After a three-year rut in employment growth, St. Louis saw the addition of 9,000 local jobs in 2011—with 14,000 more expected in 2012. While this growth is modest compared to the recovery many other cities are witnessing, it was enough to encourage more unit absorption and a declining vacancy rate.
Hendricks & Partners’ most recent market report shows that multifamily construction hit a five-year high in 2011, with 556 unit completions. However, only 77 of these were in the downtown area south of Interstate 64—the bulk of the new units were concentrated in the northern suburbs of the city and in neighboring Illinois. Permits for construction in the metropolitan area overall are expected to reach a six-year high by 2013.
Additionally, the single-family industry is seeing a significant rebound fueled by a low median home price of $119,000 and modest employment gains. Hendricks & Partners notes that gains in single-family have incurred a mild negative impact on the multifamily industry, as occupancy is often a zero-sum game. While vacancy in multifamily did decline by one percent in 2011, this trend is expected to slow considerably to 0.1 percent in 2012—partly because of single-family growth. Vacancy rates are expected to hold steady at 6.5 percent through 2012 and 2013.
In terms of where new jobs will be coming from over the next year, Hendricks & Partners reports that General Motors has decided to expand its Wentzville Plant in St. Charles County, resulting in hundreds of new jobs. Additionally, a new Mississippi River bridge linking Missouri and Illinois is expected to create 3,000 new jobs by its completion in 2014, as well as inject $25.3 billion into the local economy over 45 years. According to the project’s website, the bridge is being financed by $239 billion in grants from the federal government and $428 billion in combined funds from the two states it will serve.
The average rent saw an increase of 1.5 percent in the last year to a new high of $742 per month, which was the strongest recorded since the onset of the financial crisis in 2008. The area with the strongest price growth was Bridgeton/Northwest County with an increase of 2.3 percent, while Chesterfield/West County fared the worst with a price decrease of 0.2 percent.