Last year was a record year in real estate investment for the St. Louis region thanks to two large deals. But the current year may be completely different.

In 2007, the real estate landscape was dominated by two big deals with a combined value of about $1 billion: Australia-based Westfield Group sold four local regional malls; and Desco Group sold 33 shopping centers, most anchored by Schnucks stores.

Investment property includes large buildings — or groups of buildings — bought by individuals or institutions as a real estate investment. It includes everything from apartments to warehouses and office buildings.

Most industry experts expect to see a slowdown in commercial real estate from last year's total of about $3 billion. Probably the first — and greatest — impact will be felt on speculative office construction, said Michael Wolken, principal at Coldwell Banker Commercial in Ladue.

"In this financing environment, (developers) can't get financing without not only significant pre-lease, but strong, credit-worthy leases," Wolken said.

Real estate investors also will feel the impact of tightening credit, said Tripp Hardin, senior vice president in the Clayton office of CB Richard Ellis.

"The first half of this year is going to be a wait-and-see period for everyone," Hardin said. "There are fewer buyers in the market, and there is less property in the pipeline."

There also are fewer buyers for houses.

Residential construction fell from $2.8 billion in 2006 to $2.5 billion last year. The number of permits issued for new houses in most areas of the St. Louis region dropped significantly last year and continued to decline further during the first three months of this year. With sales of new and existing houses at historic lows, residential construction activity is likely to remain slow this year.

The bright spot on the construction horizon is green building. House builders are not only incorporating more green features into houses, but also are experimenting with new building techniques like prefabricated houses and using recycled shipping containers.

Commercial developers also are going green. At least one, Clayton-based Green Street Properties, plans to build only green projects, even for speculative projects.

"There is a much greater focus on green building in real estate, for construction, for architects, everyone," said Mike Clark, a principal at Green Street. "Everyone is ramping up to serve the demand that is clearly going to be coming."

rtstclair@post-dispatch.com

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