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- An office building in St. Louis sold for $3.6 million after selling for $205 million 18 years prior.
- Downtown St. Louis is filled with unoccupied buildings and an unwillingness to visit them.
- St. Louis' recent office vacancy rate is at a record high 22.3% according to JLL.
A vacant office building in downtown St. Louis just sold for $3.6 million — a nearly 98% discount from its 2006 sales price, signaling a concerning course for the Midwestern city's downtown area.
The former One AT&T Center, which at 44 stories is the third-tallest building in St. Louis, sold for $205 million in 2006 and recently sold for $3.6 million to the Goldman Group, a real-estate investment firm, according to CoStar News.
The steep drop in the tower's value is just one sign that St. Louis' central business district is struggling, reports say. The challenges facing it and other Midwestern hubs are perhaps graver than bigger downtowns that have been more widely depicted as abandoned or dying, like San Francisco's, according to economics and public-policy experts.
According to an April 10 report from commercial-real-estate brokerage JLL, total office vacancy in St. Louis reached a record-high 22.3% during the first quarter of 2024.
The AT&T tower has been empty since 2017, according to CoStar. Another downtown building, the 21-story Railway Exchange Building, is similarly abandoned after housing a once-thriving local department store, according to the Unseen St. Louis blog.
Indeed, St. Louis' downtown resembles a ghost town with a number of boarded-up buildings, according to The Wall Street Journal's Konrad Putzier.
Local businesses, including restaurants and shops, that have shuttered due to a lack of foot traffic thanks to a rise in remote work have spawned a vicious cycle, the Journal found.
"It's a classic chicken and egg kind of deal," Glenn MacDonald, a professor of economics at Washington University in St. Louis's Olin Business School, told the Journal. "People don't go there because there's nothing to do. There's nothing to do because people don't go there."
The cycle is often called the "urban doom loop," which the Atlantic describes as the cycle of people moving away from city as things get worse, then things getting worse because more people moved away.
Business Insider's Eliza Relman described the doom loop afflicting Midwestern cities: "Commercial property taxes make up a large chunk of many city budgets, so as office vacancies rise, the decreased revenue could force leaders to curtail municipal services or make cuts to key programs. Declining services and quality of life in turn pushes residents out, leading to a self-reinforcing exodus. Without serious changes, these midsize cities in the middle of the country could be quietly sliding into oblivion."
There's data on this. University of Toronto researchers analyzed anonymous cellphone data to track the number of people in central business districts in North America each day from March to June 2023, compared to the same period in 2019. According to the most recent data, St. Louis ranked last among the 66 cities analyzed. Six out of the bottom 10 cities were in the Midwest.
San Francisco, which was plastered as a cautionary tale during the remote-work boom, has yet to fully bounce back, but still ranks 18 spots above St. Louis in terms of downtown foot traffic.
The problem with Midwestern cities, like St. Louis, is that there's not much attracting people to the center of the city — and that applies to commuters, tourists, and residents.
"What I really think it comes down to in these places is that there's nothing special about any of the downtowns in any of these cities that would be attractive to new residents," Michael Hicks, a professor of economics and business research at Ball State University in Indiana, told BI's Relman in 2023. "The cities just don't have the fundamental amenities that would attract people."
Relman concluded that Midwestern cities need to prioritize adding downtown amenities — which can range from playgrounds and libraries to boutiques and cafés — in order to attract more people.
Coastal cities are already getting ahead of the problem.
While bigger hubs like San Francisco and New York are also experiencing an increase in office vacancies compared to before the pandemic, more developers in those spots are doing something about it: investing in upgrading offices into spaces employees might actually want to go to.
The Midwest faced problems with its sluggish downtowns well before the pandemic, Tracy Hadden Loh, a fellow at the nonprofit think-tank Brookings Institution, told BI in 2023.
"The pandemic is a huge disruption that has produced some real paradigm shifts, but the vast majority of what it's done is just drastically accelerate existing trends," she said.