Downtown St. Louis Hits Commercial Rock Bottom

There’s nowhere for the Downtown St. Louis commercial real estate environment to go but up, because it would be hard to sink much lower.

The neighborhood is struggling to escape the doom loop it finds itself trapped in, the Wall Street Journal reported. Sidewalks are deserted, offices and storefronts are vacant and car break-ins consistently rattle the area.

No central business district in a major United States city has seen a bigger drop in foot traffic than St. Louis from the onset of the pandemic to last summer, according to the University of Toronto’s School of Cities.

The urban doom loop becomes self-reinforcing. When offices sit empty, then the stores and restaurants relying on those employees disappear. Companies don’t feel comfortable bringing their employees to decrepit places without a Panera to eat at — the chain was a key lunch spot in Downtown St. Louis — and decide to lease somewhere else, or not at all. The cycle continues.

The neighborhood’s lowest moment from an office market perspective unfolded recently, when the 44-story AT&T Tower was sold for a miniscule $3.5 million. For the 1.46-million-square-foot property, that breaks down to less than $2.40 per square foot.

Boston-based Goldman Group picked up the property at 909 Chestnut Street from SomeraRoad Holdings on the Ten-X auction exchange, CoStar reported. SomeraRoad had purchased the property only two years earlier for $4.5 million.

In 2016, the property traded hands for $205 million. Since then, however, the building has emptied and is the second-largest vacant office building in the entire country.

Like other Midwestern cities, St. Louis’ office struggles predate the pandemic as both population loss and ineffective urban planning plague the neighborhood. Things took a turn in St. Louis when a Macy’s department store closed in 2013, starting a chain reaction that resulted in AT&T leaving its namesake building in 2017.

In an effort to revitalize the area, a business and civic organization is paying buskers to play on street corners while the city works to improve landscaping and bike lanes. Greater St. Louis Inc. and the St. Louis Development Corporation are also paying up to $50,000 for retailers that move downtown, as well as funds for sidewalk cafes and pop-up shops.

— Holden Walter-Warner