Soft Downtown Market Challenges Apartment Developers
Date Posted: February 27, 2025
Posted In: Discussion, Projects,
From St. Louis Business Journal: The Victor was a victory for downtown St. Louis.
The $130 million project from Memphis, Tennessee-based Development Services Group (DSG) filled one of downtown’s largest vacancies. The conversion of the eight-story, 718,660-square-foot Butler Brothers building, which spans a full city block at 1717 Olive St. in Downtown West, created 384 apartments, with a rooftop pool, dog park and a pickleball court.
But nearly two years after The Victor’s opening, apartment leasing is a “little bit behind” initial projections, said Gary Prosterman, DSG’s president and CEO. The building has about 40% left to fill, with 232 of its 384 apartments currently occupied.
An increasingly crowded multifamily market has affected The Victor’s leasing figures. It’s in competition with an influx of new apartments added to the market in recent years amid low interest rates, Prosterman said. But The Victor also sits in a submarket that’s underperforming its regional peers.
The Midtown multifamily submarket, which includes Downtown West, has 22.8% vacancy, compared with a 9.9% vacancy rate across the St. Louis region, according to fourth quarter research from Cushman & Wakefield. The downtown submarket, which includes the central business district, has 17.1% vacancy.
“There’s no doubt the overall market is soft in that submarket,” Prosterman said.