Is Chesapeake Cannibalizing the Western Corridor?

[BDP]

OK, let me start with the justified caveat that Chesapeake is a relatively good community minded corporation. Their campus looks good, it's maintained better than any office site in the city and I hear great things about their employee friendly work environment.

However, lately it seems it is taking over the Western Corridor to the extent that it is slowly killing it. It seems intent to turn the whole district into a corporate facility. They have kicked out Laredo's and Wendy's. They have bought the Metro and the Abraham's building farther south. And now, while it is unverified, they may be behind the relocation of Pearl's to Belle Isle:

http://newsok.com/article/1808354/?t...=business/main

I can't say I mind the loss of Wendy's or the Abraham's building, but still, these properties were serving the public and will be converted into private facilities. Laredo's was a long established resident serving the area for years and I believe that Pearl's was the original one and brought great Cajun dining to the area with a nice deck for a rare al fresco setting. Now these restaurants, once somewhat unique and interesting places to dine, are being relegated to the strip mall and pad site atmosphere of Belle Isle.

My concern is that one of our nicest and unique areas of locally owned establishments is slowly being converted to a restricted private corporate facility. These types of businesses rely on each other for a synergistic experiences to generate traffic. Even if Chesapeake does not buy all of Western, it could erode the merchant density and adversely affect business for those that survive the property use shift. Worst case scenario is that they all are forced to scatter or move to a strip mall.

I don't mean to say that the sky is falling, but it is a trend. Chesapeake serves the area well and brings people through employment to the area (although I think much of their employees dine at their on campus facility, instead of supporting the local merchants). Mixed use areas are always good for business. But, at what point, does this balance become disturbed by Chesapeake’s aggressive acquisition of Western corridor property? When does this conversion and relocation of services begin to really hurt the attractiveness of the area as a destination for the community?

What happens if Chesapeake cashes out and is relocated? Will a once well respected member of our corporate community ultimately be responsible for nothing more than building more office vacancy in OKC and pushing more services from a neighborhood setting to a strip mall setting? I have always appreciated Chesapeake’s concern for its surrounding community, but it is beginning to look more like they are on course to cannibalize the very community it once seemed to embrace.

[Pete]

Yes, if something happens to Chesapeake that area would become a ghost town pretty quickly.

I appreciate what they are doing but I'd really like to see them absorb existig space rather than keep building new.

[John]

Money talks, huh?

They were very firm on their not moving stance last year. The original plan (if they did leave their current site) was to move across the street to the office building on the NE corner of 63rd & Classen.

[Pete]

I do hate to see that Pearls go...

It's been in that location for at least 25 years and that's a long ride for any restaurant.

And as mentioned, the building the way it sits on that site was always somewhat unique.

[Patrick]

Guys, they own the entire corridor across Western. They just finished a deal that bought Reserve National Life Insurance Company, and Hahn Cook Street and Draper Funeral Home. They also own the state buildings to the south now.

[metro]

Very interesting conversation. I've contemplated it myself lately. First and foremost Chesapeake is if not the best, one of the best corporate citizens we have and is NOT going anywhere. Secondly, I understand your points for ruining the synergy of having a restaurant district, shopping center, etc. Western Ave. for being as prestigous as it is is not all that nice and eye appealing. If you brought a east or west coaster to the district they probably would not be impressed with eye appeal. The Chesapeake campus is the nicest thing on Western. The area is definitely cleaning up and making a comeback. I love the atmosphere of the Pearls that is moving. What I don't love is always having to wait for a seat since that restaurant is maxed to 100 seats including the outdoor patio (seasonal). The move will allow them to better serve there customers. Moving to the Belle Isle area, I do not see Laredo's or Pearls moving into a strip mall. Laredo's is already building there facility over by Chili's and IHOP and it will be much nicer and bigger than there old facility. I imagine Pearl's will do the same. All of there locations are stand alone buildings. Secondly, no one is forcing these companies to sell. It is a free market and people have free will. Chesapeake is known for offering way more than market value. Can you blame the property owners for making a good business decision? I don't know if this is right or wrong but some good things to consider. I think it will only enhance the area and bring the quality and landscaping standards up.

[Pete]

Chesapeake is if not the best, one of the best corporate citizens we have and is NOT going anywhere

You would hope not but much bigger companies have been purchased, merged, relocated or gone bankrupt. I've worked for a couple myself.

[The Old Downtown Guy]

All very interesting points BDP.

While Chesapeake is one of the top two or three corporate citizens in OKC, their campus vs office tower approach to expansion and land acquisition is having a major impact in their surrounding neighborhood and now appears to have crossed into territory north of 63rd Street. Further south, they are heavily invested in the beautification of Horace Mann Elementary by way of the new landscaping and dozens of their employees tutor there.

I think the 50th and Western Avenue Abrahams property purchase was a combination real estate investment and clean up the neighborhood deal. IMO, some of their other real estate purchases have been more real estate investment related as well. As they drive up area real estate prices with their reportedly above market price purchases, they are single handedly causing price appreciation of the many nearby parcels they now hold, which sets the stage for profits down the line. So, some of this may just be shrewd real estate investing. They have also acquired a mid-rise office building on Northwest Expressway (One Grand Park?) that they are moving some employees into because the new buildings being constructed on their immediate campus can't keep pace with their business growth. I think their rate of new hires is about fifty per month and climbing.

I can't imagine that they will experience any drastic business downturn in the near future that would facilitate closing their operations on Western, but I guess they could be taken over and relocated at some point. Hopefully, they will just continue to grow their business and plant more of the immaculately maintained curbside landscaping that we all enjoy.

[BDP]

Western Ave. for being as prestigious as it is not all that nice and eye appealing.

I can agree with that somewhat, but it is still 100% nicer than Belle Isle. It still was nicer than 95% of OKC and it was all pretty much local. I can guarantee you it would impress visitors more than Belle Isle or most of our dining districts would. In any event, I'm not really looking to impress coastal visitors as much as I am trying to keep at least a small segment of OKC different from than the rest of it. This is simply causing more homogenization of OKC.

And, all of my coastal guests enjoy Western and Paseo much more than bricktown at this point...

I love the atmosphere of the Pearls that is moving. What I don't love is always having to wait for a seat since that restaurant is maxed to 100 seats including the outdoor patio (seasonal).

The nice experience, imo, is very much because of its low capacity seating. Their large restaurants have horrible atmosphere and are unpleasant to dine at. As with most places, I'll take a wait to eat at a nice place over a no wait mega-restaurant any day (especially since we have so few quaint restaurants, many of which are/were on western). If they do build a big pad building like other Belle Isle sites, Pearl's will not have a non-industrial strength eatery. Not a step up for our restaurant mix, imo.

Moving to the Belle Isle area, I do not see Laredo's or Pearls moving into a strip mall.

Belle Isle is a strip mall with pad sites, like for Chili's. Same difference to me, and it will be a huge step down in atmosphere compared to the old establishment. They may give it a chance and do something nice, though, we'll have to see. This was the only one I liked to go to and I don't see myself going to a new mega-Pearl's if that's what they do.

Laredo's is already building there facility over by Chili's and IHOP and it will be much nicer and bigger than there old facility.

Again, it does look like it's bigger, which does not make a better restaurant, imo. In fact, I can argue it makes it worse.

…is NOT going anywhere

Let’s hope not, but that’s a large leap of faith. Their long term debt approaches 6 billion dollars and they are in a very volatile industry. If the market takes a hit, they may look to cash out and move on. You see, there is this city called Houston, Texas, and well….

I think the 50th and Western Avenue Abrahams property purchase was a combination real estate investment and clean up the neighborhood deal.

This is a great example of the Chesapeake model. The building Abraham's was in needed to go. Chesapeake bought it and will sit on it. Rumor has it, it will be a veterinary clinic for their employees. OK, say I live in the neighborhood. I lost a great local hamburger joint along with an ugly building. I may get a nicer building in my neighborhood, but I will not be allowed to use the services housed in that building. It's a wash at best.

Basically, Chesapeake is willing to provide the area with some nice landscaping and brick buildings, but the local merchants and services have to go. It's a trade off of substance for style. Places to go and do something are being replaced by places we can only look at.

Western may not be a world class corridor, but it is one of the few unique places in OKC. It is different. It is one of the only successful local corridors in town and is a very popular area to go out for dinner, drinks, and socializing. It is a viable and much more intimate alternative to bricktown. I think Chesapeake is a great company as well, but their acquisitions on Western really only amount to the people of OKC having less choices of entertainment and character so that a company can build office space in a city full of empty office space. I used to think that they were on Western because they liked it, but more and more it is becoming obvious they just want to own it and run off the long standing businesses.

Oh, and yes, these businesses do have an option to sell or not, but, as evident by the prices they are paying, this is an aggressive acquisition strategy by Chesapeake. This is their plan and none of the businesses were looking to move. My point is that their plan ultimately erodes the Western corridor as a viable and long standing alternative shopping and dining destination for people who live in Oklahoma City, which effects the quality of life for us all.

[ptwobjb]

I think their campus looks awesome. It's one of the better looking parts of Oklahoma City, really. They build large structures and the parking lot is somewhat hidden. The vast majority of OKC is stripmalls and parking lots. So this is a welcome change.

This city is plenty large...whoever is bought out by Cheapeake will have plenty of new locations to choose from.

[BDP]

I think their campus looks awesome. It's one of the better looking parts of Oklahoma City, really. They build large structures and the parking lot is somewhat hidden. The vast majority of OKC is stripmalls and parking lots. So this is a welcome change.

This city is plenty large...whoever is bought out by Cheapeake will have plenty of new locations to choose from.

It's funny but you make my point. The city is large and full of what?... Strip malls. Where will these displaced businesses go... strip malls. Basically, becuase of Chesepeake, Western moves to a strip mall named Belle Isle.

Now, if the city is so large, which it is, why do we have to give up a unique district in order for Chesepeake to build a new office space? If they really wanted to make the city better, why not do it with a struggling neighborhood or one that could use some revitalization? They are instead encoraching on a perfectly vital part of town. With all of the space in OKC, why do we have to lose anything for someone to build?

This is why I see it as cannibilazation. Yes, we get nice new shiney buildings spread out over a few lots, but we do it at the expense of some existing infrastructure and character. With all the space we do have we ought to be able to have developers build all they want (or actually renovate the glurge of vacant office space we have) without scarficing any existing character at all.

Thank about it, would we want the Metro, VZDs, Cafe Nova, Mushashi's, Sushi Neko, Hideaway, Irma's, Nichols Hills plaza, etc. to all disperse into strip malls and/or pad sites so that Chesepeake can take over the neighborhood? That's what's happened so far on a small scale and I don't think we net anything, no matter how nice their campus is. You can give me a crisp clean dollar bill for 6 old quarters, but I still can't do as much with your dollar bill as I could with the quarters.

Western is still one place in OKC you can take people when they ask if there is anything to do that isn't touristy or isn't in a strip mall of some kind. I would hate to lose it.

Maybe it will all move south and 23rd will have stuff do when there is nothing left to do on Western...

[Raspberry]

Thank about it, would we want the Metro, VZDs, Cafe Nova, Mushashi's, Sushi Neko, Hideaway, Irma's, Nichols Hills plaza, etc. to all disperse into strip malls and/or pad sites so that Chesepeake can take over the neighborhood?

Interesting..... Chesapeake recently bought Nichols Hills Plaza.

[John]

If, God forbid, anything happened to Chesapeake - the campus would translate very well into some cool semi-urban apartments. There is ample parking, a fitness center, and nicely landscaped common areas.

The loss of Chesapeake (which IMO will never happen in our lifetimes), could attract more people to the area where the campus lies.

Just a thought. Carry on!

[okcpulse]

If Chesapeake Energy is involved in this much real estate activity, it makes you wonder if they are preparing for an acquisition of another energy company and moving its employees to Oklahoma City. Just a perspective.

If you are that concerned about Chesapeake cannibalizing the area, and rightfully so, please write them, and your councilman. Let them know you are concerned about such a move.

This brings up an interesting point. The best way to begin to really transform Oklahoma City as a whole is to put a moratorium on strip malls and begin eliminating vacated strip malls altogether, and redevelop the property into a more vital point of interest for the city and the local neighborhoods.

The average life of a strip mall is 30 years. Often times, they are demolished or left sitting vacant until the city has to step in and demolish the property. Here in Houston on FM 1960, I counted 12 strip malls in a seven mile stretch that appear to be no more than 20 years old and are either more than 50 percent vacant or 100 percent vacant, and this is in a booming part of Houston.

Eliminating strip malls for livable space is something that needs to be a part of the next MAPS projects. Be vocal about this. Find a way to get everyone in the city on the same page as we were with MAPS and MAPS for Kids.

[BDP]

the campus would translate very well into some cool semi-urban apartments. There is ample parking, a fitness center, and nicely landscaped common areas.

I agree. I just hope the services would still be there for residents and in the near future for the current residents of the area.

I don't think they are leaving either, but everyone thought the same thing in the 70s during the oil boom. Everyone thought the same thing in the Bay Area during the dot-com boom. Like these two other examples, they are very leveraged. Right now they have the capitalization to service it, but what happens if there is a crash? Then we will have lost both the company and the district.

And even if they stay for 40 years, why do we have to sacrifice a district for that to happen? Too bad they didn't just buy Belle Isle. Then we'd have a nice easily accessible office park and a restraint row that isn't full of cooperate chains.

Do I sound like I'm whining, yet? Sorry, that wasn’t my intention. Maybe I should let you guys take it for a while. I guess, ultimately, I would like to see OKC begin to plan responsibly for its future in the good times by protecting the assets and character that did survive the bad times, instead of always proceeding with the mind set that we have to destroy things to move forward., especially when those things are one of a kind or few of a kind in nature to the city itself. We could put a nice office park in hundreds of spaces in OKC, why do we have to give up something to get that?

BTW, good points okcpulse. I get the impression that Chesepeake leadership does care about OKC and would listen to communiy concerns on such issues.

[jbrown84]

Yes it would be very sad to see The Metro and Nichols Hills Plaza go. I hope that is not their intention.

[BG918]

I don't know what Chesapeake's plans are but with their wealth they could really impact that section of Western Ave. They could finance construction of a mixed-use development across the street from their campus that would benefit Western Ave. and OKC as well as their employees. Continuing the semi-urban nature of Western Ave. around Crown Heights up past I-44 should be a bigger priority IMO.

Up in Omaha, which has a lot in common with OKC, one of their marquis companies Mutual of Omaha insurance is redeveloping their office park into a mixed-use area of restaurants, shops, residences, and office space. Cheasapeake should be doing the same thing for their little enclave of Western Ave.

[zuluwarrior0760]

While I also think it's a shame to see
Pearl's go, I could do without low end structures
such as Wendy's and Laredo's were.....

I do think that the bottom floor local flavor retail,
upper floors office.....makes a lot of sense for this
area of town....

Chesapeake's not going anywhere, and Rand Elliott has
done a wonderful job keeping a cohesive look with their
campus, but I too am worried about what this Nichols
Hills enclave will look like in 25 years.....
My fear is that if the energy markets keeps exploding
in margin the way they have, Nichols Hills Plaza will become
office space eventually.....

I guess in this free market economy, the only answer
when eminent domain has not been exercised, just the
ability of a corporation to write that big check....
is to "outbid em"......
If it makes no sense to do so, then there's no recourse....

[Pete]

Even though Chesepeake is building high-quality buildings, there is a legitimate concern that area will become too gentrified and planned, as it's one of the few areas of OKC that offers interesting, ecletic and non-chain retailers and restaurants.

Did they really have to have that Pearl's property? Couldn't they have integrated it into the larger development?

The fact they didn't scares me a bit.

[BDP]

The fact they didn't scares me a bit.

It kind of raised a flag for me, too, and that's why I posted. What first looked like an effort to beautify the area and maybe rejuvenating some of the older properties has begun to look like an indiscriminate take over of the district. I think they recently tore down the house that housed the Junior League. My memory may be messing with me here, but I don't think there was anything wrong with that structure, except that it was too close to Chesapeake, so it had to go.

I have talked to people recently about this and I know the concern is not isolated to a few people on this board and it is growing. Take this for what it's worth, but a friend of mine told me that he was told by a local commercial real estate mogul that McClendon and Chesapeake’s development plans extend up to Wilshire. Now, I have no idea if that includes the properties on Western itself or more back along Classen. In any event, that stretch is full of long established viable businesses housed in, like Malibu pointed out, an eclectic mix of properties, most of which are set closer to the street than in most areas of OKC. No matter what route they take, they will inevitably have to destroy many properties to implement such a plan. And all of this would be at the opportunity cost of converting and filling all the vacancy we already have in the city.

I guess a good question for the board, especially for those who don’t seem to mind the recent losses in the area, would be at what point would you begin to be concerned? How much would be too much for you?

[okcpulse]

I honestly don't think I mile-long corporate campus is on Chesapeake's wish list. Who knows exactly what they plan to do. If anything, they will expand up to Wilshire behind the Western Avenue properties. But a mile-long campus? That's almost the size of downtown OKC area-wise.

On my trip to home this summer, I'll be driving through this corridor to see first hand all of the latest activity.

[Uptown]

Chesapeake never said they were buying Nichols Hills Plaza to tear down. In fact, they stated that they were going to continue leasing it, so I thought. They said they wanted quality control of the properties surrounding them.

As good of a corporate resident as Chesapeake is, I can't see them destroying the Western Avenue District.

Too bad they weren't located downtown. Wouldn't it be interesting to see both Devon and Chesapeake cannibalizing the CBD? I think Devon needs to consolidate all of their offices downtown in one campus. How about two new 50 story Devon towers downtown?

[Pete]

I agree that I would much rather have Chesapeake absorbing and buidling downtown.

That area of Western was fine before they arrived and if anything is one of the most eclectic and progressive areas of the whole city.

It's one thing to build nice new buildings and acquire others, but when they start displacing places like Pearls and Laredos, that's a real red flag.

And even though they'll probably leave NH Plaza as retail, there are lots of interesting shops and restaurants north of 63rd that could also fall prey to their expansion plans, and if that happens it that area will lose almost all it's charm.

[BDP]

I honestly don't think I mile-long corporate campus is on Chesapeake's wish list.

I honestly didn't think they had any aspirations of tearing down any businesses in Western, but they are doing it every few months at this point.

But a mile-long campus?

It's weird and doesn't make sense, but then again, the company is still expanding and it doesn't build up more than 4 stories, it has committed itself to that campus, and there's nowhere else for it to go.

Wouldn't it be interesting to see both Devon and Chesapeake cannibalizing the CBD?

I wouldn't call that cannibalizing, as nothing would be destroyed or left vacant to accommodate that. It may even be constructive in restoring our vacant properties. But it would be nice to have that kind of presence downtown.

As good of a corporate resident as Chesapeake is, I can't see them destroying the Western Avenue District.

Yeah, but weren't Laredo's and Pearl's part of the Western Avenue District. How much do they take before it is seen as affecting the area? They had no interest in working with these businesses, other than paying them inflated exit prices, why would they care about the others?

The fact that they pay high prices for places like the Metro and Nichols Hills plaza worries me more, actually. They are not buying them for their core business, but fundamentally so that Chesapeake can control them. For what? I guess we'll wait and see.

But this is all speculation and it seems like most, outside of a few of us, are unconcerned with what they have done, but what would it take to concern you? Will the next restaurant concern you, or would it take 3 more? Actually 3 more would basically take it from a restaurant district to a place with a few restaurants... How much retail. Is everything else fair game except the plaza?

[Patrick]

Maybe Chesapeake needs to consider having more than one campus.