Downtown Office Space by the numbers

[metro]

City's office space is shrinking

By Richard Mize
The Oklahoman

Oklahoma City's office base is shrinking despite construction because so many big office buildings are being converted to living space.
That was a highlight of Grubb & Ellis-Levy Beffort's commercial realty forecast Tuesday at the Marriott Hotel on Northwest Expressway.

Mark Beffort, office specialist, said office buildings converted to living space have added up lately:

"The central business district, the primary beneficiary of these conversions ... will see its vacancy dip below 30 percent for the first time since the 1980s," he said in a Grubb & Ellis report.

Gardner-Tanenbaum Group started the trend by converting the former Montgomery Ward building at 500 W Main St. to The Montgomery, upscale apartments and street-level retail.

That's 125,000 square feet of office space gone.

Gardner-Tanenbaum then turned to the former Citizens Tower at 2200 Classen Blvd. and is transforming it into The Classen condominiums, and has plans to convert the Park Harvey building at 200 N Harvey to apartments.

That's another 320,000 square feet of office space gone -- 150,000 square feet for The Classen and 170,000 square feet for Park Harvey.

Outside the central business district, Jim Meyer's Founders Tower Condominiums LLC is converting the United Founders Tower at 5900 Mosteller Drive to condominiums, for another 182,615 square feet of office space gone.

That's almost 630,000 square feet removed from the office property rolls.

In all, more than 870,000 square feet of offices in Oklahoma City will have been converted to living space in 2005 and 2006, Grubb & Ellis said.

That's more space than is in Leadership Square, the city's second-largest office building, 735,514 square feet at 211 N Robinson.

It's as if these Oklahoma City office landmarks were gone: Mid-America Tower, 307,388 square feet at 20 N Broadway, Oil Center, 249,654 square feet at 2601 Northwest Expressway, and Robinson Renaissance, 174,840 square feet at 50 N Robinson.

All office space is not equal, however. The space going to housing is considered "Class C" -- the least desirable by serious office tenants, with low occupancy and below-market-average rents.

It's close, but the amount of space removed from office property rolls is more than new office space built in the market since 2000, Grubb & Ellis reported.

In 2000, less than 200,000 square feet of space was constructed, followed by less than 50,000 square feet in 2001, just more than 75,000 square feet in 2002, more than 300,000 square feet in 2003, virtually zero in 2004 and about 40,000 square feet last year, and virtually none in the works for 2006, according to Grubb & Ellis.

The conversions to living space reduced the amount of office space downtown by 2.2 percent in 2005 and will reduce it another 5 percent this year, Beffort said.

[Pete]

The central business district, the primary beneficiary of these conversions ... will see its vacancy dip below 30 percent for the first time since the 1980s

Just under 30% vacancy is still very high, but we're finally headed in the right direction.

And the best part is that it's mainly 'Class C' space that is being taken off the market. I bet that trend will continue as there are still a bunch of building that can be had on the cheap.