‘For lease’ signs plague downtown St. Louis as commercial real estate market plummets in wake of COVID-19

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    ST. LOUIS (KMOV) — A drive through downtown St. Louis reveals dozens of “for lease” signs on empty storefronts and office buildings, as companies both grapple and adapt amid the COVID-19 pandemic.

With many companies allowing employees to continue working from home, some are faced with difficult decisions about upcoming lease renewals in large office spaces.

“I think they’re quickly realizing that the large blocks of space that they previously occupied may not be necessary to function as a company,” said Nick Bahn, a partner at Stephen F. Bahn Commercial Real Estate Services. “There were some spaces pre-pandemic that were empty, but the surge in the number of properties I think is directly related to the pandemic.”

In addition to office space, retail and restaurant spaces are struggling to stay afloat. With fewer people eating out and the ability to shop online, both industries have been gutted by COVID-19.

Compared to the market downturn of 2008, the pandemic is changing the way people live their lives when it comes to work, travel and even shopping. With many of those slow to return to normal, the uncertainty of the future remains.

Bahn said he believes there will always be a need for office space and the collaboration and culture that comes along with it. However, companies will become more flexible with how employees split their time between home and the office.

Further, all of the empty store fronts and “for lease” signs are a poor tool to help recruit new companies and businesses to put down roots downtown.

“A lot of vacancies in our city is a sign that people don’t want to be there,” he said. “It’s urban flight. Businesses, residents and all of the above is, generally speaking, moving west because the city is not a desirable market to be in right now for the most part.

In the last 10 or 12 years, the commercial real estate market was doing well downtown, he said. The addition of Ballpark Village and the overhaul of the Arch grounds are positive moves, Bahn said, but it may not be enough.

“I think there are some systemic problems with crime and the perception of safety that are posing larger obstacles than Ballpark Village and the Arch grounds can overcome,” he said.

Over the last year, property owners have been granted months of forbearance, but Bahn anticipates the situation will get worse before it gets better.

“I do think that there is going to be additional foreclosures and bankruptcies that have not come yet because of the stimulus and PPP money,” he said. “When that is no longer there to support these landlords or businesses, I would say in the first quarter or second quarter of this year, we’re going to see more bankruptcies and foreclosures and businesses go under.”

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