Major CORTEX Project Inches Forward

UPDATE: The construction appears to be for the nearby Neuroscience building under construction just down the block. Although the construction is on the site of the 4210 site, this may not yet be an indication of the project being restarted. The story will be updated as more information unfolds.

St. Louis is on the precipice of becoming a major city for fostering startups, seeing massive venture capital growth over the last several years and now regularly finding itself topping coveted lists. One recent study from JobSage found that St. Louis was the top city in the nation for successful minority-owned businesses, finding that 25% of STL startups were minority-owned with average annual sales totaling almost $200,000.

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The St. Louis Business Journals also reported that St. Louis saw a regional record-setting amount of investment dollars, totaling almost $250,000,000 in 2021 alone. The amount of investment has swelled in recent years as the city finds itself in the top 30 markets for investment from Bay Area and New York based firms, having attracted only around $30-$40,000,000 annually between 2010 and 2013. That growth is remarkable and palpable for St. Louis area businesses and can likely be attributed to the major investments in infrastructure and networks within the Cortex Innovation Community.

CORTEX – Source: Cortex Innovation Community

If you’re unfamiliar with the Cortex, it’s an innovation community sandwiched between Forest Park Southeast, the Central West End, and Midtown. It’s several acres of high tech office space, innovation hubs, restaurants, research labs, a hotel, and soon to be residential space once KDG’s Cortex K project gets off the ground. Over the past decade, it has seen several new buildings rise and has attracted businesses including Boeing, Microsoft, and labs from WUSTL and BJC.

One office in particular, to be located at 4210 Duncan, has been an object of interest in the local urbanism community for some time. The development has been stalled since late 2020, perhaps due to leasing issues rooted in the effects of the pandemic. This building would total over $100 million dollars in investment and has a fascinating design and would have a huge presence in the community should it actually get built. With 8 and a half levels of office space, labs, and retail, it would fill out the Eastern edge of the district with a sizable presence and the façade is unlike anything we’ve seen before in the St. Louis market.

Without a whisper, it seems as though the developer has finally restarted their efforts. Over the last couple of days, the construction gates have been open as workers returned to some incomplete foundation work. Some witnessed cement trucks entering the gates and workers seemingly restarting construction. What we haven’t seen yet are the building permits, so time will tell if this is only a temporary measure, or really the start to one of the most architecturally interesting office buildings in STL getting underway.

KDG Nixes Clayton Developments, Doubles Down on City

Real Estate Developer KDG, known for its luxury apartment buildings including Clayton on the Park and The Euclid, appears to be doubling down on their St. Louis City investment. Surprisingly, those plans seem to include some distancing from Clayton, one of St. Louis’ most desirable and expensive suburbs.

Although KDG’s portfolio still includes multiple St. Louis County assets, including Centene Plaza and the under-development Olive Crossing, their recent investment decisions are skewing quickly toward the City itself. KDG just sold its long-held Clayton residential tower, Clayton on the Park, after managing the property for over a decade. KDG had, years ago, converted the building to luxury apartments during the Great Recession. It had previously been home to senior living facilities and even a hotel.

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The disinvestment from Clayton appears to go a bit further, as selling one property alone does not signify a meaningful trend. Rather, KDG has long had its eyes set on the vacant land just next-door to its Clayton on the Park tower at 121 S. Meramec. Some might be familiar with this address, as it used to be home to one of the two mid-rise 7-Up towers that were a part of the beverage company’s former headquarters. The building at this address had been demolished, while the other midrise still stands and would be converted to residential apartments under this plan. Chris Stritzel at CityScene STL details this incredibly well.

KDG’s plans as rendered above would have completely rehabilitated the structure still standing today and would have included new infill on the vacant lot to its side. Both would be connected to their former property, Clayton on the Park, via the parking garage. The development would have cost upwards of $70 million and included amenities like a rooftop pool deck, fitness center, and individual work spaces for tenants to use. However, KDG just recently scrapped these plans, shortly before they announced the sale of their neighboring asset, Clayton on the Park.

While some may suggest or feel that Clayton is losing steam, this move appears to be an individual investment decision rather than a growing trend. It is indicative of a market that has more strongly embraced the City of St. Louis in addition to but not instead of Clayton. Although KDG is shifting its set of priorities, there are multiple other developments currently reshaping the Clayton skyline, adding new residents, hotel guests, and Class A office space.

Rendering above attributed to U.S. Capital Development of the under-construction Forsyth Pointe office buildings

Clayton’s continued strength aside, it is evident that development has been heating up in the City of St. Louis. In 2020, over $1 billion in building permits were awarded, and there are currently thousands of residential apartment units under construction and in development. The Central West End saw the rise and completion of the new 100 on the Park high-rise apartments. Similarly, Downtown saw a new residential tower, One Cardinal Way, open by Busch Stadium amid major announcements by developers for hundreds of other units within Downtown limits.

The momentum clearly has not gone unnoticed by KDG. In the hot Central West End neighborhood, KDG is currently well into the construction of a residential apartment building on Laclede Ave. 4545 Laclede will host 200 units between its 7 stories, adding considerable density to an already vibrant corridor. Demand in the CWE is striking, and KDG is looking to offer new options for residents looking to enter the neighborhood with its many nightlife, shopping, and restaurant options. The building will feature “micro-units”, studios, 1, and 2-bedroom units. The average size of the micro-units will be 386 square feet, with larger units available for those who need additional space.

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KSDK reports that other amenities like a fitness center, golfing green, pool, and yoga studio will be available for residents. Moreover, while some locals might be shocked at the size and inclusion of the smaller units, they are an excellent way to maintain some modicum of affordability for residents looking to live in certain areas. Common in bigger cities with higher rent prices, micro-units also have considerably higher occupancy rates than traditional units, while also promoting sustainability and more efficient land use according to the Urban Land Institute.

KDG is also doubling down on the neighboring Forest Park Southeast neighborhood, more commonly known as The Grove. The company partnered with another developer, Green Street, on two large mixed-use buildings at the corner of Sarah and Chouteau. The two buildings, Chroma and Hue, share amenities and wrap hundreds of units, a coffee shop, hair salon, and other restaurants – significantly densifying and activating the East end of The Grove. KDG is responsible for the onsite property management at the two properties. Hue just recently wrapped up construction, and we were able to meet Green Street VP of Marketing, Liz Austin, for a construction tour covered here.

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In the neighboring Cortex neighborhood, an emerging innovation hub bolstered by Washington University and SLU, KDG is at the forefront of the efforts to bring 24/7 vibrancy through a residential component. The Cortex master plan envisions offices, hotels, entertainment, and apartments to activate the community throughout the day. To date, there has been significant progress. With a new Aloft hotel that opened its doors during the pandemic, a new MetroLink station, and tons of investment into labs and offices like the soon-to-be world’s largest neuroscience facility, the area is booming.

KDG hopes to add the key missing link: apartments. The whole plan, dubbed “Cortex K” will host a variety of uses from apartments to office and retail, but apartments are the piece that could truly stitch the community into a neighborhood, while also helping connect it to the vibrancy of The Grove.

Aerial Overview Rendering – St. Louis April 7 TIF Agenda

There will be three structures built in two separate phases. The first is a 7-story mixed-use building with 160 apartments, 18,500 square feet of office space, and 2,150 square feet of retail space. As KDG is quick to point out, this building will contribute to a neighborhood of over 500 residential units combined with the Chroma and Hue developments when complete. The TIF agenda notes that the apartments will include amenities like a fitness center, club room, outdoor deck, and more. Recent KDG apartment buildings have generally also included flexible workspaces for residents, pools, coffee, etc. Phase 1 is expected to cost $37 million according to the TIF packet.

Phase 2 will include an office building and garage, which will be part of the same complex as imaged in the renderings from KDG above. The Cortex K office building will bring 125,000 square feet of Class A office space to the City of St. Louis, in addition to 7,000 more square feet of retail space. For construction to proceed, KDG is looking to prelease at least 50,000 square feet of the usable space. The budgeted cost for the office building is an estimated $40 million.

The garage is expected to hold approximately 610 spaces and is still in a preliminary design phase. Although the garage is fairly large for a district that features a MetroLink station, it is not street-facing and will likely be shared by residents and workers alike. The project is certainly a decent example of transit-oriented development (TOD) still with the combined density and access to nearby transit options. This portion of Phase 2 will be an additional $17.9 million.

KDG is also promising to make various public improvements to the surrounding infrastructure – something common for developers when requesting tax-incremented financing from municipalities. Although the plans are still “very preliminary”, KDG expects to spend up to $3.5 million on streetscape improvements, lighting, utilities, sidewalks, and bike lanes. The improvements will be carried out for KDG on behalf of the Cortex.

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In the April 7 TIF agenda, KDG is requesting $14 million in assistance from the City of St. Louis for this development – 14.25% of the total development costs. TIFs have been under increasingly intense scrutiny by St. Louis residents for a variety of reasons. Many suggest it is a form of corporate welfare that takes necessary funds away from the city, and others a necessity to attract and retain beneficial developments.

Historically, the City of St. Louis lacked a transparent, thoughtful, and consistent plan on how it would award TIFs to developers. State Auditor Galloway released an audit of the program and called for increased oversight and transparency to ensure a level playing field just under a year ago. Much of the controversy from residents stems from the fact that the TIFs are often awarded to developers in the most economically successful districts, predominantly in the Central Corridor. The Cortex K TIF request is likely to face similar scrutiny from residents.

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Cortex Master Plan

The project itself, however, will certainly contribute to a fast-growing region in St. Louis City. Additional apartments, office, and retail will go a long way toward connecting The Grove and Cortex. Vibrant, 24/7 neighborhoods with transit access are more sustainable, enjoyable, and attractive to residents and are crucial to developing a strong, urban corridor.

As an investment decision, choosing to double down on the City of St. Louis instead of the very strong Clayton market also represents a growing source of demand that residents might not yet have noticed. There are thousands of units under construction in the city, and new home construction is off the charts. While the city is still seeing depopulation on its North Side, stemming from decades of disinvestment, redlining, racial covenants, and a 1970s plan that essentially would cut off efforts to sustain the North side (though not officially enacted, it was essentially still practiced for years), its Central Corridor and many South Side neighborhoods are booming.

The tricky act for St. Louis, however, is to find a way to extend this success, without displacement, to other neighborhoods that see little investment. With any luck, including the emerging “North Central Corridor” and a Mayor dedicated to racial equity, the City of St. Louis may yet see that day come sooner rather than later.

STL Development Unfazed by COVID

Despite the economic downturn and rising COVID cases, St. Louis economic development is still churning along in a surprising manner.

Construction photo of One Hundred in the CWE, provided by CLAYCO: https://app.oxblue.com/open/clayco/100kingshighway

It’s true that St. Louis has, over the past several decades, been reeling from its industrial economy withering away and has not been a shining star of economic stability. Yet, the forces that made St. Louis economically unstable are themselves disappearing as new industries take hold in the metropolitan area and a greater trend toward regional collaboration and workforce development. With a steadily growing Biotech sector, incredible research universities including Washington University, SLU, UMSL, and others, a blossoming Geospatial Intelligence sector, and a diversifying startup community, St. Louis of today is much stronger.

The metropolitan area is starting to make a name for itself with these new industries, and with coordinated workforce development and more competent leadership, these industries are growing.

With the new NGA facility just north of Downtown, the Geospatial Intelligence sector is poised to create thousands of jobs and revitalize a section of St. Louis City that has historically struggled. At the same time, the Federal government is bringing over 1000 USDA jobs to Downtown St. Louis, just as Accenture announced 1400 new jobs in Town and Country, with many of those jobs working in Federal contract related roles.

In the Cortex, KDG is still planning its Cortex K development, and Washington University has a crane up for its 11-story Neuroscience facility, which would be the largest in the nation once complete. The Aloft hotel just opened its doors to visitors, supporting the innovation and startup community. Cortex leaders have signaled that there will be more to come soon.

Strong industries do more than provide jobs to their direct beneficiaries. They add to the tax base, supporting city functions in the future. Moreover, they contribute to the strength of their communities, making other new jobs and developments possible. With all of the activity in the Central Corridor, there is the capacity to support hundreds of wealthier residents, with the One Hundred luxury apartment building nearing completion. In Lafayette Square, a new luxury apartment building was just announced which presumably will house the residents occupying these higher paid positions in the growing industries.

Of course, there is also the City Foundry development in Midtown, which is supposed to open its doors this Fall with a new grocery store, cinema, and a food hall with a dozen or more entrants. We also covered on this site the hotel planned on Jefferson at the Wells Fargo campus.

Not everything is so rosy – there have been some developments that have stalled, such as the Armory building in Midtown. Although the developers at Green Street have completed most of the exterior work, potential leasing issues and a lawsuit are delaying further construction, much in part due to difficulties with financing and finding tenants during the age of COVID. It’s all but certain that developers are going to present new projects at a slower pace, but this is far from a situation where St. Louis stalls. Instead, St. Louis will keep seeing cranes in its skyline.

From the Chelsea apartments in DaBaliviere Place, Forsyth Pointe in Clayton, Clarendale in Clayton, to the Iron Hill development on Grand, we’re set to see so much more new construction over the next several years.

This is anything but a dull time in St. Louis, and hopefully this means our city and community will be in a good place for a solid recovery as our crises end sooner rather than later.  

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