Springfield sits in the southwestern part of Missouri, along the Ozark Mountain Range. The metro area is only a few hours by car from the major metropolitan areas of Kansas City and St. Louis. Nicknamed the “Queen City of the Ozarks” and the “Birthplace of Route 66,” Springfield is home to a dynamic population of students, millennials, and baby boomers.
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The State of Commercial Real Estate in Springfield
Although Springfield is home to less than half a million people, the economy here is surprisingly robust. Healthcare, manufacturing, and education are among the major industry sectors helping to keep the economy growing.
The city is a hub for business and industry in the Ozarks region and is home to several major corporations, including Bass Pro Shops and O’Reilly Auto Parts. Springfield is also a popular tourist destination, thanks to its many attractions, including the Springfield Cardinals baseball team, the Bass Pro Shops National Headquarters, and Wilson’s Creek National Battlefield.
The city has a strong economy and a low cost of living, making it an attractive place to live and work. Springfield is an ideal location for investing in commercial real estate due to its central location and proximity to major metropolitan areas. The city offers a variety of amenities and opportunities for businesses and investors, making it a prime location for investment.
Springfield Regional Breakdown
Population growth in the Ozarks – and especially in Springfield – has been robust over the past several years. As KY3 News reports, the metro area is the fastest growing in the state, with the population increasing about twice as fast as the average U.S. metropolitan area:
- Metropolitan Springfield is home to over 475,000, with more than 169,000 residing in the city.
- The population of Springfield city grew by about 6.1% between 2020 and 2010, according to the most recent Census.
- Metro Springfield includes Christian, Dallas, Greene, Polk, and Webster counties.
- Major cities in the metropolitan area include Springfield, Nixa, Ozark, Republic, and Branson.
- The median age is 37.4 years, a little less than the figure in Missouri, based on the most recent report from Census Reporter.
- 39% of the residents are between the ages of 20 and 49.
- Per capita income is $32,628, and median household income is $56,896.
- The cost of living in Springfield is 10% lower than the national average, according to PayScale’s Cost of Living Calculator.
Springfield ranks as having the fifth-best job market for small to mid-sized cities in the U.S., according to a recent survey by CareerBuilder. The report notes that healthcare is the number one industry in the metro area, with over 800 job openings at the moment:
- GDP for Springfield, Missouri, is over $21.5 billion, according to the St. Louis Federal Reserve, and has increased by 36% between 2020 and 2010.
- The unemployment rate in the metro area is 2.6% (Bureau of Labor Statistics, August 2022).
- Missouri Partnership notes that the Springfield region ranks high for its tax climate, livability factors, and population and job growth.
- Forbes ranks the city as among the best places for business and careers, and in cost of doing business.
- Job sectors reporting the strongest growth include manufacturing, trade and transportation, education and health services, and leisure and hospitality.
- Target industries in Springfield include distribution and logistics, advanced manufacturing, call centers and back office, technology and innovation, corporate office, and data centers.
- Key employers in Springfield’s diverse economy include 3M, AT&T, Bass Pro Shops, BNSF Railway, CoxHealth, Diversified Plastics, Expedia, The Kraft Heinz Company, T-Mobile, and White River Marine Group.
- Bass Pro Shop, O’Reilly Auto Parts, Positronic, and Prime, Inc. are four of the companies with national headquarters in Springfield.
- Missouri State University, Drury University, and Evangel University are three of the Springfield region’s largest institutions of higher learning.
- Over 30% of the residents hold a bachelor’s degree or higher, while nearly 93% are high school graduates.
- Springfield is home to one of the three foreign trade zones in the state, making it easier to do more business far beyond the U.S. border.
- Transportation infrastructure consists of numerous interstate and state highways, dozens of daily freight rail trains, and the Springfield-Branson National Airport, with direct connections to major cities such as Los Angeles, Phoenix, Las Vegas, Atlanta, Dallas, and Orlando.
Springfield Industrial Market
Industrial space in Springfield real estate is in high demand, with speculative buildings being “quickly snapped up,” according to a report from the Springfield Business Journal. New industrial construction in the metro area is designed to meet the needs of today’s tenants, with larger footprints and taller ceilings heights:
- Total industrial inventory: 41,689,548 SF
- Market rent: $5.80/SF per year, NNN
- Rent growth: 7.9% year-over-year (Q1 2022 vs Q1 2021)
- Vacancy rate: 1.3%
- Absorption: 654,773 SF over the past 12 months
- New construction: 314,773 SF completed, with 294,406 SF under construction
- Investment sales trends: $1 million in Q1 2022, median sales price $91/SF, market cap rate 8.6%
Springfield Office Market
The growth of white-collar employment in the professional and business services and financial activities sectors may be helping to drive the demand for office space in Springfield. Over the past two years, jobs in these two sectors have increased, with the NAR noting that the city’s office building market is stronger than nationally:
- Total office inventory: 13,893,035 SF
- Overall average asking rents: $19.20/SF per year, full service gross
- Rent growth: 2% year-over-year (Q1 2022 vs Q1 2021)
- Vacancy rate: 2.5%
- Absorption: 135,907 SF over the past 12 months
- New construction: 284,341 SF under construction, with 75,906 SF delivered over the past 12 months
- Investment sales trends: $33 million in acquisitions in Q1 2022, sales price $103/SF, market cap rate 9.2%
Springfield Retail Market
Employment growth and an increase in median household incomes are helping to keep the demand for retail space in Springfield strong and steady. According to the most recent statistics from Data USA, the employed population grew by nearly 1.6% year-over-year, while household income posted a gain of 4.0% over the same time period:
- Total retail inventory: 30,870,540 SF
- Market asking rent: $12.40/SF per year, NNN
- Rent growth: 3.3% year-over-year (Q1 2022 vs Q1 2021)
- Vacancy rate: 3.3%
- Absorption: 111,340 SF over the past 12 months
- New construction: 32,402 SF delivered over 12 months, with 6,328 SF under construction
- Investment sales trends: $4 million in Q1 2022, transaction sales price $108/SF, market cap rate 8.3%
- Median household income: $56,896, with 57% of households earning $50K per year or more
Springfield Multifamily Market
Rent growth in Springfield is the second highest in the nation, according to a recent report from the Springfield News-Leader. However, even though prices are rising, rents are still very affordable compared to other cities. Asking rents average around $800 per month, representing about 11% of a 2-person annual wage income:
- Total housing units: 208,844
- Renter occupied: 35%
- Multifamily inventory: 22,573 units
- Market asking rent: $801
- Rent growth: 8.0% year-over-year
- Vacancy rate: 3.0%
- New construction: 350 units delivered over the past 12 months, with 522 units under construction.
- Investment sales trends: 6.8% market cap rate for Springfield apartment buildings for sale
- Median household income: $56,896
- Per capita income: $32,628