CLAYTON • Some of the most valuable pieces of ground in the region could be hitting the market soon.

The seller: St. Louis County.

The county is sitting on millions of dollars worth of property in downtown Clayton, considered by many as the strongest submarket for office and residential real estate in the St. Louis area.

“Everybody that calls from out of town, they all want a site in Clayton, and there’s never that many,” said Dennis DeSantis, a commercial real estate broker in the local office of Colliers International.
Clayton is actually one of the more desirable real estate markets in the Midwest, and a single-digit office vacancy rate means there’s bound to be more appetite for office construction at some point, said TJ Redmond of commercial real estate firm CBRE.

“The hard part with Clayton is just the lack of sites,” he said.

St. Louis County government has sites that could be marketed. Estimated to be worth a combined $31.5 million, according to county real estate records, the land includes two former St. Louis County office sites on Meramec Avenue and the parking lot next to the Lawrence K. Roos Government Building.

Also headed for market is the former family courts building on South Brentwood Boulevard, just north of Enterprise Holding’s Clayton headquarters.

“Enterprise wants that property in the worst way,” said Denny Coleman, who as the former head of the St. Louis Economic Development Partnership is familiar with the county’s long-term plans to sell the property. “That provides them with the opportunity for growth down the line. Clayton would like to see that happen. Enterprise would like to see that happen.”

Enterprise said it has been in communication with the county for more than 20 years about the now-empty family courts building, stretching back to the administration of County Executive George R. “Buzz” Westfall.

“Those conversations have continued with the current administration of St. Louis County,” Enterprise spokeswoman Laura Bryant said.

‘Optimal time to sell’

Almost a year ago, St. Louis County transferred the Clayton property it wanted to divest to the St. Louis County Port Authority, a move meant to make it easier to find buyers for county-owned property. St. Louis County had used the Port Authority in the past to sell real estate after struggling to reach deals on other holdings, Coleman said, pointing to the former county jail in Chesterfield as an example.

“The county charter has some very draconian restrictions and stipulations related to the sale of any real estate, which makes it very difficult to sell to any sort of development entity,” he said. “The Port (Authority) can sell it like a real transaction. It doesn’t have to follow some of these county restrictions.”

The transfer of the Clayton property to the Port Authority, an entity staffed by the St. Louis Economic Development Partnership, had been planned for years.

Voters passed a bond issue in 2012 to finance a new family courts building next to the main courthouse in downtown Clayton, putting the deal in motion. Also that year, the St. Louis County Council passed an ordinance outlining the process for selling off the old family courts building, the parking lot and the Meramec Avenue properties.

The sale of the old family courts building, which had asbestos insulation that makes renovation problematic, is supposed to offset some of the construction costs.

The building at 121 South Meramec Avenue, which housed county offices, is in bad shape, too. Extra supports had to be installed in the parking area underneath the structure, the former headquarters for Seven-Up, to stabilize it, and the utility system needed expensive upgrades.

After county employees were moved out around 2012, construction crews for the family courts project used the building for offices. Next door, the site of the former health department building at 111 South Meramec was used to stage equipment during the construction project.

With the family courts project complete, the county transferred all the properties to the Port Authority in February and March. According to the 2012 ordinance, the Port Authority has to return to St. Louis County any money from a sale, which can’t be for any less than 95 percent of appraised value.

“This would seem to be an optimal time to sell that property for a high-quality development,” Coleman said.

The city of Clayton has recently found buyers for some of its downtown property, including a surface parking lot and its former police headquarters. An Indianapolis developer is pushing a luxury apartment tower for the parking lot and another has a hotel planned for the police building.

Clayton city officials said they haven’t heard from county officials about any plans for the Port Authority property in months.

DeSantis said there is some investor hesitation in the Clayton market as apartment developers wait to see how the county seat absorbs the 600 or so units that have just opened.

“We’ll see how that goes,” he said.

And the former Seven-Up building, he said, will likely need to be torn down because of structural issues.

“Demolition’s not going to be cheap on that,” he said.

Parking lot plans ‘unclear’

At least one developer is interested in some of the Port Authority land.

Joel Montgomery Jr., who owns several commercial properties on Central Avenue, has been eyeing the county-owned parking lot just to the south for years.

His company’s website even describes plans for a mixed-use project with several hundred thousand square feet of office space and a hotel by combining his family’s land with the Port Authority-owned parking lot. A tentative agreement with the county to solicit developers for the combined site has since expired, he said.

A plan Montgomery put forward in 2014 for a 33-story apartment tower using just the land he owns on Central Avenue is on hold while he waits to see how the other apartments hitting the Clayton market perform.

But he’s also waiting to see what St. Louis County has in mind for the parking lot. He hasn’t heard anything about a request for proposals or any other movement to sell the property, but he hopes to work with the county to develop a larger mixed-use project.

“Right now, it’s unclear what their intentions are,” Montgomery said.

Katy Jamboretz, a spokeswoman for the St. Louis Economic Development Partnership, said there was nothing new to report on plans to sell the properties.

A request for proposals on the Brentwood property was being discussed and revised as early as February, according to Port Authority documents, but it’s unclear when it will be advertised.

However, the Port Authority has been paying tens of thousands of dollars to Stone, Leyton and Gershman for legal services preparing the properties for sale, according to accounting statements obtained under an open records request. In July, the Port Authority upped its retainer for the firm, to $125,000 from the $100,000 it had approved in January 2017 for work related to selling the properties.