As employment begins to rebound and new construction remains minimal, rents in St. Louis are expected to climb 2.3 percent before the end of the year. Vacancy rates continue to trend steadily downward, with 2012 seeing a 70 basis point drop in the metrowide average—to 5.8 percent. This is the lowest level in over five years.
Marcus & Millichap reports that circa 20,000 jobs are will be created before the end of the year in the metro, translating to 1.6 increase in overall employment. Much of this will be due to renewed growth in the city’s struggling manufacturing sector, with the General Motors Wentzville assembly plant expected to expand in order to produce the new Chevrolet Colorado.
While construction of new multifamily units has remained virtually flat and far below permits issued over the past few years, single-family construction is beginning to beginning to see a moderate resurgence, perhaps enough to prompt Class A residents to consider homeownership in 2013 and beyond.
For the moment, however, occupancy continues to push upward and rents are seeing a strong a steady increase. During the first two quarters of 2012, asking rents climbed 1.2 percent to $733 per month, surpassing peak levels set in the third quarter of 2008. At the same time, effective rents rose 1.8 percent to $690 per month.
High-end Class A units saw the most dramatic rent increases, rising 2 percent to an average of $930 per month. Meanwhile, lower-tier properties saw a more meager increase of 0.6 percent—to $636 per month. Marcus & Millichap projects that overall metrowide rents will reach $741 per month by the end of the year, with effective rents rising to $700 per month—a gain of 3.2 percent.
The most expensive submarket in the region this year was Clayton/Mid-County area area, posting an average effective rent of $839 per month and a vacancy rate of 6.5 percent. This is a suburb of St. Louis with considerably higher home prices and incomes than other parts of the city, thus allowing for more expensive units even with a higher vacancy rate.
Additionally, the submarket that saw the largest growth over the past year was the Maryland Heights area in the northwest part of the county, with vacancy falling 150 basis points to 4.5 percent between 2011 and 2012. Rents in this area also grew 2.4 percent to $755 per month.
The submarket with the lowest rents was the area near the airport and Interstate 70, with average effective rent coming in at $523 per month and vacancy remaining high at 7.2 percent.
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