A year ago, a Wall Street Journal report rattled St. Louis' reputation and confidence, describing the region's downtown as a "real-estate nightmare" and cautionary tale for other U.S. cities struggling with office districts that lost their vibrancy during the COVID pandemic.
The national publication’s characterization of St. Louis’ challenges drew prickly responses from some of the city’s business and civic leaders. Still, in some ways, it may have been the shock they needed.
Last May, St. Louis Mayor Tishaura Jones challenged the St. Louis Development Corporation and Greater St. Louis Inc. to deliver a plan to her by mid-September to address the Millennium Hotel and Railway Exchange properties.
And in the ensuing year, tangible steps have been taken to address these two visible reminders of the vacancy in St. Louis’ core.
The Gateway Arch Park Foundation went under contract to purchase the Millennium Hotel in September. It revealed this February that the Cordish Companies had been selected to execute a $670 million mixed-use redevelopment of the site.
St. Louis also sued to seize the Railway Exchange Building plus the adjoining parking structure and surface lot last October. It paid about $2.6 million in March to purchase the 10 parcels that comprise the city block to the south of the looming former office building.
SLDC President and CEO Neal Richardson said the acquisition allows the city to move forward with the emergency demolition of the derelict garage awash in graffiti.
“The reason we’re taking immediate action on this site is because it’s been left in such disarray that it is creating public harm to our community,” he said last month. “As a visitor coming to downtown St. Louis, imagine if this is the first impression you see of downtown. How does that make you feel?”
Richardson added he expects SLDC will soon solicit proposals for the redevelopment of the Railway Exchange Building and the city block to the south.
Mayor-elect Cara Spencer has voiced support for the area, saying she would focus money available from the Rams settlement on downtown, housing in north city and infrastructure throughout the whole city.
Decade needed for a turnaround
These steps may prove critical in softening the sour mood hanging over downtown St. Louis’ future.
“The most important thing is building momentum,” said Hank Webber, managing principal of Urban Impact Advisors. “You have wins, recognizable steps forward.”
Webber draws this viewpoint from his research into how older industrial cities similar to St. Louis, such as Detroit, Pittsburgh or Cincinnati, fared after the decline of manufacturing last century.
“To build a vibrant downtown that we’re all proud of, it’s going to be a 15- to 20-year process,” Webber said. “That’s OK, just don’t promise more than that.”
Neighborhoods naturally change slowly, he said, and St. Louis’ downtown is massive, roughly 2 square miles, according to a recent Brookings Institution study.
However, Webber sees momentum building around Energizer Park in the Downtown West neighborhood.
Since the stadium was completed in late 2022, nearby redevelopments of the Historic Butler Brothers building into the Victor apartments and the former YMCA building into the 21c Museum Hotel have opened. And AHM Group’s proposed $232 million mixed-use development just north of the soccer stadium is set to break ground this year.
Energizer Park joins a constellation of places in the region’s downtown, like Gateway Arch National Park, Busch Stadium, Union Station and others, that draw millions of visitors each year. The challenge is these nodes of activity are far apart, Webber explained.
“The problem is that you don’t naturally flow [between] amenities,” he said. “You don’t walk out of the City Museum and say, ‘Oh, I’m going to have lunch here, and I’m going to do some shopping.’ It’s not the natural flow.”
Webber laments that one of downtown’s most natural corridors for urban vitality in Washington Avenue lost its luster.
“Almost all of the buildings are at the right scale [with] first-floor storefronts, and we let it decline,” he said.
‘We’re going to force the turn to happen on our own’
The avenue through the heart of downtown features many multistory brick buildings from the 1800s that first served as the hub of the city’s manufacturing textile industry. Many of those Washington Avenue buildings were redeveloped into condos or apartments a century later, in the late 1990s and early 2000s, with the help of the federal government’s and Missouri’s historic tax credit program, said Alex Oliver, owner and founder of Oliver Properties.
But the 2008 real estate crash sent some properties into foreclosure, while others deteriorated as their out-of-town owners neglected to pour many resources into them, he explained.
“It created this collection of underperforming assets down here because people haven’t reinvested back into the buildings,” Oliver said. “That’s become our immediate focus, these buildings that have been renovated in the last 20 years.”
Today, Oliver’s real estate investing and development firm has acquired five Washington Avenue buildings, totaling 500 apartments, and he’s keen on engineering a rebound.
“I’m not patient enough for the market to turn,” he said. “We’re going to force the turn to happen on our own.”
His strategy is intentional: Go after the underperforming historic buildings already converted into condos or apartments and bring in better management and more building-wide amenities for residents at a competitive price.
Take the Six Cord Apartments at 1000 Washington Ave., which now has ample community space, package lockers, bike racks and a top floor complete with a fitness room, spa, sauna, cold plunge tank and outdoor deck space.
The 212 market-rate apartments rent at $1,300 per month for a one-bedroom place and $1,500 to $1,800 for two bedrooms.
“For the value-driven resident, I think it’s a phenomenal price point,” Oliver said.
He adds that the “incredible” leasing velocity confirms this for him. After he acquired the building in November 2023, occupancy dropped to 30% during renovations, but in the past six to eight months, that share has jumped to over 90%, Oliver said.
It mirrors other developers’ success in rehabilitating comparable buildings into apartments in Laclede’s Landing.
“We have a recipe that’s proven to work,” Oliver said, adding that his firm is moving forward with two similar renovations with the Ventana Lofts and Bee Hat Lofts, both along Washington.
Oliver has another reason for his acquisitions: eliminating past fractured ownership by consolidating more property under a single owner to bring a more cohesive retail strategy to the strip.
“Imagine a suburban shopping center that’s owned by 27 different people; you’re going to end up with an odd tenant mix when it comes to the retailers,” he said. “That’s what we currently have on Wash Ave.”
Ideally, storefronts would be filled by a range of options: restaurants and bars but also boutiques selling goods or another downtown grocer, Oliver said. But the retail market today is mainly supported by tourism, which limits what will likely be successful in the shorter term to food and beverage options, he added.
Still, Oliver can easily rattle off a list of more than a half-dozen venues to visit within a few blocks of the entrance of the Six Cord apartments.
“It’s pretty vibrant, [but] that doesn’t translate yet to all city blocks that are downtown, but a block at a time is how we’re going to get there,” he said.
‘Capturing people’s time’
The concentration of vacant properties, particularly office buildings, in the center of the region’s urban core is an extra challenge to coveted street-level activation. Venture a few blocks off main thoroughfares like Market Street or Washington Avenue and the blocks are lined with empty shops whose faded signs show what once filled them.
“Businesses have left, and nothing has replaced them,” said Charles Bryson, a policy catalyst with Trailnet who has lived or worked downtown for more than 20 years. “There’s less activity because there’s less opportunity for activity.”
And that lowers the potential value of a trip downtown when someone decides to visit one of its main draws, he added.
“[If] you just go back home, that’s a trip wasted in terms of the city gaining more revenue, vibrancy, people who on a regular basis will say, ‘This is an experience I want to repeat,’” Bryson said.
This notion has become vital given how the coronavirus pandemic upended office work and traditional central business districts.
“Downtown vibrancy is really reliant on capturing people’s time,” said Sarah Wiebenson, vice president of economic development for the Downtown Denver Partnership. “It’s not a kind of place where you want someone just to drive in, drive out, grab a coffee and keep moving.”
A trip downtown becomes more valuable if someone chooses to linger and visit another shop or maybe spend time in a park, she said. And on top of that, creating conditions or a space where people want to live, work and play, Wiebenson added.
“You think about it as an ecosystem and what else is needed to provide that complete experience and capture someone’s time from breakfast all the way through the evening,” she said.
St. Louis has dabbled with cash incentives to attract new business downtown. Last April, Greater St. Louis Inc. and SLDC launched $350,000 in grants and other incentives to help support restaurants, new retail businesses and pop-ups in vacant storefronts downtown.
To Bryson, this kind of support should be a long-term play and requires consistent attention from the city as new businesses need time to develop regular customers and steady revenue.
“It can’t be a shot in the arm, and six months later, they’re out of business,” Bryson said. “For every one business you move in, if two move out, you’re not helping yourself.”
A spokesperson for Greater St. Louis Inc. said Whip It Goods, The Passport and Buddy's Wine Bar have committed to long-term leases downtown after all received grants last year to establish temporary pop-up retail businesses.
Vacant properties and storefronts also drag on any effort to bring more activity to a street, said Lisa Middag, senior director for economic development for the Minneapolis Downtown Council and Downtown Improvement District.
“As much as I want to say place making, which I really believe in, in terms of its ability to make change happen, all of those things will fall short if we can’t address vacancy at the same time,” she said. “They’re necessary. They’re not sufficient.”
Middag argues targeted street-level activations, like a temporary art exhibition, pop-up retail or a block party with food trucks, can help demonstrate to a building’s owner what a heightened level of activity can bring them.
“Especially in a commercial building with a large stack of employees above it, the level of energy and vibrancy that happens on that ground floor had a dramatic effect on their ability to attract and retain tenants in the commercial stock,” she said.
More than just office
There’s growing recognition and acceptance that downtown districts everywhere must evolve to have multiple uses.
“It’s really about cities reorienting away from the notion that it’s a one-note district that’s all about commercial buildings and office,” Middag said.
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In many ways, St. Louis is already on this trajectory and has been for years.
Since 2010, estimates from the Census Bureau’s American Community Survey show the population in the downtown census tracts has roughly doubled while the city’s overall population has contracted.
In terms of economic activity, the dollar amount of sales occurring each year in the three ZIP codes encompassing downtown has also entirely rebounded from the pandemic and even eclipses figures dating back to 2015, according to sales and use tax data published by the Missouri Department of Revenue.
That data shows a shift in spending activity from downtown’s dense core around the convention center to the ZIP code encompassing Downtown West and Midtown.
Several projects have successfully converted empty office space into new residential units in recent years, with more in progress.
“That particular submarket represents a niche within the overall regional housing market for which there is unmet demand,” said Brookings Institution fellow Tracy Hadden Loh, who co-authored a study on office-to-residential conversion in St. Louis.
The challenge left behind are “whales” in Railway Exchange and AT&T Tower, both completely empty with more than 1 million square feet each and too risky to take on without additional incentive or support from local or state governments, she said.
There is a $350 million proposal to redevelop the AT&T Tower into more than 600 apartments and new retail space that hinges on the Missouri legislature passing the Revitalizing Missouri Downtowns and Main Streets Act, which could unlock tens of millions of dollars in tax credits for the project.
When city or state governments get involved, it can build confidence among developers to take on more projects themselves and bolster the existing office market by removing unused space that companies just don’t want, Loh said.
“New construction and infill is also a huge part of the story of what's happening in and around downtown St. Louis,” she said. “While it seems paradoxical that you can have new offices at the same time as you have too many offices, that paradox will continue to exist, because there's demand that can't be met by the old product.”
Tenants in commercial buildings have come to expect more offerings in them or directly nearby, said Joshua Allen, head of West Midwest research at commercial real estate firm CBRE. The Peabody Building at 701 Market St. is a prime example, he said.
“Dry cleaning, car detailing, attached underground parking – that’s a huge one – on site security, [a] restaurant right there in the building,” Allen said. “Those things are really what tenants are looking for to have everything there onsite.”
Allen sees a turning point for downtown, considering the multitude of projects happening and recent leasing activity.
Oliver points to the Peabody building as an example of how other developers and building owners can emulate the strategy he sees working for multifamily buildings: Add desirable amenities at an affordable price point.
“It’s a million incremental things [and] management intensive. It’s not some magic bullet that will change downtown,” Oliver said. “Can we do what we’re already doing better and not get distracted by that shiny object, [a] magic bullet that we think is just going to solve everything?”
This story has been updated with details on businesses committing to long-term leases from Greater St. Louis Inc. and SLDC's retail incentive grants.
For more on this story, listen to Eric Schmid’s conversation with Elaine Cha on St. Louis on the Air. Find the episode on Apple Podcasts, Spotify, or YouTube or click the play button below.
