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Building Tomorrow: St. Louis Real Estate's Role in Shaping 2024

The St. Louis real estate market stands as a formidable force, not just influencing sectors like retail, industrial, multi-family, single-family, and commercial properties, but also weaving itself into the fabric of our local business community. For the average businessperson, understanding the dynamics of this market is essential, as it plays a pivotal role in the region’s economic vitality.  Let’s explore what makes our local market unique and the challenges and opportunities that lie ahead in 2024.


Stability Amidst Volatility: While the local real estate sector may not boast the sheer scale of cities like New York, Pheonix or Chicago, changes in the trajectory of St. Louis’ real estate market are felt across local industries.  Fortunately, while there are fluctuations, the St. Louis real estate market distinguishes itself as being significantly less volatile, not experiencing the extreme highs or lows seen in other markets. 

As we move into 2024, the St. Louis Retail, Industrial, Multi-family, and Single-family sectors remain stable, while the commercial and office sectors are experiencing pockets of volatility.  Within the office sector, we are seeing more tenants trade up into spaces with premium amenities.  With hybrid and remote work-arrangements now offered by many organizations, tenants generally need less square footage, and are seeking higher-end, premium locations and features.


Innovative Repurposing:  A trend we are seeing both nationally and locally is the creative repurposing of spaces that have fallen out of fashion or are under-utilized. Examples like the Old General American site in South County and Chesterfield Mall in the West County area showcase the transformation of potential challenges into opportunities. The Streets of St. Charles exemplifies the success of mixed-use spaces, blending retail, housing, restaurants, and green spaces to create vibrant communities.


Interest Rates as the X Factor: Looking forward, the trajectory of interest rates emerges as the X factor shaping 2024. The impact on Commercial Real Estate (CRE) loans is significant, with potential challenges if rates remain high. In 2024, an estimated $182 billion is expected to mature among major commercial real estate property types nationwide, according to Moody's Analytics Inc. Among that, an expected $47 billion is forecast to mature in the office loan world — the property type where the most distress is expected to be.  However, with signs of inflation under control, a decrease in interest rates could offer a favorable environment for CRE firms, seizing on opportunities that may arise.


A Mixed Bag:  Despite St. Louis' positive momentum with robust job growth, rising wages, and transformative infrastructure projects, challenges remain. The region has experienced population decline in recent years and the relocation of some corporate headquarters cast shadows on long-term growth. However, St. Louis' growing focus on tech, healthcare and logistics and its inherent affordability compared to larger coastal cities present unique opportunities to attract residents and businesses over the long-term.

Midwest BankCentre’s Commitment: In this dynamic landscape, Midwest BankCentre remains a steadfast partner. Our local relationship managers, equipped with deep knowledge of the St. Louis market, serve as trusted advisors. As we collectively navigate uncertainties, our commitment is unwavering – because in banking, It Matters Where You Bank.

 

Originally published in the St. Louis Business Journals Ask The Expert Column on 1/26/2024 by Danny Pogue, President – Commercial, Retail & Small Business Banking.