Commercial real estate brokerage firm JLL (NYSE: JLL) today announced the region’s industrial sector is on track to deliver nearly seven million square feet of new construction by the end of the year, the highest activity the region has ever seen. More than 3.5 million square feet was delivered by the close of Q3 and another 3.4 million is anticipated by year-end. Construction deliveries have far surpassed 2015, which topped out at 2.2 million square feet. New development, coupled with growing occupancy rates, has pushed warehouse asking rates up 4.4 percent in the last year.
Pat Reilly, senior vice president for JLL and president of the St. Louis chapter of the Society of Industrial and Office Realtors (SIOR), said, “It’s been a remarkable year for industrial growth in St. Louis and all indicators point toward sustained momentum in the sector. With another 3.4 million square feet expected to deliver in the fourth quarter, we are on track to see year-end totals upward of 6.8 million square feet in new construction activity. This is a clear illustration that St. Louis’ industrial real estate scene is thriving.”
New construction projects driving the numbers include GM’s supplier warehouse in Wentzville (1.1 million square feet), Reckitt Benckiser’s new distribution center in St. Peters (717,000 square feet), and NorthPark’s new speculative warehouse in North County (538,000 square feet).
JLL’s Industrial Outlook also shows year-to-date absorption rates exceeding 4 million square feet, the most activity seen in ten years and projecting absorption to top 5 million square feet by year end. Slightly more than 60 percent of the industrial leasing activity has been in the Metro East, and approximately 40 percent is in the Missouri portion of the market, divided between projects in North County, Mid County, St. Louis County and South County. The commencement of Amazon’s two fulfillment centers in Edwardsville and Schnucks’ warehouse in North County added 2.5 million square feet to occupancy. Boeing added a new manufacturing facility at its North County campus, while Knapheide and Ole Tyme Produce each completed build-to-suit projects in St. Charles County.
Low interest rates, healthy consumer spending and strong e-commerce are forming perfect conditions for industrial and logistics real estate growth in 2017, says JLL. Potential investment in infrastructure and continued company expansion are also expected to fuel demand for warehouses and distribution centers despite global economic uncertainty.
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate