<p>As 2007 comes to a close, the St. Louis industrial real estate
practitioner community stands poised for an anticipated influx of
distribution users. An abundance of newly constructed speculative
warehouse space and developers with significant land positions stand
ready, and eager to introduce prospects to the positive factors of the
St. Louis market for their operations.</p>
<p>The key factors that make St. Louis attractive mirror many of the
ideals recited by logistics executives and site selection consultants
across the business spectrum &mdash; availability of quality labor, proximity
to population centers and quality transportation infrastructure.
National and local developers have sought to capitalize on these
factors in recent years, building and planning on a scale unprecedented
in St. Louis.</p>
<p>Year to date in 2007, 1.6 million square feet of space has been
delivered here, with another 1 million square feet under construction.
In 2006, 3.1 million square feet was brought to the market. This
compares to the region's five-year market average of 1.3 million square
feet. The average building size for this new supply for 2006-2007 is 76
percent larger than the five-year average. Measure these statistics
against average annual net absorption (the amount of vacant or
available space consumed by the market after accounting for new
construction deliveries) of 950,000 square feet over the last five
years, and it becomes clear that the supply stakes have been raised to
compete with other major distribution hubs.</p>
<p>Some of the best known names in the industrial development business
are betting on St. Louis in this competition &mdash; Duke Realty, Trammell
Crow Co., Panattoni and First Industrial, to name a few. Duke has begun
development of its 500-acre Premier 370 development in suburban St.
Charles County and just completed Lindbergh Distribution Center, a
528,000-square-foot speculative building in St. Louis County. Trammell
Crow completed Westway I and Westway III in 2006-2007, speculative
buildings of 479,220 and 579,204 square feet, respectively, within the
Gateway Commerce Center development in Madison County. They control a
total of 1,200 acres for development there. Panattoni completed
Lakeview Commerce Center II, a 540,000-square-foot building in Lakeview
Commerce Center in Madison County, where they control a total of 600
acres. First Industrial closed in August 2006 on 122 acres at Howard
Bend, a St. Louis County development.</p>
<p>Expanding the user base necessary to support this scale of
development brings formidable challenges, as evidenced by below average
net absorption for 2007 year-to-date. However, positive high-level
indicators such as a steady stream of inquiries by site selection
consultants conducting multi-city comparison studies and increased
interest from national clients of large brokerage firms like Cushman
&amp; Wakefield and CB Richard Ellis point toward increasing demand for
St. Louis locations. As we enter 2008, this practitioner is optimistic
for an active and exciting year &mdash;ï¿½ and expects St. Louis to stretch
through the growing pains inherent to becoming a major distribution
hub.</p>