Piers Pritchard

Like most Midwest cities, St. Louis suffered through its share of pain during the Great Recession and its painfully slow recovery. Today, though, the city appears to be on the rebound. And that includes its commercial real estate market. Midwest Real Estate News recently spoke with Piers Pritchard, a vice president and principal at the St. Louis office of Cassidy Turley. Pritchard had plenty of positive news to share regarding this Midwest city’s commercial real estate market.

Midwest Real Estate News: This is a pretty broad question, but are you seeing things getting better in the commercial real estate market these days in St. Louis?
Piers Pritchard: Yes. We saw some good momentum at the end of 2011. In the second half of this year, that momentum has continued. Some of the good news comes from our local companies. We have several local companies, from recent start-ups to our Fortune 500 companies, who are adding jobs and committing to additional space. These companies are furthering their commitment to the St. Louis metro area.

MWREN: It’s good to see that commitment from local companies.
Pritchard: It is. We won’t see that absorption until 2012. That’s when we’ll see the space actually being occupied. But we are seeing good momentum in St. Louis right now. The total square footage that those tenants are looking for is 11 percent more space than they currently occupy. That’s a good formula. We are feeling good and optimistic about 2012.

MWREN: Why do you think you’re seeing these improvements now.
Pritchard: I think St. Louis is a pretty fundamentally sound city. We do not have the boom/bust of the bigger cities on the coasts. We don’t’ see the highest of highs or the lowest of lows. When we are seeing a recovery, as we are now across the country, St. Louis is almost always positioned well to recover because we don’t have the big swings like some of the bigger cities. We also have a good foundation of corporate citizens. Some of our largest employers are adding jobs and more space.

MWREN: What commercial sectors are performing better than others?
Pritchard: The big thing everyone is talking about is healthcare. St Louis is actually pretty heavy on healthcare. That’s a good thing from our perspective. It’s one of those segments that hasn’t slowed during the recession. We’ve seen growth. We think that will accelerate.

MWREN: What other property types are doing well right now?
Pritchard: Some property types seem to be in the last stages of the downfall. Others seem to be in the first stages of recovery. Industrial has seen the most significant recovery so far. The St. Louis area has seen a couple of large deals. Walgreen’s occupied 500,000 square feet last year. Procter & Gamble expanded in the area. There has also been a strong demand for rental units. It’s hard to purchase a home because of stricter lending standards. The multi-family market coast to coast is doing well. That is the case here in St. Louis as well.

MWREN: Multi-family seems to be doing well in all the Midwest markets that we cover.
Pritchard: From an investment perspective, there are two product types doing well now. One is core, well-leased, good-credit-tenant big retail projects that are grocery anchored. Big retail centers of that kind are doing well. And the multi-family segment is also doing well.

MWREN: What about retail? How is that segment performing today?
Pritchard: Retail is slow and steady. We have optimism going forward. What we’ve seen in the last couple of years has been a flight to quality from lesser B- and C-class properties to Class-A properties on the retail side. Those B and C type properties have been vacated or have been converted to different types of uses. An old retail center could become a church or a school or very inexpensive office space. The owners of lesser-quality retail space have had to be creative in attracting tenants, in recouping that income from tenants that have vacated.

MWREN: Since the start of the recession, we’ve seen plenty of these creative re-uses across the Midwest.
Pritchard: It is a trend that we have seen. And it’s not just on retail. You’ll also see light industrial, flex spaces and office/warehouse spaces that may have had more of a typical type of use that are now being converted into something different. From a landlord’s perspective, they just want their space leased.

MWREN: Looking ahead, what do you see occurring in the world that might actually derail the recoveries we are seeing in most Midwest markets?
Pritchard: Everyone is still on edge. We are still optimistic and we do believe that the momentum we’ve seen can carry us in the right direction. But recent history has everyone a little nervous. Everyone is very cautious in their optimism. We have political issues and the presidential election in November to worry about. There are a lot of things that are teetering in Washington. Who will be president is one of them. This could all have an impact on what happens nationally.

MWREN: Do you think the recovery in St. Louis will continue in 2012 and beyond?
Pritchard: Our economy here is pretty diverse. We are not completely dependent on any one industry. Healthcare is a growing trend in St. Louis, but we are not completely dependent on healthcare. We have manufacturing. We have IT companies here. We have a strong market with lawyers and accountants and other professionals. We are not dependent on one segment of the market. That will help our recovery. We are all about slow and steady. St. Louis is about not hitting the high highs or low lows.

Laura Newman

Laura Newman recently joined the St. Louis office of CBRE as a senior real estate manager. She will be headquartered at The Plaza in Clayton, Mo.

Newman oversees about 326,000 square feet of Class-A office and retail space in downtown Clayton. Her responsibilities include budgeting and finance reporting, overseeing the daily operations of the building and ensuring tenant satisfaction.

Rotty began her career with Tarlton in 2005. She was named to the St. Louis Business Journal’s 30 Under 30 Class of 2009, recognizing her professional accomplishments and community service, and is a member of the Engineers’ Club of St. Louis and the Society of Women Engineers.

Rotty became a LEED Accredited Professional in 2008.

“Sondra has played a key role in several Tarlton projects,” said Tracy Hart, president of Tarlton. “In addition to her strengths as an engineer, she is a highly motivated team member who really gets involved in everything she does. Sondra is an outstanding role model for women in construction.”

Rotty served as senior project engineer on the Hardin-Tarlton joint venture team that last year completed the new 500,000-square-foot National Personnel Records Center in St. Louis for the U.S. General Services Administration and the Molasky Group of Companies. In addition, she served as project engineer for Tarlton’s build-out of the GSA’s Rush Hudson Limbaugh Sr. U.S. Courthouse in Cape Girardeau and for construction of Seigle Hall at Washington University in St. Louis. All three are LEED certified or registered projects.

HFF marketed the property on behalf of the seller, Gulfstream Capital Partners.  Education Realty Trust purchased 3949 Lindell for an undisclosed amount free and clear of debt.

3949 Lindell is located across from St. Louis University and near Forest Park and the Washington University Medical Center.  Completed in 2008, the four-story property has studio, one- and two-bedroom furnished units that average 894 square feet each.  Street-level commercial space at the property totals 13,083 square feet.  Community amenities include a swimming pool, business center, fitness center, tanning salon and assigned garage parking.

The HFF investment sales team representing Gulfstream Capital Partners was led by managing director Sean Fogarty, executive managing director Matthew Lawton and managing director Marty O’Connell.

Once completed, the new building addition will double the size of the data center, which houses sophisticated computer networks that store massive amounts of genomic data used to identify the genetic origins of cancer and other diseases. The expanded state-of-the-art facility will help accelerate the pace of genomics-based discoveries, for which Washington University is widely known.

In the university’s announcement about the National Institutes of Health grant that supported the project, Larry Shapiro, executive vice chancellor for medical affairs and dean of the school of medicine, said, “These projects are helping scientists worldwide understand the genetic basis of cancer and the contributions of microbes to human health and disease. We could not continue this vital research without expanding the data center, which houses the computer infrastructure that allows our scientists to analyze unprecedented volumes of data.”

The existing data center is the first “green” building on the medical school’s campus and received a LEED Gold designation from the U.S. Green Building Council.  The new addition will be designed to exceed those standards.

“We are humbled to be part of such a significant project,” said Kirk Warden, senior vice president and partner at Clayco. “This facility will house the technology needed to further groundbreaking scientific discovery.”

The new addition will be built on the facility’s east side.  Construction will start mid-November of 2011 and is expected to be completed by the end of May of 2012.

While this is Clayco’s first project for the school of medicine, the firm has been in the forefront of other projects for Washington University.  These projects include the recent completion of Preston M. Green Hall, a 70,000-square-foot engineering research building; the 150,000-square-foot Stephen F. & Camilla T. Brauer Hall engineering building; a 92,000-square-foot addition to the Snow Way parking facility; and several residence halls at South 40 Village.

Jesus Gutierrez and Ana Gutierrez purchased about 6.95 acres of industrial ground located at 16030 Ruck Road in Ellisville from Louisville Realty Corporation. The property will be developed for warehousing.

Steven Lechner and Jason Riegelsberger, both with Lechner Realty Group, Inc., represented the seller. Wayne Deen, Coldwell Banker Gundaker, represented the buyer.

“We continue to expand our Midwest regional capabilities and market coverage through a combination of recruiting the foremost professionals and expanding our national footprint,” says Robert Bagguley, president of Transwestern’s Midwest Region. “Balke Brown’s reputation and entrepreneurial approach to real estate is a great fit for Transwestern. This affiliation will provide us with the ability to leverage Balke Brown’s local market expertise for the benefit of our clients’ needs. This is an exciting addition for Transwestern.”

Founded in 1979, Balke Brown is one of the largest commercial real estate firms in the St. Louis area, with a portfolio of 56 projects totaling more than 6.4 million square feet of space.  The firm employs 40 people, including 10 brokers, who provide brokerage, investment, property management and development services in the office, industrial, medical and multi-family sectors.

“This affiliation provides us the ability to counsel clients on a national basis and will enable Balke Brown Transwestern to grow our portfolio in St. Louis.  Our firm and team members are already reaping the benefits of Transwestern’s national platform,” adds Mike Donovan, principal at Balke Brown Transwestern.

The merger between the two companies will create the second-largest commercial real estate firm in the St. Louis region. It will also increase Gershman’s property management portfolio by 30 percent.

Coldwell Banker Commercial officials Gregory Nooney, Jr., principal managing member, and Bruce Brophy, principal, will join Solon Gershman. Nooney has been a leader in the commercial industry for more than 50 years, and has been involved in the development and leasing of more than 1.75 million square feet of office space for institutional investors in the St. Louis area. Brophy oversaw management operations at Coldwell Banker Commercial and has worked in the real estate industry for more than 30 years.

The new tenant is 1-800-Pack-Rat, a portable storage company. With this lease, DukePort II is now 100-percent occupied.

Rocky Stenger with Colliers International represented 1-800-Pack-Rat in the transaction. John Hinds, vice president of industrial leasing, represented Duke Realty.

The City of Frontenac Municipal Building and the Mercy Enterprise Data Center were both recognized.

The 14th Annual Construction Keystone Awards highlight the creativity and talents of the St. Louis region’s construction industry.

The new 37,800-square-foot City of Frontenac Municipal Building combines the city’s government offices, police department and fire department into a single facility.  Each of these entities was previously housed in a separate building on the same site.  The challenge facing S. M. Wilson was that all city functions had to be maintained around the clock throughout demolition and construction on a very tight job site.  Careful construction planning and very close and ongoing communications with the City ensured seamless City operations and a smooth transition of all departments to the new building.

The Mercy Enterprise Data Center in Washington, Mo., encompasses 40,000 square feet and serves as the primary corporate data center for Sisters of Mercy Health System hospitals and medical centers throughout the Midwest. S.M. Wilson overcame numerous challenges on this project, involving anticipated computing load, data storage requirements and related equipment needs. S.M. Wilson also faced issues with the project’s security requirements and tier ratings and the migration from current data facilities to the new/expanded facilities.