained unchanged year over year at 13.5%, supported by positive net absorption in the Clayton and West County submarkets. Vacancy rates are expected to remain steady in the coming year as the market continues to recalibrate. Tenants maintain significant leverage across most Metro submarkets; however, the availability of heavily discounted deals is diminishing as multiple firms finalized leases in the second half of 2024. Average asking rental rates declined from $23.00/SF to $22.71/SF this quarter, marking a 0.4% decrease for 2024. Rental rates are projected to remain flat over the next year, with some landlords choosing to lower rents rather than increase concessions due to limited liquidity.
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St. Louis Industrial Market
Net absorption in the fourth quarter of 2024 totaled 181,615 SF, following 2.1 MSF in 3Q24—the highest quarterly total since 2Q22. The construction pipeline currently stands at 3.2 million SF, with 79% consisting of build-to-suit (BTS) projects. Speculative construction is expected to remain limited in 2025. Vacancy held steady at 4.6%, supported by positive net absorption from various mid-sized deals and only 150,000 SF of new deliveries to the market. This stable vacancy rate underpins rental rate growth fundamentals and is likely to encourage developers to break ground in 2025. Year-over-year, asking rental rate growth for the overall market was negative, declining by 3.1%.
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