St. Louis continues to offer strategic advantages as a key player in the industrial big-box market, leveraging its central location, robust infrastructure, and diverse incentive programs. While the market faces challenges such as slowing leasing activity and population decline, strong fundamentals and planned developments present opportunities for growth. Here’s an in-depth analysis:
1. Demographics and Workforce
With nearly 3 million residents within 50 miles of its core, St. Louis benefits from a significant population base. However, the region’s population is projected to decline by 0.2% over the next five years, a trend common in some Midwest markets. Despite this, the city boasts a robust industrial workforce:
- Warehouse Labor Force: Approximately 38,000 workers with a projected growth of 4% by 2034.
- Average Wage: $17.76 per hour for non-supervisory warehouse workers, aligning with the national average.
This combination of workforce stability and competitive wages continues to support the region’s attractiveness for industrial tenants.
2. Attractive Economic Incentives
St. Louis offers a variety of state and regional incentive programs designed to attract industrial investment. Notable programs include:
- Missouri Works Program: Provides payroll rebates and income tax credits for businesses creating jobs. Requirements vary by county, but companies in non-rural counties must create at least 10 full-time jobs with wages exceeding 90% of the average county wage.
- BUILD Program: Offers refundable tax credits for manufacturing and R&D projects that create at least 100 jobs and invest a minimum of $15 million.
- Illinois EDGE Program: Targets neighboring Illinois with discretionary tax credits for corporate income taxes, rewarding job creation and capital investments.
These incentives have facilitated over 130 deals in the last five years, averaging $26,000 per new job.
3. Superior Logistics Infrastructure
St. Louis benefits from a highly developed multimodal transportation network:
- Port of Metropolitan St. Louis: A 70-mile port system on the Mississippi River, providing ice- and lock-free access year-round. It serves as a key distribution point, with one-third of the U.S. population located within 500 miles.
- Class I Railroads: Six railroads converge in St. Louis, offering seamless freight movement.
- Interstate Connectivity: Seven interstate highways provide access to major markets, while St. Louis Lambert International Airport supports growing cargo volumes.
This infrastructure makes St. Louis a prime logistics hub for businesses targeting national and regional markets.
4. Shifting Supply & Demand Dynamics
The St. Louis industrial market faced challenges in 2023, including:
- Leasing Activity Decline: Only 2.4 million sq. ft. of leasing transactions, all for spaces under 500,000 sq. ft.
- Vacancy Rates: Increased to 6.1% due to negative net absorption and move-outs from larger spaces.
- Rent Growth: Despite higher vacancies, rents for facilities under 500,000 sq. ft. increased by 15.1%.
On the development front, 5 million sq. ft. is under construction, nearly all preleased. This limited new supply should help stabilize vacancy rates and drive continued rent growth in 2024.
5. Why St. Louis Matters for VidTech
St. Louis is a dynamic market for big-box developments, and its competitive advantages make it a valuable focus for real estate visualization. At VidTech, we specialize in capturing the full potential of such markets through cutting-edge video solutions, including drone footage and data overlays. Whether you’re an investor or developer, our expertise can provide unparalleled insights into St. Louis’s industrial landscape.
