St. Louis Industrial Outlook Q3 2016
- 1. Industrial Outlook St. Louis Q3 2016
- 2. Annual change of industrial employment Source: JLL Research, BLS Construction deliveries (in millions s.f.) Source: JLL Research YTD absorption by submarket (in millions s.f.) Source: JLL Research Industrial employment shows some softening Employment in the industrial sectors is continuing its positive trend after bottoming out in early 2012, but the growth rate has begun to slow as of late. Mining output, particularly coal production across Missouri and Illinois, is down 27.3 and 43.6 percent over the past year according the Federal Reserve. Manufacturing employment continued to slip as durable goods employment shrunk by 4.9 percent in the last 12 months. The region does have a growing construction sector. The value of building permits across the region is up 12.0 percent from 2015 and are over a billion dollars year to date. Millions more of new construction still to come in 2016 Construction activity continued to move full steam ahead as the third quarter concluded. Over 3.5 million square feet have delivered this year, and another 3.4 million square feet is set to finish in the fourth quarter. South County is adding its first spec building to the development cycle as Fenton Logistics Park kicked off the redevelopment of the former Chrysler plant with a 158,000-square-foot warehouse. New development, coupled with growing occupancy, has pushed warehouse asking rates up 4.4 percent in the past year. Absorption concentrated in submarkets with new construction After a huge third quarter, year-to-date absorption has exceeded four million square feet, the most in more than 10 years. The commencement of Amazon’s two fulfilment centers in Edwardsville and Schnuck’s 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. Absorption will continue to increase in the fourth quarter, but expect vacancy to move up slightly as several vacant buildings deliver. New buildings continue to drive occupancy growth Industrial Insight St. Louis | Q3 2016 3,222,594 Quarterly absorption (s.f.) 2,786,129 Warehouse absorption (s.f.) 3,637,968 Total deliveries YTD 4,178,110 Total under construction (s.f.) 5.6% Total vacancy 2,263,330 Speculative construction (s.f.) 4.4% Growth in warehouse rents Y-o-Y 51.0% Total preleased -1 0 1 2 Metro East North County Mid County St. Charles County Other Counties West County South County -1.0% 0.0% 1.0% 2.0% 3.0% 2013 2014 2015 2016 0 1 2 3 4 2013 2014 2015 YTD 2016 (1 1 2
- 3. Industrial Leasing Activity Report St. Louis Q3 2016 This report analyzes all closed industrial leases > 30,000 s.f. 14 1,444,246 1,310,853 133,393 - 49 7,065,893 Avg. building construction date 824,602 0 220,519 101,829 297,296 0 Top 10 lease transactions during the quarter Size Building status Year built 406,497 Existing 1999 179,712 Existing 2002 133,393 Existing 1900 109,704 Existing 1998 105,000 Existing 2001 90,696 Existing 2006 68,000 Existing 1997 66,829 Existing 2015 55,693 Existing 2016 53,626 Existing 1997 DPI, Inc. 7 Gateway Commerce Center Metro East United Scrap Metal DirectNorth CountyLegacy Pharmaceutical 13600 Shoreline Johnson Controls 3159-3195 S. Rider Trail North County Direct Linn Star Transport 306 Hazelwood Logistics Center Dr North County Direct Trans-Lux 6102-6110 Aviator Dr North County Direct Monsanto 641 Lambert Pointe Drive North County Owens and Minor Direct Reaction Auto Parts 11701 Missouri Bottom Rd North County Direct Direct Lease type 14 Gateway Commerce Center Dr Metro East Direct 3808 Weber Rd South County St. Louis City1020 N 23rd St Direct Sublease OHL Tenant Address Submarket Avg. lease size (in s.f.) Expansion in market Expansion in building Renewal Extension (< 36-month term) Relocation within market New to market Leasing activity by submarket QTD At a glance Total leases QTD Total s.f. leased QTD Leasing activity by size QTD Total s.f. leased QTD: Warehouse/Distribution Leasing activity QTD 1990 Total s.f. leased QTD: Manufacturing Leasing activity by transaction type QTD Total s.f. leased QTD: Special Purpose Total leases YTD 103,160 Total s.f. leased YTD 60.3% 14.3% 15.3% 3.7% 6.4% Metro East Mid County North County South County St. Louis City - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Historical leasing activity - 1 4 6 3 - 100,000 200,000 300,000 400,000 500,000 600,000 500,000+ 250,000-499,999 100,000-249,999 50,000-99,999 10,000-49,999 Total leased Number of leases Source: JLL Research 2016 Jones Lang LaSalle IP, Inc. All rights reserved.
- 4. Industrial Development Report St Louis Q3 16 This report analyzes all industrial developments under construction & new deliveries > 30,000 s.f. Total leased at delivery (%) 68.9% Total speculative at delivery (s.f.) 2,019,788 Total BTS at delivery (s.f.) 1,083,500 Total Owner-User at delivery (s.f.) 534,680 Total # of properties delivered 11 Asking rental rate (low - high) $0.00 - $0.00 Top 5 projects delivered to date Building RBA (s.f.) Delivery date Leased at delivery (%) Schnuck's Distribution Center 923,500 Q3 2016 100% 3931 Lakeview Corporate Drive 769,500 Q2 2016 0% Gateway East 717 717,000 Q1 2016 0% Boeing 777X Facility 424,000 Q3 2016 100% Hazelwood Logistics Center I 199,288 Q2 2016 59% Total pre-leased (%) 51.0% Total speculative under construction (s.f.) 2,263,330 Total BTS under construction (s.f.) 1,914,780 Total Owner-user under construction (s.f.) - Total # of properties UC 7 Asking rental rate (low - high) $4.45 - $5.95 Top 5 projects currently under construction Building RBA (s.f.) Delivery date Pre-leased (%) GM Supplier Building 1,200,000 Q4 2016 100% 2001 Premier Parkway 714,780 Q4 2016 100% Gateway East 620 624,150 Q1 2017 0% NorthPark DC I 538,000 Q4 2016 0% Gateway East 520 520,980 Q4 2016 41%Speculative Speculative Owner Construction type Speculative Tristar Northpark Partners Tristar Duke Realty Northpoint BTS BTS Metro East North County Metro East St. Charles County St. Charles County Historical deliveries (s.f.) Construction typeOwnerSubmarket North County North County Metro East Metro East North County Northpoint Boeing Tristar Panattoni Development USAA Speculative Speculative New deliveries Completions in-depth 3,637,968 Total delivered YTD (s.f.) Owner-user Speculative BTS Submarket Under construction 4,178,110 Under construction (s.f.) Under construction in-depth Upcoming deliveries by year (s.f., excludes YTD completions) 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 2010 2011 2012 2013 2014 2015 YTD 2016 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 2016 2017 BTS Owner-user Speculative Source: JLL Research 2016 Jones Lang LaSalle IP, Inc. All rights reserved.
- 5. Industrial Statistics St. Louis | Q3 2016 Inventory (s.f.) Quarterly total net absorption (s.f.) YTD total net absorption (s.f.) YTD total net absorption (% of stock) Total vacancy (%) Total availability (%) Average total asking rent ($ p.s.f.) Quarterly completions (s.f.) YTD completions (s.f.) Under construction (s.f.) Market Totals Warehouse & Distribution 150,890,559 2,786,129 3,752,775 2.5% 6.3% 10.7% $4.02 1,034,180 3,213,968 4,178,110 Manufacturing 62,492,603 436,465 423,941 0.7% 3.7% 6.6% $2.97 424,000 424,000 0 Total Industrial 213,383,162 3,222,594 4,176,716 2.0% 5.6% 9.5% $3.78 1,458,180 3,637,968 4,178,110 Submarkets Metro East Warehouse & Distribution 25,341,999 1,687,944 1,455,933 5.7% 2.4% 5.1% $3.98 0 1,486,500 1,145,130 Manufacturing 9,583,454 0 30,150 0.3% 0.9% 2.1% $4.65 0 0 0 Total Industrial 34,925,453 1,687,944 1,486,083 4.3% 2.0% 4.3% $4.05 0 1,486,500 1,145,130 St. Louis City Warehouse & Distribution 39,287,771 -176,597 -70,047 -0.2% 9.6% 16.6% $2.80 0 125,000 959,800 Manufacturing 18,755,909 -42,708 -102,487 -0.5% 9.2% 14.4% $2.37 0 0 0 Total Industrial 58,043,680 -219,305 -172,534 -0.3% 9.5% 15.9% $2.61 0 125,000 959,800 Mid County Warehouse & Distribution 22,359,130 204,124 516,575 2.3% 4.7% 6.6% $3.75 0 0 0 Manufacturing 5,820,995 -15,886 108,599 1.9% 0.3% 1.4% $3.99 0 0 0 Total Industrial 28,180,125 188,238 625,174 2.2% 3.8% 5.6% $3.88 0 0 0 South County Warehouse & Distribution 8,291,415 10,873 103,373 1.2% 4.3% 11.3% $5.77 0 0 158,400 Manufacturing 4,113,587 19,146 -134,014 -3.3% 4.2% 9.4% $4.22 0 0 0 Total Industrial 12,405,002 30,019 -30,641 -0.2% 4.3% 10.6% $5.95 0 0 158,400 West County Warehouse & Distribution 2,551,795 19,829 18,647 0.7% 1.5% 1.6% $3.90 0 0 0 Manufacturing 2,799,134 689 11,469 0.4% 0.1% 9.0% $5.43 0 0 0 Total Industrial 5,350,929 20,518 30,116 0.6% 0.8% 5.4% $4.04 0 0 0 North County Warehouse & Distribution 33,073,383 888,406 1,026,260 3.1% 9.7% 15.2% $4.15 923,500 1,193,788 0 Manufacturing 9,156,923 428,424 428,424 4.7% 0.1% 0.8% $3.00 424,000 424,000 0 Total Industrial 42,230,306 1,316,830 1,454,684 3.4% 7.6% 12.1% $4.08 1,347,500 1,617,788 0 St. Charles County Warehouse & Distribution 12,826,591 117,950 364,311 2.8% 2.3% 3.5% $4.38 110,680 248,680 1,914,780 Manufacturing 8,115,858 0 35,000 0.4% 0.7% 1.4% $4.41 0 0 0 Total Industrial 20,942,449 117,950 399,311 1.9% 1.7% 2.7% $4.38 110,680 248,680 1,914,780 Other Counties Warehouse & Distribution 7,158,475 33,600 337,723 4.7% 2.9% 4.9% $2.74 0 160,000 0 Manufacturing 4,146,743 46,800 46,800 1.1% 6.7% 7.9% $2.94 0 0 0 Total Industrial 11,305,218 80,400 384,523 3.4% 4.3% 6.0% $2.84 0 160,000 0 Blaise Tomazic Research Manager 211 N Broadway, St. Louis, MO 63102 tel +1 314 261 7377 [email protected] 2016 Jones Lang LaSalle IP, Inc. All rights reserved.
- 6. Total jobs vs. unemployment rate: St. Louis Source: BLS, JLL Research Industrial employment trends (12-month change) :St. Louis Source: BLS, JLL Research Job growth/loss by sector (12-month change): St. Louis Source: BLS, JLL Research 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 1,220,000 1,270,000 1,320,000 1,370,000 1,420,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total Employment Unemployment Office employment trends (12-month change) :St. Louis Source: BLS, JLL Research Job growth (12-month change): United States vs. St. Louis Source: BLS, JLL Research Employment Update Metro St. Louis | September 2016 3.1% 5.0%U.S. unemployment 1.7%U.S. 12-month job growth 5.0%St. Louis unemployment 2.0%St. Louis 12-month job growth 5.2%Missouri unemployment 0.7%Missouri 12-month job growth Peak: 1,439,149 jobs (10) (5) 0 5 10 15 20 2011 2012 2013 2014 2015 2016 Financial Activities Professional and Business Services Information Government (15) (10) (5) 0 5 10 15 2011 2012 2013 2014 2015 2016 Mining, Logging & Construction Trade, Transportation & Utilities Manufacturing Other Services -3,800 -1,000 200 500 1,600 2,200 3,400 4,300 7,100 11,700 Manufacturing Information Other Services Government Mining, Logging & Construction Financial Activities Educational & Health Services Trade, Transportation & Utilities Professional & Business Services Leisure & Hospitality -1.0% 0.0% 1.0% 2.0% 3.0% 2011 2012 2013 2014 2015 2016 St. Louis United States
- 7. For more information, please contact: About JLL 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. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $56.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com. About JLL Research JLL’s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today’s commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our more than 400 global research professionals track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions. This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without prior written consent of Jones Lang LaSalle IP, Inc. COPYRIGHT © JONES LANG LASALLE IP, INC. 2016 Blaise Tomazic Research Manager +1 314 261 7377 [email protected] Patrick Reilly, SIOR Senior Vice President +1 314 338 2085 [email protected] David Branding, SIOR Executive Vice President +1 314 338 2084 [email protected] Chris Schmidt Vice President +1 314 261 7378 [email protected]