I took these numbers from a survey that was done almost a year ago, and they have probably improved since then.

I took a guess at the building class, although I know the vacancy rates for each class is right because they tie out to the survey (which doesn't specifically identify which buildings fit into which category).

Some interesting observations:


Class A space inventory is tight; less than 15% available and no large contiguous blocks
Almost half the entire vacant space in the CBD is from the First National Center, which is Class C space in it's current form
If that space was converted to housing or leased, downtown vacancy would be under 15% overall -- very low
Vacancy rates have been trending steadily downward for five years and rents have been going up accordingly



http://www.pc78.com/images/okctalk/cbdofficespace.jpg

If Devon was to build a building of it's own, here's some more numbers to ponder:


They presently occupy 37 floors in 4 separate buildings
Approximate total square footage is about 750,000
A 50-story building would be right around 1,000,000 sq. ft.

Funny I posted this just hours before the Devon Tower announcement. :)

I think it will be great being class A. With such a large volume, they should be able to lower the price some and attract some folks that maybe wouldnt have moved downtown before.

The biggest impediment to the Class C space is that parking costs the same as if you were renting Class A.

And someone needs to do something with the Dowell Center.

Dowell Center received a big grant to remove asbestos which I believe they completed last year. The owner they said they were planning to slowly remodel the whole interior, floor by floor.

However, as far as I know, the building is still completely vacant.

Yeah, Dowell Center is supposively going under a renovation as well. They are currently using the grant money to remove asbestos as Pete said.

When I was looking at office space I looked at First National Center. That place needs some serious remodeling above the first floor. It just looks old from the floors to the ceilings.

Is 50 North Robinson the Sheraton Parking Garage ? That place needs a grade lower that C. Nasty for office space.

55 North Robinson is not in there but that place has quite a bit of open space also. The IRS used to occupy most of the building. Now there are various spots all over the building for lease commercially. Most of the 3rd floor is available there.

I was told that FNC has asbestos problems yesterday, but I have not seen anything about that anywhere else. Is that true?

It does...My brother just came home from prison and he has a job with abestos removement and hes going to be working at FNC for a while.

Oklahoma City office vacancy increasing
Journal Record
December 16th, 2008

Last week I blogged about how if the decline in oil prices is prolonged, it will likely cause turmoil among numerous small to mid-sized energy firms in the metro area causing downsizing and closings, which in turn would lead to an increase in vacancy. Now, it appears the decline in oil prices may already be having an affect on Oklahoma City’s office market.

While vacancy fell to its lowest level in well over a decade to 15 percent during the second quarter of 2008, REIS is reporting that vacancy jumped back up to 15.9 percent during the third quarter. Furthermore, early indicators and research point to the possibility that year-end vacancy will be slightly over 16 percent.

The good news is compared to the high vacancy the market experienced just four years ago, 16 percent still represents a healthy vacancy for the market. In 2003 and 2004, vacancy shot up to nearly 24 percent; therefore, even if vacancy does continue to slightly increase in 2009, the market should retain the strength it has gained since the end of 2004.

Funny how this article gives no specifics on how oil is the reason for the vacancies (what companies vacated and how they directly relate to oil).... just speculates.

Good point. Association doesn't prove causation.

What was the change in inventory?

I don't know that this is the primary cause of the rise in vacancy rates, but when I was at home over Thanksgiving, what really struck me was the nature of the new office developments in OKC. Within a couple of miles of my parents' house in Quail Creek, there must have been five or six of these new "office parks" that consisted of six or eight or ten smallish, house-like buildings, each containing individual companies. That seemed to be a trend; companies could get affordable, new construction with free parking and be convenient for the half-dozen employees. It struck me that this was bad urban planning and a terrible addition to the sprawl-like nature of OKC. Not to mention that they didn't look very much like offices. But now this thread makes me think that these developments could be adding to the office vacancy. I am assuming many of these small doctors offices, law offices, insurance places, contractors etc. were in multi-tenant buildings at one time.

Very true stl.

I wouldn't worry about it too much. I'm sure it's happening everywhere.

Very true stl.

I wouldn't worry about it too much. I'm sure it's happening everywhere.

In this part of the country.......

By that I meant that the increase in vacancy is surely happening everywhere.

Very good point, it didn't point out the fact that the city added capacity.

That said, we need to further diversity the city's employment opportunities. Isn't this something that the Chamber could begin to run with? With the economy the way it is, and OKC's attractiveness in the Cost of Living and Taxation attributes, not to mention OKC's renaissance and central location; Im positive the city could pull off some white collar relocations thereby filling up office space (DOWNTOWN!!!). We could also set up incubators for small upstarts, who can get in at heavily reduced rates in the short run but in the long run would move nearby to other downtown towers.

One more option for OKC would be to go after more Federal Government offices. .. They are ALWAYS looking for space, and certainly OKC is attractive to them too.

Good thing we are building a new skyscraper...

And if you look downtown, I bet you'll find the Class A and B space is pretty danged full. Like usualy, we have a lot of crap Class C space that no one every wants....and no one will invest to clean it up. FNC has a lot of that....

This is really an amazing statistic.

Oil runs in the streets of downtown Oklahoma City's booming office market | News OK (http://newsok.com/oil-runs-in-the-streets-of-downtown-oklahoma-citys-booming-office-market/article/5390669)



Flash “No” over downtown Oklahoma City’s best office buildings, for “No Vacancy” — but hurry.

No one knows how long it will last.



Price Edwards & Co. reported Wednesday that downtown Class A office space ended 2014 with a vacancy of 0.7 percent.

“We’re basically out,” said Craig Tucker, the firm’s managing broker and an office specialist.

You hear this and then you hear people talking about why not to build another tower right now. I just don't ever get developers......

Would you classify OG&E's space as A or B? There isn't a lot of it so it's not going to saturate the market or anything. We got lucky as all hell when Devon's got swallowed up by Continental.

The elephant in the room is Sandridge.

I think Continental would snap up the SandRidge properties were some or all to become available.

Yeah my thoughts as well. Which might domino their current space(es), of course.

You hear this and then you hear people talking about why not to build another tower right now. I just don't ever get developers......

Would you classify OG&E's space as A or B? There isn't a lot of it so it's not going to saturate the market or anything. We got lucky as all hell when Devon's got swallowed up by Continental.

Technically it is neither since it is owner-occupied. The A to C classification is determined by the properties ability to generate market-rate rental income. However, when OG&E moves it is possible it will come on the market as C (which makes it a prime candidate for residential conversion).

C? I would have put it at least at B. The ability to get a particular rental rate depends on what the building has to offer. Anyone is going to gut the walls and rework the space, so the better question is what the infrastructure of the building has to offer. With renovations to restrooms/lobby/infra. the place could even hit A. I think that's a stretch, but do you really put it in the same spot as the FNC tower space???

Forgive my ignorance, but what are the criteria for the different classifications of office space? I've seen people refer to the different classes a number of times the last couple years I've been reading OKCTalk, but I guess I don't really know exactly what makes something class A, B, or C.

Forgive my ignorance, but what are the criteria for the different classifications of office space? I've seen people refer to the different classes a number of times the last couple years I've been reading OKCTalk, but I guess I don't really know exactly what makes something class A, B, or C.

There's no hard and fast definition. It's based upon what rental rates you can ask for.

Generally Class A has big big floor plates, lots of amenities. It's got all the modern stuff. The big companies lease Class A space.
Class B is somewhere in the middle.
Class C space is usually for smaller offices. A law firm with 9 or 10 employees will probably lease Class C space. First National tower is basically limited to Class C space, because the actual physical structure of the tower is seperated into a bunch of small offices.

The classification is also very location specific. A class A building in one city might not be a class A building in another city, or even in a different part of the same city. OKC for example has like 6 sub-markets. A converted warehouse in north OKC wouldn't come close to the same rental rate as a converted warehouse in Bricktown, so wouldn't be classified the same even if they were identical in every other way.

That's true for every city. Location is part of the classification.

An update to this story by Richard Mize.

Numbers between the lines help tell Oklahoma City's oily office market story | News OK (http://newsok.com/numbers-between-the-lines-help-tell-oklahoma-citys-oily-office-market-story/article/5391419)


Oil commanded the most attention in a story Thursday on the office market based on Price Edwards & Co.’s year-end summary, and some important numbers got washed out.
Class A vacancy fell from 9.3 percent at midyear to almost nothing, 0.7 percent, at year end, but overall vacancy barely budged, from 21.7 percent to 20.7 percent.

The important number, though, was 84.

“It should be noted that 84 percent of the vacant downtown space exists in buildings that were constructed in the 1920s and 1930s and nearly two-thirds of all the vacant space ... exists in one building — the First National Center,” Price Edwards reported. “That building’s dated systems and troubled ownership has virtually taken this building off the market for the past couple of years and any hope for new ownership and a revitalization of the project through a pending sale is now clouded by monetary claims from a partner in a previous ownership group. The point is, most of the available space downtown is vacant for a good reason and good space is nearly impossible to find (downtown).”

I'm not going to paste the link to the pay wall for the joklahoman article on this that came out today, but it's not hard to guess what it says. In a post covid world, office space vacancy is on the rise and isn't going to be anywhere even close to what it was pre-covid.

Drive around and you'll see lease signs on ever office building around. While some companies are pushing back to the office, it's not everyone. I would argue that it's not even the majority now. I've been in several markets around the country over the last year and i've witnessed the same thing. Millions of square feet of leased space just aging out on its lease, waiting to be cut off from the accounting sheets like a dying limb. Land lords are, understandably, not interested in re-negotiations because they know once the lease it up, they'll either be facing a massively reduced tenant base, or in some case, no tenants at all. The larger the floor plates available, the more difficult they are to fill with single tenants. So spaces are being broken up, repurposed (think converting to mixed use or even fully residential), or just flat closed.

So what does this mean here in OKC? Work from Home is here to stay. Once that pandoras box was opened in the 21st century, it wasn't going to get closed again. Employees got a taste of it and they're not interested in going back to the way it was. Hybrid maybe, but fully back...nope. There are some pretty old structures around town that have been the space for mid-size companies for decades. Those companies are just not there now. What i'm afraid of is that now that the demand has bottomed out and realistically will not be like it once was, do we see a rash of structures becoming dilapidated? Are we going to see a flurry of sales for a loss? It won't create demand, but it may lessen the financial burden on the landlord to keep things maintained.

Class A will continue to be class A. It will be nice and it will be maintained. But I have a worry that more Class B is going to slip to C and the C is going to fall off the wagon.

Thoughts?

^

The recent broker surveys:

Leadership Square: 32% vacant vs 23% at the end of 2020.
Oklahoma Tower: 22% vs. 9%
Landmark Towers: 41% vs.18%
Corporate Tower: 32% vs. 19%
Oil Center: 39% vs. 27%
Valiance Tower: 35% vs. 33%

They don't even mention BOK Park Plaza, which has to be well less than half full.

Pretty huge drops especially downtown when you consider First National Center was all office before and none now and Sandridge Tower is now fully occupied by the State. We've also had several buildings converted to residential and a couple more planned.

Probably a good thing BancFirst did their renovation when they did. I don't think we'll see office space of any significant size built downtown for quite a while.

Is there any mention if they have lowered prices of the rentals? Curious to see if they still expect 2019 rent when businesses can be more selective.

What us the % occupied at the Dowell building downtown?

Maybe this will prompt more conversions to residential.

To really put it in perspective, these are mostly Class B & C office spaces. Companies are now looking for high end amenities in Class A or Class AA spaces. I wonder how many of these vacancies are a result of companies moving to better spaces. If Oklahoma City want to recruit the best companies and talent, they need to build new Class A spaces.

But yet other cities are building office towers like it ain't nothing. So that COVID/work from home excuse needs to stop.

To really put it in perspective, these are mostly Class B & C office spaces. Companies are now looking for high end amenities in Class A or Class AA spaces. I wonder how many of these vacancies are a result of companies moving to better spaces. If Oklahoma City want to recruit the best companies and talent, they need to build new Class A spaces.

Of those listed, all are Class A except Landmark and the Oil Center.

What us the % occupied at the Dowell building downtown?

0%. It's been completely vacant for at least 10 years.

But yet other cities are building office towers like it ain't nothing. So that COVID/work from home excuse needs to stop.

Building, but are they filling?

Most new Class A office buildings going up in other cities are tenant induced and not spec.

Of those listed, all are Class A except Landmark and the Oil Center.

Class A by what standards? I have a hard time believing Oklahoma Tower is a Class A office space comparable to BOK Park Plaza or Devon Tower.

The key to downtown high rise construction now is making it mixed-use. Most new high rises now are a mix of office, residential, and hotel. Oklahoma developers need to get of this old way of thinking building towers for just one use. Downtown OKC could definitely support a 30-35 story high rise mixed with office, residential, and hotel.

Class A by what standards? I have a hard time believing Oklahoma Tower is a Class A office space comparable to BOK Park Plaza or Devon Tower.

Class A based on brokers, the rent the building charges, and all the vacancy surveys.

Devon Tower is owner-occupied so it is not included in any of the surveys.

Should be interesting. I'd love to see some more affordable decent stuff come online.

New class A office spaces going up are being constructed to make the worker enjoy coming to work. So comfortable that it feels like you are at home. Most new Class A buildings have workout facilities, basketball gyms, eateries, lounge areas, green spaces, daycare centers, and top of the line technology.

I was in Tampa last week. They had at least 5 cranes going downtown.

^

OKC has several cranes in our downtown area and we are less than half the size of Tampa/St. Pete.

There are only a few cities where office vacancies are down since covid and apart from San Diego, it's all the recent boom towns like Austin and Nashville.

There are certainly smarter ways to do it. Hybrid is the best way to go, where workers share a common space a few days each week. You don't need a cubical for every worker in your organization that's just a waste of space. Collaborative office space design will need more modern Class A space.

^

When I was in management consulting -- a business where most staff are working at the client's site but occasionally back in the home office -- we did "hotelling" which meant you were just assigned an open desk when needed. Most of the big accounting firms worked the same way.

It's really a smart way to operate, especially now that almost everyone has a laptop and cell phone, so all you need is WIFI access and a place to sit.

^

OKC has several cranes in our downtown area and we are less than half the size of Tampa/St. Pete.

yes, but theirs are all for high-rises.

My wife's company had 3 floors in one of the Landmark Towers pre-covid and abandoned all 3 floors with no plans of ever returning there. The few people who couldn't work from home were all moved to other existing office space at another location. Everyone else is still WFH. Which by the way she always said the building she was in was not very nice and seemed to always have problems. Plumbing, heat and air, elevators...

The downtown core has seen several Class A office projects either announced or under construction in the last couple years:

1) Convergence (230,000 sqft)
2) Citizen (160,000 sqft)
3) CoreBank (100,000+ sqft)
4) Phillips Murrah (80,000 sqft)
5) Pivot Office Building (48,000 sqft)
6) OSB office Building (45,000 sqft)

That's over 660,000 sqft of new Class A office space. That's enough space to fill a 25+ office tower. The point is that these companies could of easily back filled and subleased office space in the downtown core, but they wanted their own building.

There are only a few cities where office vacancies are down since covid and apart from San Diego, it's all the recent boom towns like Austin and Nashville.

That is incorrect.

There are markets all over where this is happening.

Chicago, the newest and best spaces are doing well. Everything else is sort of piddling along. If your building hasn't renovated recently, you're not filling it.

Detroit, you're looking at single digits outside of downtown. Oddly enough, people are looking more to move downtown. Former corporate burbs like Southfield are ghost towns. Single digit occupancy folks. THese are places that were spilling over with employees where you couldn't get any parking before COVID. And this isn't ghetto Detroit, this is high end where there are multi million dollar estates in Highland Park, just around the corner.

Dallas, well if you haven't already migrated north to Plano, then you're at home.

Want something more like OKC, go to Salt Lake. All those massive call centers are empty. Millions upon millions of square feet that will never fill up again. And those new buildings that were under construction during covid, well they're empty too.

So don't tell me that the markets of these places all over the country are not like it is here. I've been to too many of these places and seem them with my own eyes. And i think you missed one of my main points i've been making. We're not done with this trend yet. The reason is that those 10 year leases people signed, well early termination clauses are coming up and companies are exercising them. They've had to keep paying the leases (even if they "went dark" to put things below the line) because they couldn't get out of them. But as the option to get out comes up, you better bet your bippy that they are. And if not fully, then they are massively reducing what they had.

It will be interesting, my employer recently ordered everyone back to the office 2 days a week with the promise that a 3rd day will come by the end of the year. However, we have hired a significant number of people during work from home and there isn't enough room in our current building. Our lease is up next year and we have been told we are moving to a new office building with more space.

Meanwhile, my wife's employer has a large suburban campus and started leasing their unused space to other companies, so even if they did want to bring their employees back to the office there is nothing to bring them back to. Her company once had 10,000 employees on-site and now they now only have about 250 on-site. Everyone else works remote.

I assume the vacancy rates don't include 101 Broadway (former BancFirst building) and 100 Park Avenue since they were purchased by Gardner Tannenbaum to be renovated into residential?

https://www.okctalk.com/content.php?r=867-Two-downtown-buildings-to-be-converted-to-apartments-and-retail

I assume the vacancy rates don't include 101 Broadway (former BancFirst building) and 100 Park Avenue since they were purchased by Gardner Tannenbaum to be renovated into residential?

https://www.okctalk.com/content.php?r=867-Two-downtown-buildings-to-be-converted-to-apartments-and-retail

Correct, those are now off the market.