Year after year the St. Louis industrial market continues to be strong ending 2017 with 6.95 million square feet of leasing activity and a huge 11.59 million square feet of sales activity, a 56% increase over 2016. Direct asking rents felt increasing pressure throughout the year, rising to $4.46 per square foot at the end of fourth quarter 2017 from $4.14 per square foot in first quarter.
Speculative construction, especially in tax abated business parks, was red hot in 2017. Ninety percent (90%) of new industrial construction in 2017 was spec development. Currently, there is 2.3 million square feet still under construction, both build-to-suit and spec development. Of this new inventory, 1.9 million square feet will be warehouse/distribution space and 380,000 square feet will be manufacturing space.
After entering the St. Louis market in 2016 leasing nearly 1.5 million square feet, Amazon added 450,000 square feet to their local footprint in 2017. GEODIS, a logistics and freight transportation provider, leased 624,000 square feet in the newly completed Gateway East 624. Fairfield Processing Corporation placed its distribution facility in North Broadway Distribution Center and currently occupies 300,000 square feet. Quiet Logistics, another e-commerce fulfillment company now occupies 270,000 square feet in Hazelwood Logistics Center 2 and Duke Realty leased 161,000 square feet of its new 300,000 square foot spec building in Premier 370.
In 2018, Colliers expects demand for users needing 20,000 to 70,000 square feet to continue, especially pursuing buildings to own. Square footage demand however will again be significant, driven by several very large transactions on the horizon. This is a great time to be in St. Louis. Local companies are expanding and new companies are moving in creating significant opportunities for continuing industrial development.