May 16, 2017 | Liz Austin

Thanks to its ideal geographic location and existing infrastructure, St. Louis is the perfect place for shipping and logistics companies to grow.

St. Louis’ economic ecosystem is in the midst of a radical transformation. Due to a confluence of factors, new industries are emerging across the city and existing industries are expanding their scope. This period of rapid growth has created an unprecedented demand for commercial property, especially industrial warehouse and manufacturing spaces.

According to projections by the Society for Industrial and Office Realtors (SIOR), St. Louis is expected to see sustained growth through the 2017 calendar year, with demand for newer, larger, and more technologically advanced space on the rise. SIOR projects that 2017 will be characterized by upward pressure on rents; a decreasing vacancy rate throughout the region (in commercial space especially); a positive absorption of warehouse and industrial space; more robust investment sales; and, unsurprisingly, an unpredictable “Trump Effect.”

New Players

Fueling the demand for industrial real estate are new technology and pharmaceutical companies that are establishing a presence in the Bi-state region. Tech giant Amazon, for instance, will open two enormous fulfillment facilities in Edwardsville by October 2017 — a major, positive disruption in the local economic ecosystem.

Amazon’s new facilities will occupy nearly 1.4 million square feet of space at the Gateway and Lakeview Commerce Centers, and create 1,000 new jobs. St. Louis commerce and industry officials are hopeful that the prestige of the Amazon brand will demonstrate for a national audience St. Louis’ capacity to accommodate any logistical demand.

An Expansive Infrastructure

Also contributing to strength of St. Louis’ industrial real estate market are its geographic location and existing infrastructure. Situated on two major rivers, with numerous rail lines and several accessible airports, St. Louis’ geographic advantages and enviable infrastructure make it the perfect spot for transnational shipping and logistics companies.

In fact, shipping and freight maintenance company CSTK, which has 10 locations in the Midwest and along the East Coast, recently invested in a newer, larger facility on the North Side in order to keep up with the growing logistical demands of the region. The expansive, $12 million facility includes double the service bay capacity of the company’s old space, with enough room for CSTK subsidiary Kahn Truck Equipment.

This expansion is betting on the sustained development of St. Louis as a connection point for regional and national logistical operations. I-44 runs directly out of the city, allowing direct highway connections to the southwest and Texas, while still directing freight onto I-70 as it moves east. Additionally, St. Louis officials have been investing improvements in intermodal movement in rail yards, allowing the region to more efficiently navigate the immense rail traffic that passes through the area.

As more emphasis is placed on logistical development, infrastructural improvements, and entrepreneurially-focused policy-making, the St. Louis region is expected to see continued growth in the industrial real estate market. The result has been an emerging recognition of St. Louis as a hub for the transportation and logistics industry. The market opportunity is there and ready for the taking.

(Photo Credit: Theresa Davinroy)

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