St. Louis Industrial Real Estate Market Report | Q1 2025
Flip Through the Full Q1 2025 Industrial Market Report
St. Louis Industrial Market Hits Three-Year Vacancy Low in Q1 2025
The St. Louis industrial market is off to a strong start in 2025, with vacancy rates tightening and tenant demand surging across key submarkets.
Vacancy Hits 3.9% – Lowest Since 2022
At the close of Q1 2025, the overall vacancy rate in the St. Louis industrial market fell to 3.9%, its lowest point in three years. This marks a significant drop from the 5.0% rate at the end of 2024 and reflects the region’s sustained leasing momentum and limited new inventory.
Absorption Surges, Led by Metro East and St. Charles County
Net absorption rose 133% quarter-over-quarter to over 1.3 million square feet, signaling renewed confidence among industrial users. Metro East and St. Charles County were standout performers, together accounting for the bulk of this activity. This marks the fourth consecutive quarter of positive absorption, with a 12-month total topping 5.6 million square feet.
Rental Rates Continue to Climb
As availability tightens, pricing continues to rise. The average direct asking lease rate increased to $6.20 per square foot NNN, up from $6.04 in Q4 2024. Submarkets like Chesterfield and Jefferson County commanded some of the highest average rates, reflecting continued demand for well-located, newer facilities.
Construction Pipeline Remains Active—But Largely Build-to-Suit
Over 3.2 million square feet of industrial space is currently under construction, with 81% of that activity driven by build-to-suit projects. Amazon’s 933,656-square-foot facility at Gateway TradePort VI led new groundbreakings in Q1. This trend underscores a shift toward custom solutions and away from speculative building.
Leasing Eases But Remains Strong
While leasing activity in Q1 dipped 29% from the previous quarter to 2.7 million square feet, the numbers remain in line with 2023 averages. Limited availability of high-quality space may be tempering the pace rather than a drop in demand. Active submarkets included Metro East, Earth City, and North County.
Sales Volume Slows Amid Cautious Investment Climate
Investment sales in Q1 2025 hit a five-year low, likely due to elevated interest rates and limited inventory. Owner/user sales remained steady, but investor activity has slowed as capital markets tighten and trade policy uncertainty lingers.
Submarket Spotlight: A Tale of Two Extremes
- North County recorded the highest vacancy at nearly 12%, signaling opportunities for value-driven tenants.
- Jefferson County, on the other hand, posted a record-low 0.5% vacancy, with growing interest pushing demand toward the outer-ring submarkets.
Looking Ahead
With solid fundamentals, a healthy construction pipeline, and continued tenant interest, the St. Louis industrial market appears poised for another strong year. As inventory tightens, strategic site selection and build-to-suit opportunities will remain key themes heading into the second half of 2025.