Downward angle icon Downward angle icon. St. Louis, Missouri. Art Wager/Getty Images A St. Louis office building has sold for $3.6 million after being sold for $205 million 18 years ago. Downtown St. Louis is filled with vacant buildings and no signs of visiting. St. Louis' recent office vacancy rate is at an all-time high of 22.3%, according to JLL.
A vacant office building in downtown St. Louis has sold for $3.6 million, a nearly 98 percent discount from its 2006 sale price and a worrying sign about the future of the Midwest city's downtown neighborhoods.
The former One AT&T Center, which stands 44 stories tall and is the third-tallest building in St. Louis, was sold in 2006 for $205 million and recently sold to real estate investment firm Goldman Group for $3.6 million, according to CoStar News.
The tower's reported plummeting value is just one sign that St. Louis' central business district is in trouble. Economic and public policy experts say the challenges facing it and other Midwest centers may be worse than those of larger downtowns such as San Francisco, which are widely described as abandoned or in decline.
St. Louis' office vacancy rate hit a record high of 22.3% in the first quarter of 2024, according to an April 10 report from commercial real estate brokerage JLL.
According to CoStar, the AT&T Tower has been vacant since 2017. Another downtown building, the 21-story Railway Exchange Building, once housed a local department store but has since similarly fallen into disrepair, according to the Unseen St. Louis blog.
In fact, downtown St. Louis resembles a ghost town, with many boarded-up buildings, according to The Wall Street Journal's Conrad Putzier.
A Wall Street Journal investigation found that an increase in remote work has led to fewer customers, creating a vicious cycle as local businesses such as restaurants and shops have closed.
“It's a classic chicken-and-egg problem,” Glenn MacDonald, a professor of economics at the Olin School of Business at Washington University in St. Louis, told The Wall Street Journal. “People aren't going there because there's nothing to do. And there's nothing to do because people aren't going there.”
This cycle is often referred to as the “urban doom loop,” and The Atlantic explains that as conditions get worse, people leave the city, which makes things even worse.
Business Insider's Eliza Relman describes the vicious cycle plaguing Midwestern cities: “Commercial property taxes make up a big chunk of many city budgets, and as office space vacancies rise, the loss of revenue could force leaders to cut municipal services or slash key programs. Poor services and a decline in quality of life could, in turn, drive residents away, leading to further exodus. Without serious reform, these mid-sized Midwestern cities could be quietly forgotten.”
There's data on this: Researchers at the University of Toronto analyzed anonymized cell phone data to compare the daily foot traffic in North American central business districts from March to June 2023 to the same period in 2019. The latest data placed St. Louis at the bottom of the 66 cities analyzed; six of the bottom 10 were in the Midwest.
San Francisco, held up as a cautionary tale during the remote-work boom, has yet to fully recover but ranks 18th higher than St. Louis in downtown pedestrian traffic.
The problem with Midwestern cities like St. Louis is that there isn't much to attract people to the city center — commuters, tourists, and residents alike.
“What I really think about these places is that there’s nothing special about the downtowns of any of these cities that would make them attractive to new residents,” Michael Hicks, a professor of economics and business studies at Ball State University in Indiana, told BI’s Relman in 2023. “They just don’t have the basic amenities that would draw people in.”
Relman concluded that Midwestern cities need to prioritize increasing downtown amenities, from playgrounds and libraries to boutiques and cafes, to attract more people.
Coastal cities are already getting ahead of this problem.
Big cities like San Francisco and New York are also seeing higher office vacancy rates than they were pre-pandemic, but more developers in these areas are taking action, investing in upgrading offices into spaces that employees actually want to visit.
Tracy Hadden Law, a fellow at the Brookings Institution, a nonprofit think tank, told BI in 2023 that the Midwest was facing the problem of lackluster downtown areas long before the pandemic.
“The pandemic has caused major disruptions and led to some real paradigm shifts, but most of its impact has simply been to dramatically accelerate existing trends,” she said.