AT&T move will empty huge downtown tower in St. Louis
The building’s owners, a Chicago-area real estate investment trust that bought the property from AT&T in 2006 for $204.9 million, did not return calls seeking comment.
Kevin Farrell, head of economic and housing development at the Partnership for Downtown St. Louis, said he was confident the owner has been planning for the building’s future.
“I’m sure this is not a surprise to them and is something they’ve prepared for,” he said.
They may already be shopping space around. Jim Mosby, senior managing director at commercial real estate broker Cassidy Turley, said he believes prospective tenants have toured the building in recent months.
But it won’t be an easy sell. Downtown already has a relatively high office vacancy rate: 13.8 percent of higher-end “Class A” space sits empty, according to brokerage firm CBRE, compared to 8.8 percent in Clayton. And a competing building, the Laclede Gas Building nearby on Olive Street, will soon have nine more floors for rent when Laclede Group, as expected, moves to the General American building in 2015.
Meanwhile, One AT&T Center was designed for a single user, and there aren’t many companies that need more than a million square feet.
“It’s a lot of space to fill, obviously,” Farrell said.
But he pointed out that the building has large floors and a good location, and that it could be renovated to house multiple tenants, as many large office towers do — though that would likely cost millions of dollars.
The building also faces a growing trend of telecommuting, especially among technology companies, resulting in less demand for huge blocks of downtown office space. Several AT&T employees said Thursday that the company has expanded work-from-home options in recent years. Farrell said he has a neighbor who works downtown for AT&T. She spends only one day a week in the office.
That may, in fact, soften the blow a bit on downtown restaurants and other businesses that serve AT&T workers, he noted. They’ve had time to adapt to this attrition, and now another year-plus to plan for more. Plus some of the roughly 2,000 workers in One AT&T Center will remain based downtown, just in other buildings.
The city’s tax base, though, will likely take a hit. Workers who are shifted to St. Louis County will no longer pay earnings tax unless they live in St. Louis. And after reaching a deal to lower the building’s assessed value, owner Inland Real Estate Trust paid just over $4 million in city property taxes for One AT&T Center in 2012, down from $5.6 million in 2009.
That was while the building was still half-full. Now it’s heading toward empty.
Businesses have always picked up and moved in their own best interests. People who make downtowns vibrant long term are those that choose to live and work downtown.