Insatiable appetite for commercial real estate continues

The St. Louis-area CRE market is still hungry for more, according to Commercial Real Estate Women (CREW)-St. Louis’ “Industrial Outlook” panelists.

Christie Brinkman, director, design build, Castle Contracting, LLC, moderated the March session as panelists, Cara Weber, Wakeel Rahman and Christy Campbell discussed recent pandemic-related challenges and predictions going forward.

Cara Weber, vice president, business recruitment, Missouri Partnership, said the Partnership is a public/private entity funded by the State of Missouri’s Department of Economic Development and the Hawthorn Foundation to focus on attracting new businesses to the state by functioning as a sales tunnel that includes marketing, business development and project management.

“Our Raise the Bar program is identifying sites for development so the region can control its own destiny,” Weber said. 

In the past five years, the Partnership has opened 615 projects and lost 142. Wins by industry include advanced manufacturing, energy solutions, food solutions, logistics and distribution, and office-based space.

“Expansion is incredibly important — about 80 percent of new jobs are coming from expansion,” she said. “I’m excited about the level of project flow so far this year, which has been mostly industrial. We’re seeing a lot of searches for existing buildings, but don’t have a lot available.”

“Retention (of businesses) is the key component. Attraction is our wheelhouse,” Weber said. “We’re getting more opportunities from big OEM businesses.”

Available CRE space is a factor in lost projects, along with whether a business has an existing presence in the area and concerns about logistics, incentives, available workforce, business costs and infrastructure, according to Weber. 

“What’s great about Missouri is our transportation resources: rail and river,” she said.

The CRE profession is faced with “trying to meet an almost insatiable demand for commercial real estate,” said Wakeel Rahman, vice president, NorthPoint Development. “The market is very healthy. Retail stepped up to take a lot of space to compete with Amazon.”

E-commerce is driving the market from “just in time” (JIT) to “just in case” (JIC), and the ratio of inventory to sales in the supply chain should increase. 

Rahman warned that national headwinds to watch include continued supply chain delays and cost increases for materials and construction, NIMBYism (Not In My Back Yard) attitudes toward industrial properties, entitlement and permitting, and warehouse fatigue. 

“St. Louis is still one of the tightest markets,” he said. “Looking forward, we will see an increase in automation and more-affordable systems; new geographies where companies can build; and spending more on infrastructure, which means good things for our industry because it creates improved access.”

The preliminary 2022 first-quarter numbers are encouraging, said Christy Campbell, brokerage associate, Cushman & Wakefield: “2.2 MSF of positive net absorption and a 2.9 percent vacancy rate — the lowest ever.” Asking rates are increasing in response, she said. “While St. Louis has always been a stable market, 2021 was a record year and we’re already halfway there in 2022, with 8.3 MSF under construction among 26 buildings with only one that’s tax-abated.”

Royal Canin, Ryder and Imperial Dade are leading the field; Duke Realty has completely left the market. 

The largest Q1 investment sales have been Duke to Exeter Property Group, Inc., TriStar Properties to Apollo Global Management and Duke to Pontegadea Inversiones as cap rates continue to compress.

“Trends are an upward pressure on rental rates and annual increases, changes in marketing strategies with less and less advertised rates, increased emphasis on e-commerce, and the move from JIT to JIC,” Campbell said.

In terms of some of the issues that Rahman noted, “The most common misconception about the industrial sector is negative environmental impact of large facilities on a community; but in reality, there’s no stress on schools, there are new jobs, and LEED buildings with high-tech electronics-driven systems are environmentally friendly,” she said.

“Industrial tenants are looking for buildings with 30- to 40-foot clear heights because of racking and are making heavy trailer parking demands,” Campbell said. “Land prices are increasing across the country, although St. Louis is lagging behind the coasts.” 

Upcoming CREW-STL events include Coffee with CREW, April 1; Membership Hike, April 6; Bar K & Green Street Real Estate Ventures Happy Hour and tour, April 12; and Dine Around, April 19. To register or for more event details, visit https://crewstl.org/events.

Lawrence Group adds Integrate Construction Partners, names president

Lawrence Group has announced the spinoff of its construction division into a separate entity, now known as Integrate Construction Partners.

The new commercial construction company offers design-build, construction management and general contracting services. Lawrence Group will continue to provide its core design services including architecture and interior design through its three offices nationwide.

Lawrence Group, which has had a construction division since 2004, has seen its construction division grow substantially through client relationships and its own affiliated real estate projects.

“The market for how organizations seek to facilitate their building needs continues to evolve. The establishment of Integrate Construction Partners creates a more independent platform for providing construction services while allowing our design practice to solely focus on industry-leading design solutions,” said Steve Smith, CEO of Lawrence Group.  

Scott Zola has been named president of Integrate Construction Partners; Smith will serve as its chairman. 

“I am excited to build upon the success of our construction group through Integrate Construction Partners. Honesty and transparency coupled with first-in-class full life cycle project leadership is the cornerstone upon which Integrate is built. Through a true partnership, we will work with all our project stakeholders to integrate value, safety, quality, community and fun,” said Zola.

Zola joined Lawrence Group in 2014 to lead the firm’s construction practice. Since then, he has grown the firm’s construction volume from approximately $5 million of St. Louis based work to more than $40 million across multiple states with plans for continued growth.

The spinoff, and recent announcement of real estate affiliate New + Found, is part of the organization’s overall strategic plan to build a multidisciplinary group of companies to provide comprehensive building solutions. 

Pioneer and advocate for DEI receives lifetime achievement award

Kaven Swan, senior principal, firm-wide director of business development-aviation + transportation at the St. Louis headquarters of the global design, architecture, engineering and planning firm HOK, recently received a lifetime achievement award for his work in diversity, equity and inclusion (DEI) in architecture, engineering and construction (AEC) from MOKAN, an advocacy group for minority- and women-owned businesses (MBEs and WBEs).

Swan talked to MetroWire Media about his work and why DEI will continue to be important to those areas of business.

“I gravitated to this work because I started twice with minority-owned firms and saw how difficult it was to get opportunities and assignments and show our skillsets, even though we all went to the same schools,” Swan recalled. “We were in the same building as HOK, and I realized the best way I could lead projects was through a large majority firm.”  

Working together created a good team, Swan said. “I found myself becoming an advocate for inclusion and was asked to take a state role (with the Minority Contractors Association), which I did for 10 years. I saw that we have to be intentional in scoring qualifications for projects and making inclusion part of that process.” 

When he became a consultant to HOK on the firm’s aviation work in various cities, leveraging relationships was essential to success.

“This business is relationship-based. It became a natural thing to do in all projects,” Swan said. “It was important to have people at the table to become sensitive to factors in decisions.” 

Swan made a point of visiting minority firms throughout the region, connecting people and encouraging joint ventures. He believes in the meritocracy of ideas and having a focus on solving problems, often through creative approaches.  Although progress has been made, Swan admits challenges still remain.

“There are generational gaps, and it’s still hard for women and minorities to get into architecture school,” Swan noted. “People gravitate to those they know and who look like them.”

A bout with COVID-19 earlier this year has put Swan “in a different place” and led him to reflect on his work and contributions.

“Inclusion is imperative — it’s almost a moral imperative — because our industry is a reflection of our community, the people we serve and the environments we build,” he said. “They are permanent. To get it right, we have to have a diverse perspective. Communities are becoming more diverse, so business has to do the same.”

There have been advances, Swan said. “There is an expectation now that women and minorities will have a seat at the table. That has changed, and will continue to change.” 

Swan has been with HOK since 2002, but his impact on DEI extends beyond the firm. In 2015, he worked with BJC Healthcare to develop a framework for improving diversity and inclusion in the institution’s contracting. He is a member of the Diversity Committees of the Airport Council International-North America and the American Association of Airport Executives; on the Nominating Committee of the Airports Consultants Council; and part treasurer of the Airport Minority Advisory Council In St. Louis, he serves on several nonprofit boards and is a member of the St. Louis Minority Supplier Diversity Committee. 

The scope of Swan’s impact over the past 35 years in design and construction has been extensive, to say the least. A few highlights include helping to launch HOK’s global A&T practice and first Diversity Committee, and advising the St. Louis office’s current DEI Committee; being appointed by then-Missouri Governor Mel Carnahan as chair of the Missouri Minority Advocacy Commission; helping to write an executive order for Missouri state agencies to improve their diversity, which resulted in more WBEs and MBEs participating in state contracts; helping to create a CEO-2-CEO roundtable program that matched area WBE and MBE firms with CEOs of large construction management companies; helping to develop the Urban Enterprise Loan program (St. Louis and Kansas City); ensuring that MBE, WBE and small business enterprises (SBEs) participated in major airport projects in Indianapolis, Atlanta and Los Angeles; and leading the team that won the Maynard Jackson Soar Award for using SBE, MBE and WBE firms on projects at the Hartsfield-Jackson Atlanta International Airport.

Swan has a master’s degree in business administration from Atlanta University and a BA degree in management and organizational behavior from Morehouse College. 

For a video of the MOKAN award event, go to: https://www.hok.com/news/2021-11/kaven-swans-30-year-push-to-diversify-the-design-and-construction-industry/.