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It’s still unclear to real estate professionals what long-term effects the pandemic will have on the prospects of downtown St. Louis’ office market since it had been struggling for years.
Although downtown has long had the highest vacancy rates in the region, there were encouraging signs just before the pandemic as a few fast-growing companies neared deals on space, said Eric Galanti of commercial tenant representation firm CBIZ Gibraltar, a Chicago-based broker who represents clients looking for space throughout the region. But those downtown deals evaporated as the pandemic hit.
“There was a lot of really good momentum downtown going into the pandemic, all of which got put on hold,” Galanti said.
But activity is starting up again. One of the startups that had dropped its search, technology software firm Balto, just signed a sublease for 23,000 square feet in Downtown Westafter searching for years. Galanti was the broker on that deal.
Surgical instrument maker Stereotaxis will move from the Cortex Innovation Community to 43,000 square feet in the Globe Building at 710 N. Tucker Blvd. downtown. The renovated Globe Building has positioned itself as a hub for geospatial companies, capitalizing on the $1.7 billion National Geospatial-Intelligence Agency western headquarters under construction in north city.
Those deals are energizing for brokers working downtown. But in a Catch-22, the central business district needs employees back in the office to fund the retail and restaurants that make it attractive for more businesses to locate there, Galanti said.
“Although the absorption numbers look OK because there’s been some recent deals, it’s going to take downtown awhile to bounce back,” Galanti said.
Significantly, a buyer walked away in July from a contract to buy the former AT&T tower and its 1.2 million square feet of vacant space. Regional business officials at Greater St. Louis Inc. are worried enough to weigh alternative uses for downtown buildings that may never be offices again, lobbying for a federal tax credit that would help fund office-to-residential conversions. The first example locally appears to be Bamboo Equity Partners’ Ballpark Heights apartment complex, under construction in a historic office building across from Busch Stadium.
Broker Brandon Wappelhorst of Sansone Group, who joined the firm in 2008 and leases properties across the region, said downtown has struggled as long as he can remember, and that hasn’t changed during the pandemic.
“We get a decent amount of activity downtown, but comparably speaking to West County, to Clayton, it is far behind,” Wappelhorst said.
