Due to a shifting economy and an influx of millennial talent, St. Louis communities are encountering unprecedented opportunity.
St. Louis is in the midst of a transformation.
In the first half of the 20th century, St. Louis’ economy was driven by a mix of heavy manufacturing, energy production, and a healthy distribution and transportation sector. Over the past fifty years, however, these once thriving industries have slowed. But with the many unique challenges that coincide with the changing digital economy, St. Louis business leaders have also found unparalleled opportunities to adapt and modernize — and ultimately revitalize their city.
An Influx in Talent
There’s a lot to be excited about in the shifting St. Louis economy. First and foremost, the bi-state population has remained relatively stable in recent years. In fact, young, educated, white millennials are making moves into the city in numbers not seen in decades. And while this has produced concerns about the effects of gentrification in a historically segregated city, municipal leaders also see an opportunity to not only incorporate a growing demographic into the city culture, but to retain it.
This trend is by no means accidental, as the socioeconomic conditions that exist in the city right now are quite favorable to the young and educated. Most notably, St. Louis is home to the third highest number of Fortune 500 companies of any city in the Midwest. Many of these companies are big players in the pharmaceutical industry — like Express Scripts, Pfizer, and Centene. The healthcare and biomedical industries, too, have become a huge draw in the region. Anchored in St. Louis by Washington University and Barnes Jewish Hospital (the third largest hospital in the world), the biomedical and pharmaceutical industries continue to bring millennials into the city for high-paying jobs.
Large corporations like these not only attract high-salary residents, but they also tend to spend huge amounts of money on development in the area. Centene alone plans on spending $772 million on a campus expansion in the Clayton area. In fact, the Clayton area itself is proving to be a hotspot for development, seizing on the decade-long revival of the Central West End. The growth in these areas has brought local real estate experts to declare an apartment building boom, with 500 new apartments slated for construction in Clayton this year alone.
Much of the city’s residential growth has come from the development of the Central West End’s Cortex Innovation Community — an entrepreneurial hub that supports startups and emerging tech companies in St. Louis. Cortex’s growth has spurred a need for apartments in the area, a demand to which many local development firms are responding with new mixed-use residential developments, like Green Street’s own Choteau’s Grove. Within walking distance of Cortex and only a short MetroLink ride from the County Seat in Clayton, demand for well-located, mixed-use developments is steadily increasing. Further proof of this rapidly growing need for apartments? IKEA’s 2015 arrival in the Central Corridor.
Revitalizing St. Louis Industrial Roots
Manufacturing remains a key economic sector in the St. Louis area as well as the primary driver of growth in areas outside of the Downtown/Central West End/Clayton main line. In Wentzville, General Motors has continued to see strong returns, and has consequently committed to building an additional 1.1 million sq. ft. of subassembly space. This expansion comprises just a portion of the record-breaking 7 million square feet of industrial real estate development in St. Louis over the last 18 months.
The historical industrial roots in the region have also attracted a new breed of players to the area: logistics and distribution companies. With the arrival of Amazon later this year, the city will begin to establish itself as a major player in the ecommerce matrix. As has always been the case, St. Louis is leveraging its central geographic location to attract all manner of distribution services and companies. Refrigeration company Central States Thermo King is betting on sustained growth in this industry, and has just moved into a new transportation, repair, and distribution facility, consolidating their disparate bi-state locations into one, all-encompassing facility.
What It Will Take
Despite all of these bright spots on the horizon, serious hurdles to positive change remain. While the western end of the Central Corridor is seeing immense growth and investment, the opposite is true of Downtown St. Louis. While still a major driver of tourism and culture, safety concerns and political unrest have generated concerns for companies who might have previously located their offices in high rise buildings in the heart of the city.
The energy industry, too, is facing regional hurdles despite playing a historically significant part in the city’s economy. Peabody is only now emerging out of bankruptcy, and given the centrality of coal to their portfolio, their future remains precarious.
Recently, developers have capitalized on lower property values in the Downtown area in an effort to lure the booming tech and biomedical companies closer to the Downtown neighborhood. By attracting a diverse array of businesses to the neighborhood, they hope to ensure the long-term health and sustainability of the Downtown area. Green Street’s 2351 Market Street is attempting to bring this vision into reality. More than a third of the space has already been claimed by cloud hosting/tech support company Avatara, paving the way for other future-focused companies to find a home in St. Louis’ Downtown area.
With the building boom spreading around the rims of the city, a resuscitation of St. Louis’ central neighborhoods is also well underway. Despite the onset of the digital revolution — and in many ways because of it — St. Louis remains an area steeped in opportunity, with a well-trained and reliable work force amassing in a geographically prime location. The city is once again at a crossroads, but given the right road map, St. Louis’ future is bright.