st. louis capital markets · $15 $20 $25 1q10 1q11 1q12 1q13 1q14 1q15 1q16 1q17 1q18 1q19 1q20...
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ST. LOUIS CAPITAL MARETS REPORT 1Q20
ST. LOUISCAPITAL MARKETS
RESEARCH 1Q 2020
© Newmark Grubb Zimmer 2020
EXECUTIVE SUMMARYNewmark Grubb Zimmer (NGZ) is constantly monitoring market indicators, tracking and analyzing supply and demand drivers, cyclical patterns and industry trends. The following quarterly research report examines the multifaceted St. Louis investment market.
NGZ research and analytics has established a system of data flow unique in our industry. Rather than rely on third-party data sources, our data acquisition efforts involve inputs from advisors in the field, analysts and brokers executing transactions. NGZ research converts market data and analysis into knowledge that creates value for our clients.
Our clients include market-leading investors and distinguished institutions in and around the St. Louis area and the Midwest. Our market knowledge continues to expand as the market progresses and evolves.
SIGNIFICANT MARKETTRANSACTIONS
480 UNITS – SOLD FOR $42,261,000 ($88,040/UNIT)Mid County | 10304 Oxford Hill Drive
MULTIHOUSING | OXFORD HILLS
107,000 SF GLA – SOLD FOR $40,800,000 ($381/SF)Downtown | 3700 Forest Park Avenue
OFFICE | 3700 FOREST PARK AVENUE
401,630 SF GLA – SOLD FOR $35,000,000 ($87/SF)Downtown | 701 Market Street
OFFICE | 701 MARKET STREET
180 UNITS – SOLD FOR $28,400,000 ($157,780/UNIT)St. Charles County | 2000 Styling Ridge Drive
MULTIHOUSING | MEADOWRIDGE APARTMENTS
540,000 SF GLA – SOLD FOR $27,450,000 ($51/SF)Metro East | 3971 Lakeview Corporate Drive
INDUSTRIAL | 3971 LAKEVIEW CORPORATE DRIVE
ST. LOUIS CAPITAL MARETS REPORT 1Q20
CAPITAL MARKETSST. LOUIS MARKET OVERVIEW
The pace of investment activity decreased in the St. Louis market, realiz-ing a decline of 11.4% in total sales when compared to a year prior. As a leading second-tier market, the St. Louis metropolitan area ranked sixth out of the largest nine Midwest markets in total sales volume during the past twelve months. Capitalization rates decreased 11 basis points (bps) compared to the past 12 months, registering 7.09% in first-quarter 2020. Total net absorption across the industrial, office, and retail sectors com-bined, increased 1.8 million square feet year-over-year, registering 168,274 square feet of negative absorption in first-quarter 2020. The multihousing sector realized 2,346 units of net absorption during the past four quarters. Vacancy increased 40 bps and 30 bps for the office and industrial sectors respectively, over the past year. Vacancy decreased 60 bps and 20 bps for the multihousing and retail sectors during the same period. Over the last 12 months, the sales volume for all property types registered $2.5 billion.
Industrial and multihousing assets led the way over the last 12 months accounting for 53.4% of total sales volume.
While COVID-19 has slowed deal flow, the NGZ Investment Sales and Capi-tal Markets Team has successfully assisted clients in closing transactions despite current short-term market conditions. Commercial real estate as an asset class remains a safe investment that historically outperforms other investment alternatives over the long term. Market fundamentals remain strong and the debt markets remain attractive for well capitalized buyers.
We anticipate an active second half of the year as market uncertainty from the COVID-19 pandemic wanes and investors with dry powder pursue opportunities resulting from current market distress.
Source: Newmark Grubb Zimmer Research, CoStar, Real Capital Analytics
5%
6%
7%
8%
9%
10%
11%
1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20
Office Industrial Retail Multihousing
ST. LOUIS CAP RATESINCLUDES PROPERTY OR PORTFOLIO SALES $2.5 MILLION OR GREATER
MARKET ANALYSIS
© Newmark Grubb Zimmer 2020
1Q20 ST. LOUIS
AVERAGE ASKING RENT (PER/SF)
NET ABSORPTION
VACANCY RATE
$0
$5
$10
$15
$20
$25
1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20
Office Industrial Retail Multihousing
2%
4%
6%
8%
10%
12%
14%
16%
1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20
Office Industrial Retail Multihousing
-500
0
500
1,000
1,500
2,000
-3,000,000
-2,000,000
-1,000,000
0
1,000,000
2,000,000
3,000,000
4,000,000
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
Units
Squa
re F
eet
Office Industrial Retail Multihousing
ST. LOUIS CAPITAL MARETS REPORT 1Q20
SIGNIFICANT SALES TRANSACTIONS
SELECT SALES TRANSACTONS | FIRST QUARTER OF 2020
SectorSector BuildingBuilding SubmarketSubmarket Sale PriceSale Price Price¹Price¹ SF/Units²SF/Units²
Office 100 N Broadway Downtown $19,900,000 $39 510,200
Office 1050 Old Des Peres Road West County $19,900,000 $354 56,160
Office Envision Portfolio (4) | 8, 16 Executive Drive & 331, 333 Salem Place Metro East $17,100,000 $110 155,760
Industrial 13860 Corporate Woods Trail North County $12,745,000 $53 241,050
Industrial 420 E Carrie Avenue St. Louis City $12,500,000 $223 56,020
Industrial 4465 Manchester Avenue St. Louis City $8,000,000 $134 59,750
Industrial 3850 Millstone Parkway St. Charles County $6,300,000 $65 96,830
Retail Ladue Market Place Mid County $6,050,000 $633 9,565
Retail Walgreens | 100 Admiral Weinel Boulevard Metro East $3,164,000 $226 14,020
Retail Jack in the Box | 31 Junction Drive Metro East $2,400,000 $973 2,470
1The price per unit/room is displayed for the Multihousing and Hospitality sectors. 2The number of total units/rooms is displayed for the Multihousing and Hospitality sectors.
MARKET ANALYSIS
© Newmark Grubb Zimmer 2020
1Q20 ST. LOUIS
5.5%DEN
6.1%HOU
6.0%DFW
6.1%MIA
6.2%ATL
5.8%DC
6.2%PHI
5.2%NYC
5.5%BOS
6.3%CHI
6.2%KC5.0%
SF
5.1%LA
5.4%POR
5.1%SEA
6.0%MSP
5.0%-5.5%
5.6%-6.1%6.2%+
7.1%STL
6.4%ORL
5.9%SLC
5.8%LAS
5.8%PHX
6.1%NASH
6.9%IND
$129,954,400$85,893,422
$73,050,000
$79,975,000
$14,875,000
$93,350,000
$50,580,341
$29,850,000
$71,500,000
$8,000,000
$40,800,000
$48,500,000
$20,875,000
$62,630,000
$6,700,000
$35,000,000
$42,040,465$19,800,000
$50,000,000$4,600,000
$32,900,000 $37,475,694 $17,938,782 $44,000,000 $4,131,600
Office Industrial Retail Multihousing Hospitality
• BurkHill RE LLC/Gershman Commercial RE
• Lingerfelt CommonWealth Prtnrs
• CapStone Holdings
• Briar Meads Capital
• Larson Capital Management
• Blackstone
• DRA Advisors
• Exeter
• ILPT REIT
• Guggenheim Partners
• The Staenberg Group
• First National Realty Prtnrs
• Select Strategies Realty
• RH Johnson Co
• Service Properties Trust
MOST ACTIVE BUYERS IN THE ST. LOUIS MARKET BY ASSET TYPE 12-MONTH TOTALS (IN MILLIONS)
CAP RATES | ALL PROPERTY TYPES12-MONTH AVERAGE
• Investcorp
• Goldenrod Cap Prtnrs
• Timberland Prtnrs
• Emerald Equity Group
• Hamilton Zanze & Co
• Lodging Hospitality
• St. Charles Hotel Group, LLC
• Double Star, Inc.
• Om Sai Hospitality, LLC
• Welcome Hospitality, LLC
ST. LOUIS CAPITAL MARETS REPORT 1Q20
SIGNIFICANT SALES TRANSACTIONS
DRY POWDER
DEBT FUND DRY POWDER
Source: NKF Research, Preqin
$0$1
$3 $3$5
$6$7
$11
$16 $16
$12$14
$8
$20$21
$18
$25
$34
$45
$38$40
0%
5%
10%
15%
20%
25%
$0
$10
$20
$30
$40
$50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Debt
Fun
d Dr
y Pow
der a
s %
of T
otal
Billi
ons
Aggregate Financing % Debt Fund
Note: Excluding Debt and Distressed Funds Source: NKF Research, Preqin
$86$94
$79
$92
$79
$113
$102
$134$145
$170
$202$196 $197
37.2%39.4%
35.4%
30.4%
27.8%30.1% 29.4% 29.9% 30.3% 30.0% 30.2% 29.6%
31.0%
38.4%
35.1%
36.7% 38.0%
44.3%
32.7% 34.3%
42.5%
33.8%32.4% 33.2%
38.3%35.5%
4.7%3.2%
6.3% 6.5%
8.9% 8.8%10.8% 10.4% 10.3% 10.6%
7.9% 7.7% 8.1%
0%
10%
20%
30%
40%
50%
$0
$40
$80
$120
$160
$200
$240
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Univested Equity Value-add Opportunistic Core & Core Plus
Mike Carlson, SIOR, CCIMExecutive Managing Director, [email protected]
Kevin McLaughlin, SIORExecutive Managing Director, [email protected]
Andrew GartenDirector, [email protected]
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Terms and DefinitionsGross Leasable Area (GLA) – Expressed in square feet. It is the total floor area designed for the occupancy and exclusive use of tenants, including basements and mezzanines. It is the standard measure for determining the size of retail spaces, specifically shopping centers, where rent is calculated based on GLA occupied. There is no real difference between RBA (Rentable Building Area) and GLA except that GLA is used when referring to retail properties while RBA is used for other commercial properties.
Vacancy Rate – The vacancy rate is the amount of physically vacant space divided by the inventory and includes direct and sublease vacant.
Net Absorption – The net change in physically occupied space over a period of time.
Average Asking Rent – The dollar amount asked by landlords for available space expressed in dollars per square foot per year. Retail rents are expressed as triple net where all costs including, but not limited to, real estate taxes, insurance and common area maintenance are borne by the tenant on a pro rata basis. The asking rent for each building in the market is weighed by the amount of available space in the building.
Reproduction in whole or part is permitted only with the written consent of Newmark Grubb Zimmer. Some of the data in this report has been gathered from third-party sources and has not been independently verified by Newmark Grubb Zimmer. Newmark Grubb Zimmer makes no warranties or representations as to the completeness or accuracy thereof.
ST. LOUIS, MO8235 Forsyth Boulevard, Suite 200Clayton, MO 63105314.254.4600
KANSAS CITY, MO1220 Washington Street, Suite 300Kansas City, MO 64105816.474.2000 EASTERN JACKSON COUNTY1485 SW Market StreetLee’s Summit, MO 64081816.474.2000
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