Rents in the suburbs grew 7 percent — ending the fourth quarter at$20.92 a square foot —ranking St. Louis as the seventh highest of all U.S. office markets in suburban lease growth, a recent CBRE report showed.
It’s a sign of the region’s steady job growth in the services sector, and it’s giving landlords confidence that they can increase rents. But companies still want value for their money, particularly as coworking-like environments have gained in popularity, brokers say.
“In St. Louis County, building location with convenient access to the highways and decision maker’s homes typically drives real estate decisions, but you still have to offer an amenity-rich environment to compete. Employees don’t want to have to get in their car to go get lunch or work out,” Sansone Group’s Tom Bajardi said.
That’s why Chapman Ventures is moving forward with itsEdge@West project in Creve Coeur.
Developer Larry Chapman is proposing to build a four-story, 110,000-square-foot building that aims to offer the cutting edge in office design. The development, which could cost $32 million to $35 million, sits just north of the West Park retail center on Olive Boulevard and would be bordered by Heritage Place to the east.
The Class A building will be designed for technology and creative companies and incorporate the best aspects of coworking spaces, said CBRE First Vice President Tom Ray, who’s the leasing agent on the project.
“A building designed to help employers gain a competitive advantage would get premium rents and hold those rents over the long term,” he said.
The building would feature open floor plans with collaboration areas and huddle rooms as well as house myriad amenities like a staffed coffee bar, fitness center with locker rooms, “micro-mart,” putting green and basketball courts.
Based on the current inventory in the area, it would not be your typical Class A building, Bajardi said.
“We typically see the creative/tech employee want to locate in the urban core with more of a walkable city environment than is available in the suburbs,” he said. “This type of concept hasn’t been proven in the suburbs — yet.”
The deal, however, is contingent on whether the project can sign multiple tenants or a single user. Chapman said he’s hoping to find tenants within the next three to four months. The property is still owned by Olive Mason LLC, an entity affiliated with VictoriaSheehan.
“Tom’s a well-established office broker, and he convinced me that employers would embrace a building designed to attract the employees of tomorrow and that it could push the envelope on lease rates,” said Chapman, who’s also a partner at CRG, Clayco’s St. Louis-based private real estate development firm. “It made sense to give it a try.”
Talent retention and cost are the biggest drivers in companies’ real estate decisions, Cushman & Wakefield Executive ManagingDirector Jim Mosby said at the SIOR Metro Market Forecast this week. Tenants, Mosby added, want amenities like fast-casual dining options, parking, fitness center, conference facilities and renovated common areas.
If Edge@West finds a tenant or tenants, Clayco is set to be the general contractor and BatesForum the architect.