Why St. Louis? CCIM-STL panel illuminates appeal of Gateway to the West

The St. Louis region is in good shape and offers worthwhile opportunities for commercial real estate, according to speakers at a February 13 CCIM-STL meeting at the Meridien Hotel about “Why St. Louis?”

Jim Fredericks, partner in luncheon sponsor Armstrong Teasdale, set the tone for the program by saying, “I believe in St. Louis, and I believe in what we can do for St. Louis.”

Doug Rasmussen, founder and CEO of Steadfast City Economic & Community Partners, noted that his focus on site selection benefits from the interconnections among all 15 St. Louis counties, and that assumptions about the airport are not a big deal: “The lack of an airport hub isn’t that important,” he said. “We have parity in travel prices,” so business travelers have fewer concerns when planning trips.

The St. Louis region can “line up well in risk management,” Rasmussen said. “We can serve the globe from one location. We have diverse options for the supply chain. We have a reliable infrastructure, including weather. We have an industrial heritage and sites that can be redeveloped. We can provide a talent supply chain from the shop floor to the C-suite.”

The region does need more tech workers and residents in general, he noted.

“The challenge for real estate professionals is to think of St. Louis as unique and focus on what’s in our own backyard for all aspects of what a company might need,” Rasmussen said.

For Maggie Kost, chief attraction officer at Greater St. Louis, Inc., promoting St. Louis to potential new businesses is “truly a team sport.”

Her organization primarily focuses on companies in advanced manufacturing (automotive, aerospace, and food and beverage), agtech, bioscience and health, digital transformation, financial and business services, and geospatial. The span of industries and occupations is “an asset for spouses when [a business owner] is relocating here,” she said.

Kost and her team present St. Louis as “a place to start up, stand out, and stay.” St. Louisans “are hard on ourselves, and we shouldn’t be,” she added.

She noted that the metro St. Louis region is ranked as number one in the Mississippi River corridor. “We are putting St. Louis on the global stage,” she said. That’s due to the area’s “transport modal hub, great culture, affordable housing and minimal commutes,” among other qualities.

Commercial real estate professionals would benefit from thinking of Greater St. Louis, Inc. as “a resource and part of your team,” Kost said.

Robert (Bob) Millstone, president and founder of the The Millstone Company, outlined the ways that the Gateway South project, a 100-acre master-planned redevelopment along the riverfront, aims to enhance St. Louis as number one in construction innovation. It will be “a walkable, mixed-use downtown focused on cross-pollination,” Millstone said, at a total estimate cost of $1.2 billion.

Phase 1 is expected to be complete in two years, with work scheduled to begin in March, Millstone said — an impressive goal. It already has $200 million in incentives and $25 million in out-of-town investments, as well as “real local manufacturing companies that will anchor the project.”

Reflecting on the history of the area, “we’re excited about the next 100 years,” Millstone said.

Kost also noted that the St. Louis area’s colleges and universities contribute substantially to the region’s appeal to new and existing businesses and nonprofit organizations as “tremendously important for filling the talent pipeline and innovating.”

Millstone added that “we also have to keep tech training in mind”; not just area universities but also institutions like Rankin Tech and the offerings of the community college system.

Kost agreed: “A lot of people don’t realize there are a lot of community college programs for retraining. It’s all set up to address (business) needs. The community colleges and Rankin understand (what companies need).”

Another key to the region’s future, according to Rasmussen, will be promoting its “cool factor — making it an area that young people want to go to (and stay in). It’s mostly a matter of making (our advantages) known.”

Immigration trends also work in favor of St. Louis, panelists agreed. “It’s very important for us that St. Louis has always been really good at welcoming immigrants,” Kost said, while Rasmussen said that “my lens as a site selector is that St. Louis is not as well-known as we could be (in this respect) — it’s important to make (us) more of a landing place for new Americans.”

The same things that attract new companies and people to the area are a factor in retaining graduates and employees, Kost said.

Millstone identified the role of commercial real estate professionals as creating jobs for the future and convincing potential new businesses and residents that “this is a good place to live, work and play.” Being “ambassadors for the region” is also a vital role for the profession.

“Projects have to integrate with what leaders and the community want,” Millstone added.

That perspective fits with plans for the Greenway project, which Kost called “incredibly important in quality of life and an asset in connectivity and bridging the divide.” It can also be promoted as a tourist attraction, Rasmussen said.

The session wrapped up with perspectives on downtown. “Downtown is incredibly important,” Kost said. “We have locations (that are ideal for) industrial reuse, office space that is very affordable compared to other areas. We’re making sure that we have the tools for redeveloping spaces (so employees will want to come back to offices).”

The answer to “Why St. Louis?” comes down to recognizing that “we’re a region and we live and die as a region,” Millstone said. “St. Louis can be a success, downtown can be a success, but we have to invest.”

Innovation and customer experience key to St. Louis commercial real estate growth in 2023

More than 100 industry professionals attended MetroWire Media's 2023 Market Forecast Summit on March 9, 2023 at the Lodge Des Peres, which featured networking and a panel discussion with Addie Bunting from Wies Offsite as the moderator, and panelists Lauren Talley with Cobalt Construction Consulting, Tom Ray with CBRE, Tom Kaiman with Mia Rose Holdings, and Kyle Wilson with Kadean Construction. The panelists covered a range of CRE topics related to multifamily housing, office, industrial, and retail real estate.

Here are some highlights from the session:

Impact of the new Citypark Soccer Stadium

Kaiman: “It’s a great addition to the city that will spur other development in the area. Quality developments will bring people back to town. It will be an exciting place to live. The Taylor family is doing a great thing with this investment in the city.”

Talley: “It is exciting to see midtown coming to life,” said Talley. “Out-of-town developers are coming in.”

Multifamily

Kaiman: “Multifamily has been undersupplied for decades; zoning, permitting and NIMBY continue to be problematic. A lot of new product is coming online in St. Charles County.”

Wilson: “We continue to see a lot more interest in multifamily and condo properties for sale among empty nesters in Kirkwood, Webster Groves and Clayton. Small projects seem to infill well.”

Ray: “Apartments will fix downtown. The answer is more apartments. It’s more important than ever that people can live in walking distance of their offices.”

Talley: “Multifamily has exploded. The result is a flight to quality while commercial is seeing a flight to amenities.”

Office

Ray: “Downtown is seeing a nice absorption in startup and early-stage businesses looking for office space needing little improvement. Landlords are ready to deal. There’s an historic view that the prime downtown tenant is a large law firm that will stay forever, but smaller startup companies are the future. There’s a lot of leasing as companies look for smaller office space.”

Kaiman: “There’s no longer a playbook or one size fits all. We’re still trying to figure it out. The world will continue to evolve in how we work, how we live, how we play.”

Retail

Kaiman: “Development fits everywhere. It’s all about how you activate a site and bring people there. It has to be safe. Cities that keep an open mind will benefit. The economic development folks have to be out there recruiting for new businesses.”

Wilson: “Store chains are taking a new approach, adding a smoothie bar, clothing for sale, etc., to create a new experience.”

Ray: “Mixed use is a goldmine for commercial/retail. It’s completely based on walkability.”

Talley: “Mixed use is kind of the ‘new black,’ and jurisdictions are mandating it. I think it’s here to stay. We need to grow to be more welcoming to national chains.”

Cannabis

Kaiman: “It’s the best thing that ever happened to empty stores. Data also shows property values going up around dispensaries.”

Industrial

Wilson: “We’re finding more mega-sites — they seem to be bigger and bigger. Tenants who need smaller space might be left in the dust. Big is booming.”

Talley: “We have the land available (that companies need for large industrial uses). Cost increases for materials and supplies led to a pause. Products delivered to the home with continue to grow (and require large warehouse and distribution facilities). Companies are looking to automation because it offers less human error or possibilities of people getting hurt — all industries are increasing automation.”

Wilson: “Automation has much higher construction requirements, so we’ll see taller buildings. If it gets traction, it will change the way we build warehouses.”

What Clients Want

Kaiman: “Our customers are tenants, so the flight to quality is their number-one driver.”

Wilson: “Our biggest challenge is being asked for more product. The subcontractor market is overloaded — they need more workers.”

Ray: “The collective experience in the office sector is adding more amenities. A new building has to be different from the one next door. You have to figure out how to provide experiences.”

Talley: “Clients want transparency in everything — costs, where products are coming from, when items will arrive, whether prices will be the same on arrival.”

Overall, the panel was optimistic about the future of commercial real estate in St. Louis, highlighting the potential for growth and expansion across all four sectors. They emphasized the importance of providing customers with unique experiences, as well as the need for economic development teams to recruit new businesses to the area.

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CLICK HERE TO VIEW EVENT PHOTO ALBUM.

Brinkmann Constructors promotes Brian Satterthwaite to CEO, Tom Oberle to president

Brinkmann Constructors has completed a leadership succession plan that promotes Brian Satterthwaite to chief executive officer (CEO), and Tom Oberle to president. Founder and former CEO, Bob Brinkmann, will remain engaged as chairman of the board for the company he launched in 1984.

Since 2010, Bob Brinkmann had served as CEO, Satterthwaite as president and Oberle as executive vice president. Now 12 years later, Brinkmann Constructors’ annual sales revenue has grown more than ten-fold, rising from $111 million to $1.3 billion.

“It is an honor to succeed Bob as CEO,” Satterthwaite said. “He has put nearly four decades of dedicated effort into building an outstanding organization while generously planning a better future for all Brinkmann employee-owners via our stock ownership plan. We’re happy to have Bob’s involvement in nurturing the culture that defines us and his service as chairman of the board. Our community will benefit from his continued civic endeavors.”

The changes complete the last step in a multi-year leadership and ownership succession plan initiated by the founder. Ownership succession was addressed with the establishment of the Brinkmann Constructors Employee Stock Ownership Plan (ESOP).

“The outstanding performance and leadership shown by Brian and Tom have proven instrumental to our growth and success,” Brinkmann said. “I am excited to have them take full leadership of Brinkmann’s strategy, direction and operations while I remain involved as chairman of the board. I am confident they will continue to nurture our culture, which focuses on the strength of our team, the creativity and knowledge of our employee-owners, and the shared passion we have for serving one another, our clients and our communities.”

To further support growth, Ted Hoog, vice president of operations, was promoted to senior vice president of corporate operations, supporting Brinkmann’s national construction operations. Matt Funk, director of preconstruction, was named corporate vice president of business development and preconstruction, adding company-wide business development responsibilities to his existing duties leading Brinkmann’s preconstruction services. 

Jeff Vierling, director of field operations, was named vice president of field operations, broadening his mentoring and management responsibilities for Brinkmann’s field teams nationally. Lucas Rottler, director of preconstruction in Denver, was promoted to vice president of preconstruction in Denver, expanding the scope of his responsibilities. Nathan Wirth, senior superintendent in St. Louis, was promoted to regional director of field operations in Kansas City.

The national construction firm today stands at 350 employee-owners scanning four cities (St. Louis, Denver, Kansas City and Richmond, Va.).

Brinkmann Constructors is a national general contractor offering design/build, design/assist and construction management services to a wide variety of commercial industries, including student housing, senior living, industrial, multifamily and mixed-use, office, retail and more.

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Editor’s note: Catch Matt Funk as a panelist in MWM’s STL Mixed-Use Summit on Nov. 30 at The Expo at Forest Park. For more information, or to register for the event, CLICK HERE.

Healthcare and senior living markets pivot to prosper

Despite continuing challenges in supply chain and workforce, the CRE market for healthcare and senior living projects in St. Louis remains healthy, thanks to some strategic pivots, according to panelists at the 2022 MetroWire Media Healthcare + Senior Living Summit, hosted by Brahms Construction (a Dover Companies business) in St. Louis, Mo. on September 27.

Kelly Reed, chief revenue officer with the Dover Companies, moderated the session, which featured insights from Matthew (Matt) Goebel, president, Brahms Construction; Adam Walter, vice president, Lument; Michelle Hamilton, business development director, Spellman Brady & Company; and Joseph (Joe) Lampe, director – healthcare, Cornerstone Commercial Realty.

Dover develops senior living communities; Brahms has 56 facilities in seven states; Spellman Brady is a women-business-enterprise/women-owned organization that works in design and artwork for senior living, education and healthcare entities; Lument is a commercial real estate lending bank exclusively serving hospitals and senior housing, and Cornerstone is a real estate brokerage working in healthcare only that serves five area hospitals and physician groups.

“The need for senior living communities is great, especially in under-served areas,” Reed said.

In asking for comments about the state of healthcare and senior living resources in the St. Louis market, Reed noted that “the adult child as a shopper for their parent” is a current trend. Virtual tours were a “great resource” during the pandemic and remain invaluable even post-Covid: “Customers might not have the opportunity to view facilities in person, so we had to shift and reinvent technology because these days, the customer experience begins online,” she said.

Businesses had to pivot as a result of the pandemic, Goebel said. “We engaged with third-party developers and are doing a lot more remodels from coast to coast because new buildings are not being built. Everyone is looking to refresh their properties.”

At Spellman Brady, “we were able to cross-populate projects and move more toward hospitality-based design,” Hamilton said. Requests for private space for healthcare staff to relax and rejuvenate themselves have increased, and expectations are that the baby boomer generation will need more senior facilities by 2030 as they retire.

“We’re seeing a lot of renovation work to elevate space to a higher quality and be more functional,” Hamilton said. “We’re designing for the next disaster to protect inhabitants, staff and visitors. It’s fascinating how we’re all borrowing (ideas and approaches) from each other.”  

Panelists and their companies responded to the isolation of the pandemic in various ways, many of which were technology-based. “Technology expedited our ability to stay in touch,” Hamilton said.

“Capital solutions evolved during Covid,” said Walter. “We saw bridge loans as an opportunity for direct lending in acquisitions because many long-term owners wanted to exit the market. Owners were looking to diversify, which I expect to see as a strong continuing trend.”

The current environment is “an exciting time to be in healthcare real estate — we aim to lead clients into solutions,” Lampe said. “We were seeing increased confidence going into the pandemic that is continuing. It’s been a dogfight in private equity for physician practices. We’re now seeing much longer-term leases than I’ve ever seen before — 10 to 15 years.”

Current challenges include consumers paying more attention to how healthcare physical plants look and feel, Reed said, and that is driving design and renovation efforts.

Supply chain issues continue to bedevil the healthcare field.

“We’re getting product into town, but it’s still a challenge,” Hamilton said. “It requires earlier planning in acquisitions and greater care in setting budgets. Acquisition assistance is a big part of any new business. The main challenge is finding a balance between budget constraints and creating safe spaces. A lot of properties are prime for renovation.”

Reed noted that healthcare professionals have to be very careful about purchasing existing properties because “you never know what you’ll get”: A recent building acquisition came with more than 150 feral cats!

The pandemic era has had a positive impact on how clients respond to any continuing challenges and the occasional surprises: “People are being more flexible and understanding about delays and needing alternatives to their choices in materials or products,” Hamilton said.

The financial side of the healthcare real estate industry is having an impact as well. “A lot of clients have put projects on the back burner as interest rates have been going up,” Walter said. “They are waiting for the market to stabilize. From an operational standpoint, staffing is still a huge challenge. National compression over time is making it harder and harder to do some projects.”

Lampe is seeing a similar concern in working with landlords needing to fill or maintain commercial projects for healthcare entities as clients ask for space that responds to patient, staff and visitor requests for softer furnishings and less technical or industrial-seeming environments than in the past. “It’s hard to justify the return on investment on the atmosphere of your space,” he said. “If a building is visually detrimental, it can be hard to convince owners to upgrade it before they can sell. We have to make the case that, for instance, alarms might be out of code or a building will have unnecessary dedicated spaces that the owner will have to fix before anyone will buy.”

For the banking side of the healthcare industry, change is coming in the next six months. “A slowdown is coming,” Goebel said.

Panelists agreed that the pandemic has driven a greater understanding of the effect of a healthcare building on the physical and mental wellness of everyone who works, receives care or visits there.

“Design, art and furniture are things that people think about more from a biophilic or natural approach now,” Hamilton said. “We have to understand that demographic when we draw on colors and space. There’s also an increased demand for activities outdoors. We have to work closely together so design and products align with what patients and staff need. 

This trend is also important from a practical perspective, she said: “If you don’t stay up to date, you can take a hit from Medicare.”

Walter alerted participants to building for the “active adult” as a new asset class — a product developed in 2016 but becoming increasingly popular in healthcare communities today.

“These are essentially age-restricted — 55-plus — rental properties with an amenity-rich lifestyle focused on wellness,” he said. The average age of the active adult is 72 to 74, compared to 80 and older for traditional senior living communities. That demographic is a factor in whether to build on an existing campus or build something new, he said.

According to Lampe, “we are seeing demand for more space in waiting rooms and larger areas for receptionists and other staff. How common areas feel is more and more important.”

Goebel noted that when thinking about the wellness factor, “it is critical for everyone to know that construction is a very stressful environment. It’s the largest industry with mental health issues because it’s such a push-push industry with constant deadlines.”

Asked about the biggest deals in the St. Louis healthcare market, Lampe listed the BJC vascular center, Mercy Health Creve Coeur projects and Mercy South Cancer Center and an upcoming Kindred Healthcare site.

“There are also a lot of smaller deals,” he said. “The last two years have been the busiest I’ve ever seen in that arena, and there will be continued ripple effects in independent practices.”

Goebel expects St. Charles County to see substantial growth in healthcare facilities.

Altogether, panelists agreed that the St. Louis healthcare market is doing well and should see continued growth and expansion, with ever-increasing attention paid to the way commercial properties support the physical, mental and emotional needs of all user demographics.