The commercial real estate environment in downtown St. Louis has no choice but to go up, as it's difficult for it to go down any further.
According to The Wall Street Journal, the neighborhood is struggling to break out of the cycle it's trapped in: Sidewalks are deserted, offices and stores are empty, and car thefts have rocked the area on a regular basis.
No major U.S. city's central business district saw a bigger decline in pedestrian traffic between the start of the pandemic and last summer than St. Louis, according to the University of Toronto's School of Urban Studies.
The urban doom loop becomes self-reinforcing: As offices empty, the stores and restaurants that rely on those workers disappear. Companies become uneasy about taking workers to decrepit locations that don't even have a Panera (a staple lunch spot in downtown St. Louis), so they decide to rent somewhere else, or not at all. The cycle continues.
The area's lowest moment from an office market perspective occurred recently, when the 44-story AT&T tower sold for just $3.5 million — less than $2.40 per square foot for the 1.46 million square feet of property.
Boston-based Goldman Group Inc. has acquired the property at 909 Chestnut St. on the TenX Auction Exchange from Someraroad Holdings LLC, which purchased the property just two years ago for $4.5 million, CoStar reported.
The property sold for $205 million in 2016, but has since sat vacant, making it the second-largest vacant office building in the country.
Like other Midwestern cities, St. Louis' office woes predate the pandemic, with population decline and ineffective urban planning plaguing the region. The closure of Macy's department store in 2013 set off a chain reaction that led to AT&T's departure from its namesake building in 2017, upending St. Louis' situation.
In an effort to revitalize the area, some businesses and civic groups are paying performers to perform on street corners, the city is working on landscaping and improving bike lanes, and the Greater St. Louis Corporation and the St. Louis Development Authority are also paying retailers up to $50,000 to move downtown and providing funding for sidewalk cafes and pop-up stores.
— Holden Walter Warner
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