ST. LOUIS — St. Louis was ranked in the top five in key economic indicators in a report released by commercial real estate advisory firm Newmark Group Inc. examining challenges and opportunities resulting from the COVID-19 pandemic in nearly two dozen cities across the U.S.
The report, called The Newmark Opportunity Index, studied 22 cities in the U.S. where Newmark had the most consistent and highest quality data available. The research examined economic and commercial real estate metrics across several property types, including office, industrial, multifamily, hospitality and retail.
The St. Louis area economy is recovering faster than peers according to the report, which notes that the region had the sixth-lowest unemployment rate of the 22 markets studied as of February.
St. Louis ranked fifth in how it performed among all economic indicators coming out of the pandemic such as unemployment rate. By property type market, it ranked second in the multifamily market, seventh in retail and eighth in the hospitality segment.
In the office market, the report ranked the top five performers as Tampa, Florida; Miami; Dallas; Minneapolis and a tie between Philadelphia and St. Louis. Newmark looked at change in sublease availability rate, overall vacancy rate and asking rental rates between Q1 2020 and Q1 2021, as well as the overall economy, to determine office market rankings. The 1.1% increase in the sublease availability rate in St. Louis ranked ninth among all cities studied, and the overall vacancy rate increased by only 1.2% to rank second. An increase in asking rental rates of 2.65% came in at seventh among all cities studied.
With an office vacancy rate of 12.1% as of the first quarter of 2021, the asking rent in St. Louis climbed to a record high $21.67 per square foot, up 3 cents from the fourth quarter of 2020, according to Newmark research.
Nationally, the office vacancy rate was 13% in Q1 2020 and increased to 15.8% a year later, according to Newmark. And while all cities have been impacted by the pandemic, there have been disparate outcomes.
Of the 22 cities, Tampa and San Francisco, perhaps, best tell the story of how starkly different U.S. office markets have been impacted by the pandemic. In Tampa, sublease availability rate increased 0.5%, compared to 6.3% in San Francisco, Newmark found. Tampa's vacancy rate increased 0.7%, compared to 10.9% in San Francisco. The Florida city also posted a 4.2% growth in asking rates between Q1 2020 and Q1 2021, while San Francisco's average rate dropped 9.8%. The exodus out of San Francisco has been well documented while an ongoing building boom in Tampa Bay has resulted in a full rebound in construction employment there.
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