Would Ballpark Village offices be a home run? Brokers say project is needed despite high vacancy rates downtown
St. Louis Business Journal - by Patrick L. Thimangu
As plans to build Ballpark Village — and add a minimum of 325,000 square feet of office space in downtown St. Louis — move forward, the downtown submarket continues to have the largest amount of vacant office space in the region by a long shot.
The Class A vacancy rate downtown hit 21.2 percent last year, up from 17.5 percent at the end of 2007, according to a recent report compiled by Colliers Turley Martin Tucker (CTMT). In comparison, Clayton and West County have rates below 6.5 percent, and St. Charles County’s rate is 10.3 percent. One City Centre at 515 N. Sixth St. alone has 290,000 square feet of contiguous space, the CTMT report shows. There are four other Class A buildings downtown that can accommodate a tenant seeking 100,000 square feet of contiguous space. In Clayton, the largest contiguous space currently is 25,000 square feet, available in each of three buildings.
Nevertheless, area brokers say the downtown market could use new product, assuming it isn’t purely a spec project and has some tenant commitments.
Dave Morris, senior vice president at Grubb&Ellis|Gundaker Commercial, points out that it has been 20 years since the opening of Metropolitan Square, the last major office development built downtown. Ballpark Village would provide top-of-the-line space built with today’s need for efficiency in mind. The development also would force other downtown office buildings to find ways to remain competitive, such as doing renovations and making facility improvements. That, in turn, could make the entire submarket more marketable.
Morris said he expects Ballpark Village would command between $28 to $30 per square foot, rates comparable to those at the top buildings in Clayton. Current Class A space downtown averages $18 to $19 per square foot. “Clearly it’s going to command a rental rate that hasn’t been seen downtown for a long time, but if it’s a good product, there will be takers,” he said. “I think county tenants will consider it, especially with a reconstructed Highway 40 open.”
Michelle Duffe, principal at real estate firm Duffe Nuernberger Realty and a former director of real estate at the St. Louis Development Corp., said she doesn’t think Ballpark Village’s addition will hurt the downtown office market despite the already high vacancy rate.
She said Ballpark Village — which also is set to include 250,000 square feet of retail and entertainment space and 1,200 parking spots — adds to the diversity of lease spaces downtown. A large portion of office space available in the area, Duffe said, is in renovated historical buildings, and there hasn’t been construction of a new mixed-use building of this scale.
“What Ballpark Village will bring to the market is a mix of new Class A space and retail space,” she said. “There are some businesses that it might attract, businesses that are looking for that kind of space.”
Investment banking firm Stifel Financial Corp. and law firm Polsinelli Shughart PC are among the companies considering lease space at the planned development, although they’re not necessarily additions to the downtown market. Stifel is seeking 175,000 square feet to move its firm, which currently is housed at 501 N. Broadway. Polsinelli is looking for about 100,000 square feet to consolidate its current local offices, which are downtown and in Clayton.
While those would be mostly lateral moves for downtown, the area is set to lose a couple of top tenants. Law firm Husch Blackwell Sanders LLP is vacating 80,000 square feet of space in the Laclede Gas Building this year to consolidate its area offices at The Plaza in Clayton. Another downtown firm, Armstrong Teasdale LLP, signed a letter of intent to lease more than 100,000 square feet of space with the developer of Centene Corp.’s planned $200 million headquarters complex in Clayton.
