City's office occupancy improves

[Pete]

Looks like we're finally headed in the right direction.

Hope the trend continues and that we see some high-quality new construction sometime soon.




City's office occupancy improves

By Richard Mize
The Oklahoman

Devon Energy is spilling from Mid-America Tower, Chase Tower and First National Center, the Hornets are buzzing Oklahoma Tower and Park Harvey Center is going to housing, vastly improving office occupancy.

Oklahoma City's office market absorbed more than 200,000 square feet the last half of last year partly because of the reduction in supply by conversions to housing, according to a recent office market report by Wiggin Properties LLC.

Downtown enjoyed 40 percent of the absorption, or 98,000 square feet, which lowered the vacancy rate in Class A and Class B buildings to 20.5 percent, Wiggin Properties said.

The conversion of Park Harvey Center in particular is causing tenants to relocate to other empty space downtown, the report said.

The Hornets' 22,000 square feet in Oklahoma Tower and Devon Energy's continued expansion -- to continue this summer when the energy giant expands onto five floors of Corporate Tower -- shined the occupancy numbers, Wiggin Properties said.

The company said conversion of Founders Tower, in the northwest suburban submarket, has tenants there relocating and filling other space, contributing to the lowest suburban vacancy rate since summer 1999 -- 12.5 percent.

Rents haven't changed, however, although Wiggin Properties said it expects to see increases this year because of the improved occupancy and reduction in supply.

Asking rent rates for Class A space downtown range from $15 to $16 per square foot per year, and asking rates for Class B space downtown range from $12.50 to $16, the report said.

Suburban asking rent rates for Class A space range from $16.50 to $22.50 per square foot and from $11 to $16 per square foot for Class B space.

Oklahoma City's office market is in good shape, Wiggin Properties said.

"Compared with many cities, Oklahoma City's office market looks very strong. Our expectation is for continuing improvement in occupancy levels and significant increases in rent rates during the next year or two," the company said in the report. "As suburban vacancy rates continue to decline and the number of suburban space options dwindle, rents will move upward, pushing downtown rates up as well, and making downtown space options more attractive.

"Meanwhile, the remarkable growth in downtown hotel rooms, sports and entertainment offerings and residential options makes the office environment an increasingly attractive alternative to the suburbs."

[BDP]

It's interesting that class A downtown is cheaper than suburban, but class B is the same or more expensive. I thought most Class A downtown was rented, which would make it competitive. If there's any available, it seems like Class A downtown is a steal.

[HOT ROD]

"Meanwhile, the remarkable growth in downtown hotel rooms, sports and entertainment offerings and residential options makes the [downtown] office environment an increasingly attractive alternative to the suburbs."

Let's bank on this to help us see our next tallest building downtown!!!

[BG918]

Devon Energy is OKC's hope for a new tower downtown. They already take up so much space in several buildings it just seems like it would make more sense for them to consolidate. Didn't someone figure that if Devon wanted to completely consolidate their downtown office space it would be upwards of 30 floors? Can you imagine a new 30 story office tower in downtown OKC, or better yet a 40 story office tower? It could be the city's new tallest. Oil at $75 a barrel will certainly help our cause in getting a new tower built!

[Midtowner]

It's interesting that class A downtown is cheaper than suburban, but class B is the same or more expensive. I thought most Class A downtown was rented, which would make it competitive. If there's any available, it seems like Class A downtown is a steal.

This may be due to the short term surge in demand on class B caused by the closing of Harvey Place. There are a lot of lawyers that need immediate office space in that vicinity, and they're not interested in Class A (doesn't work well for most law offices).

[BDP]

Good point Midtowner. That would make sense.

[HOT ROD]

why couldnt First National Center be the location for the law offices? I understand that it is class B and it would be perfect for law or medical offices.

Also, it could become a low cost business incubator. Businesses could set up shop there with reduced rent for office space. As their profits improve, they could either remain in the building but pay market rent OR move to another downtown building. I would stipulate that a business would be required to remain downtown tho - if they set up in the incubator (but that might be a stretch).

Perhaps we could do both, the lower 10 floors as the incubator; the upper 20 as law/CPA/accountant/financial services/medical offices; the top 3 floors as a NEW club or Beacon Club returning!

After all, its weird having the Beacon Club away from the "beacon" of the First National.

[Luke]

I wonder what the top floor of the First National Tower looks like. If you look up there you'll see what appear to be observation windows spanning one of the highest floors. Anyone have any inside info?

Also, surely someone here knows someone who knows someone at Devon that can get a feel for the chances of them building a new bigger better tower. That would be cool.

Perhaps our best chances for a new office tower will be when I-40 is relocated.

[Midtowner]

why couldnt First National Center be the location for the law offices? I understand that it is class B and it would be perfect for law or medical offices.

Also, it could become a low cost business incubator. Businesses could set up shop there with reduced rent for office space. As their profits improve, they could either remain in the building but pay market rent OR move to another downtown building. I would stipulate that a business would be required to remain downtown tho - if they set up in the incubator (but that might be a stretch).

Perhaps we could do both, the lower 10 floors as the incubator; the upper 20 as law/CPA/accountant/financial services/medical offices; the top 3 floors as a NEW club or Beacon Club returning!

After all, its weird having the Beacon Club away from the "beacon" of the First National.

1) I don't think First National is class B, I think it's more C and D. The non-tower part is more modern though from what I understand.

2) The current management is awful. They run month to month leases a lot of the time and raise your rent whenever they feel like it (from what I hear from current tenants).

First National is a treasure -- such that I wouldn't mind seeing public money spent in hopes of keeping it alive.

[russellc]

BG819: Can you imagine a new 30 story office tower in downtown OKC, or better yet a 40 story office tower?

Devon already leases more than 30 stories of their other buildings, so if the plan for the future, 40 would be a minimum or a new building. IMO

[Easy180]

Looks like there may be some more space opening soon...Another OKC based business is eaten

By Jim Stafford
Business Writer

Telecommunications giant AT&T Inc. will buy Oklahoma City-based Dobson Communications Corp. in a deal valued at $2.8 billion, officials said Friday.
The deal will expand AT&T's presence to about 1.7 million mostly rural customers that Dobson serves in 17 states. Dobson operates as CellularOne by Dobson Cellular Services in its service territories.

Officials hope the deal will close by the end of the year, said Everett Dobson, chairman of Dobson's board of directors.

The financial terms work out to about $13 per share, he said. That represents a 17 percent premium over Friday's closing price of $11.11 in trading on Nasdaq.

Dobson said he could not comment on the future of Dobson's corporate headquarters in Oklahoma City and the 325 people who work there.

"They have indicated to us that they will work to find a home at AT&T for as many Dobson employees as possible,” Dobson said.

[metro]

Hopefully this won't affect the downtown office market per se.

[Kerry]

This shouldn't effect downtown vacancy at all. Dobson heaquarters are on Memorial road.

[john60]

I don't know if anyone saw this, but Vince Orza wrote an interesting editorial in The Oklahoman today. He suggested that OCU Law move to the First National Building. Kind of a pipe dream, but it sounds like a great idea, I just don't know how feasible it is...would solve a lot of vacancy issues downtown though and really give downtown a shot in the arm.

NewsOK: A plan to reduce office vacancy

[Midtowner]

I don't know if anyone saw this, but Vince Orza wrote an interesting editorial in The Oklahoman today. He suggested that OCU Law move to the First National Building. Kind of a pipe dream, but it sounds like a great idea, I just don't know how feasible it is...would solve a lot of vacancy issues downtown though and really give downtown a shot in the arm.

NewsOK: A plan to reduce office vacancy

Not likely. We're building a new law library in the next few years from what I understand. The law school will remain on the OCU campus from here on out. Orza, I guess still sees OCU Law's place in the law school world as a night school.

For the vast majority of our students, that's simply not the case.

[metro]

This shouldn't effect downtown vacancy at all. Dobson heaquarters are on Memorial road.

I know, I wanted to clarify for others that this really won't affect the downtown market. Thus me stating it shouldn't affect the downtown market per se.