Who goes to downtown St. Louis? Incentives are banking on tech companies

ST. LOUIS — When the downtown central business district began plotting to move from its startup digs eight years ago at the Washington Avenue Incubator, CRM had everything it needed.

Walkability, an urban environment, and transit access are important to the young software company’s founders and their employees who live in the neighborhood. And despite moving to a mixed schedule due to the coronavirus pandemic, smaller affiliate CRM recently moved downtown, signing another five-year lease for its Olive Street office.

“For us, downtown St. Louis in particular is incredibly important,” said partner Alex Hyman. It is the gateway to our region.

In recent years, tech companies have found a home in the central business district — often lured by the incentives of downtown by offering start-up money and boasting the same facilities as an annoying CRM presence. For many fans, the growing tech sector is a key element in revitalizing the neighborhood.

Signs, at least so far, look promising: St. Louis’ tech sector will grow 4.3 percent from 2020 to 2021, with commercial real estate firm CBRE ranking the region among the top 30 tech markets, according to a new report. And the new National Geospatial-Intelligence Agency headquarters 2 miles north has already prompted several geospatial companies to open downtown offices and other firms to make major investments in the industry.

But there are still major obstacles, such as crime and criminal awareness, which must be addressed. Tech companies have also been slow to return to the office since the pandemic, with some downsizing.

“A lot of tenants are proud to stay (downtown) and want to support the city through its challenges. David Kelpe, senior vice president of CBRE in St. Louis, said they feel it’s their civic duty to stay and they want to be part of the solution rather than making the problem worse. “They said to make a statement.”

The downtown central business district was the center of business activity for the region before companies began leaving for new buildings in Clayton and west St. Louis County 30 years ago. Downtown still has the lowest occupancy rates for offices in the region at 83.4%, according to CBRE. However, that figure has largely stagnated over the past five years — with no big gains in renters, but no big losses either.

One bright spot for the region could be additional data centers. Because of low utility costs, abundance of fiber optics and available property, the central business district can become a prime data center, Kelpe said.

Miami Beach-based Neutrality Data Centers bought two downtown buildings, 900 Walnut Street and 210 North Tucker, in 2016 because the properties sit on a fiber optic ring. The properties help facilitate low-latency communication, which increases the performance and speed of computer networks that high-tech companies need.

“There is virtually no way to conduct business that requires ultra-low latency without these facilities,” said Gerald M. Marshall, president and CEO.

His company is renovating its assets to add more power to support new technology companies.

“We found the city of St. Louis to be very convenient and business-friendly,” Marshall said.

Many boosters see potential in the northern part of the city, where geospatial companies have opened homes, particularly in the Globe Building on Tucker Boulevard.

There, the Globe Building has about 200,000 square feet of office space, mostly leased to technology and geospatial companies. The lead developer of the Secret Compartment Information Facility, or SCIF space, needed to review classified information, took up two floors, said owner and attorney Steve Stone.

Just off Washington Avenue, tech incubator T-Rex — where the tiny startup CRM first operates — has partnered with NGA to establish Moonshot Labs, a nondescript innovation facility that hosts monthly events on the geospatial industry.

T-Rex is launching Collider Sirius, a partnership focused on helping small businesses and entrepreneurs find business opportunities with the federal government, particularly in the geospatial sector. The organization will host a geospatial “hackathon” later this summer, said Patricia Hagen, executive director of T-Rex.

A new innovation district called Downtown North aims to capitalize on the trend and work with other downtown proponents. He’s currently collecting signatures to formalize the community improvement district to give residents a voice and support his efforts to bring in more businesses, said John Berglund of The Starwood Group Management, which owns the former Post-Dispatch building in Tucker. He hopes to have enough collected by late spring.

Real estate brokers expect more geospatial and technology-related companies to come.

“The NGA will continue to attract geospatial companies that want to be nearby,” said John Warren, managing director of commercial real estate firm Cushman & Wakefield in St. Louis. “There is no doubt that the flow will continue.”

Warren said the downtown area, including west of the central business district, still has the amenities workers need: 85 restaurants, multiple transit stops and plenty of entertainment, from live music venues to professional sports.

On a less hectic CRM, the company is renovating its downtown office to better meet post-pandemic needs. Employees still come twice a week for company lunches, meetings and other gatherings, Hyman said.

“Other companies will see the value of downtown, but it will be slow,” he said.