Devon Energy Center

[OKC74]

Pete - I love the idea of a high-rise Hyatt...or some other nice hotel, downtown. I've wondered WHY in the past few years all of these hotels are being built in Bricktown (which don't get me wrong I think is GREAT), but they are not "tall"...meaning they are not a skyscraper. They are kind of boxy looking and all look similar (of course because of the restrictions for Bricktown). But I'm looking for a hotel...maybe 20-30 stories...downtown. Something higher and skinnier than The Sheraton or The Renaissance...something that will really stick out in the skyline and enhance it even more. Do you think there will be demand for this soon? Or do you think with the amount of hotels in Bricktown as well as the 4 or so in the CBD (the 2 mentioned as well as The Skirvin and Colcord) that we will have enough trouble keeping relatively high occupancy rates in those?

[BG918]

I'm not suggesting that there will be a huge amount of spec office space built.

Just that it's likely more local companies will want to be down there and if so, we don't have the Class A space for them now, let alone in 3-5 years.


And BTW, downtown OKC has only 5.7 million square feet of rental office space, as opposed to 7.7 million for Tulsa, a city significantly smaller.

Could that be because of the significant amount of office space along NW Expressway?

Yet another reason why a downtown-centered rail transit plan needs to be implemented ASAP. Parking is already an issue and you can't increase density without increasing parking OR providing an alternative transport. method. Once concrete plans for light rail/commuter rail are released, hopefully with MAPS III, then that makes downtown even more viable for increased office space in the future.

[Pete]

Could that be because of the significant amount of office space along NW Expressway?

No, because Tulsa has a little more suburban space as well.

Simply put, OKC has never had the same amount of downtown office space of cities it's size and even smaller. Or I should say, that has been the case since at least the 60's.

And I think that's going to start to change because more and more, it will be the place to be.

[bluedogok]

The naysayers like to point out the energy bust of the 80's and all the empty lots in Downtown Dallas that was supposed to have towers on them but that was a different time and scenario. Most of those were developer proposed buildings, not corporate HQ buildings intended to be "owner-occupied" which it looks like the Devon Tower is to be. Developers rely on financing and most only have the building as the collateral to cover the loans, very few have the available assets to cover the loan without the building. That is why so many of those failed and many projects seem to be on an "indefinite hold" like we are facing in my office now. Even though the economy in this part of the country has been doing well, since everything is national/international now the money woes in California/Arizona/Florida and elsewhere are affecting the credit markets for projects in this part of the country. That doesn't seem likely to be an issue with this project.

Also, energy prices are not going to entirely collapse like they did in the 80's, OPEC can't just flood the market a drop prices back to $8.00 a barrel anymore. Due to the increased worldwide demand of a few billion people in China and India it is a much more competitive market for energy than it was in the early 80's and that has changed the market dynamics from 25+ years ago.

[metro]

Pete, interesting facts. So with our 5.7 million existing and 1.9 Devon proposed, we're only at 7.6, still 100,000 sf smaller than downtown Tulsa.

[Pete]

Also, Devon is pretty diversified between oil and natural gas, so even if the bottom did fall out of the oil market (highly unlikely for all the reasons mentioned) the demand for natural gas will always be more stable.

Especially in the future, as gas is increasingly being used in all types of applications and is considered a very clean fuel.

Plus, Devon has $50 billion in assets and is not going to let themselves be acquired as long as Nichols is at the helm -- which should be quite a while.

It's very, very hard to come up with a scenario where this doesn't get built. I guess the negative types will have to find something else to try and put down.

[OKCisOK4me]

Due to the increased worldwide demand of a few billion people in China and India it is a much more competitive market for energy than it was in the early 80's and that has changed the market dynamics from 25+ years ago.

And in saying that, imagine what their affect will be on the rest of the world in the coming 25+ years as their populations skyrocket higher and higher and more and more of them become industrialized. It's a trend that is going to keep oil skyhigh.

[Pete]

The billions of people in India and China are just NOW starting to buy cars. And even in the U.S., our population is predicted to grow rapidly over the next 50 years.

As good as this is for companies like Devon, I'm actually much more worried about gas going to $10 a gallon then it dropping way back down.

I'm all for shiny, tall corporate towers in downtown OKC but if things go too much higher our national economy will really suffer, as we're already seeing evidence of that now -- let alone if the price of oil doubles.

[OU Adonis]

So how long will it take for Devon to be as big as Exxon? Can they ever catch Exxon and the mega energy companies? It would be nice for them to be so big no one could do a takeover of them.

[PLANSIT]

I'm not suggesting that there will be a huge amount of spec office space built.

Just that it's likely more local companies will want to be down there and if so, we don't have the Class A space for them now, let alone in 3-5 years.


And BTW, downtown OKC has only 5.7 million square feet of rental office space, as opposed to 7.7 million for Tulsa, a city significantly smaller.

Ok, you compared it to one city.

Note: You claim that OKC's 5.7 million square feet is small to comparable markets, yet there is still a very high vacancy rate. Build more, build more!

[mheaton76]

Interesting, I heard that concern echoed by a colleague today about the oil bust in the 1980s - suggesting the building of the Devon HQ in some way mirrors that time when our last skyscrapers were built.

I agree with Pete - Things are different now then they were back in the 80s. And I don't think it's just economic. There are other qualitative factors that though hard to measure suggest OKC has reached a tipping point toward something much bigger and better than it has been in the past. More and more evidence accumulates everyday to support this idea...



www.unitedstatesofmichael.com

[bluedogok]

And in saying that, imagine what their affect will be on the rest of the world in the coming 25+ years as their populations skyrocket higher and higher and more and more of them become industrialized. It's a trend that is going to keep oil skyhigh.

I know, they are effectively going through what the US economy did in the post World War II era growth, they had Communism to strangle it for 50 years and since they have a "modified" Communism-Capitalist society. A migration to cities and personal transportation instead of smaller town/rural living and public transportation/walking....only on an exponentially larger scale.

[Kerry]

Ok, you compared it to one city.

Note: You claim that OKC's 5.7 million square feet is small to comparable markets, yet there is still a very high vacancy rate. Build more, build more!

Keep in mind that a vast majority of the vacant space downtown in is in Class C property. The market for Class A space is way underserved.

[PLANSIT]

Keep in mind that a vast majority of the vacant space downtown in is in Class C property. The market for Class A space is way underserved.

Already discussed this. Renovations are obviously needed.

Edit: One thing that could solve both problems is to renovate Class B and C to residential. The floor to ceiling heights of those older layouts are better suited for residential units.

[CuatrodeMayo]

^^ Good job architect! that's awesome. You're getting good at sketchup. That is a massive tower.

Aww...beat me to it! good job.

[Pete]

Note: You claim that OKC's 5.7 million square feet is small to comparable markets, yet there is still a very high vacancy rate. Build more, build more!

There is 1.2 million square feet vacant in downtown OKC and the huge majority is in the FNC and other Class B & C buildings. My point stands there is still very little vacant Class A space and certainly no large contiguous blocks.

And here's how OKC's downtown office inventory stacks up to other cities. This is from CB Richard Ellis market surveys done this year.

(BTW Metro, Devon Tower won't be added to these numbers because it's a private building. All such buildings are left out of market surveys, both in terms of inventory and vacancy.)

Memphis 2.7
San Antonio 5.1
Omaha 5.5
OKC 5.5
Salt Lake City 6.1
Nashville 6.5
Jacksonville 6.8
Tampa 7.4
Fort Worth 8.1
Tulsa 8.4
Austin 8.6
Louisville 9.7
Sacramento 10.6
Columbus 10.6
Indianapolis 10.7
Oakland 12.6
Charlotte 12.7
Kansas City 15.2

Numbers represent millions of square feet in the CBD.

[BDP]

Due to all of the economic factors already mentioned, I agree that this thing will get built. There are only two realistic concerns:

1) Devon is acquired and moved.

2) Economic indicators in oil and gas cause a period of slower growth or no growth of the company in terms of personnel. It seems like this plan has room for about 25% growth in employees from their current payroll. It's possible that the project is scaled down to their current size. If so, and if we assume that it would affect the size of this project in an equal proportion, then you're still looking at 600+ feet.

Neither of these things look likely from where we stand today, but things change quickly and "you never know". But there is a lot more to support that it will get built very close to the scale presented yesterday and, honestly, if it only changes in size, I think that we will still have a building that elevates the image of the city and improves the atmosphere for working and living downtown.

I think the only way we don't get a very nice world class building out of this is if it isn't built at all and I just don't see that happening at this point.

[Pete]

If we're going to play the "what if things get worse" game, then shouldn't the other alternative be considered as well?

What happens if things really go through the roof for Devon in the next 3-4 years? Isn't that just as likely as things going the other way? In fact, based on recent trends, you could make a strong argument that is more likely than their business cratering or them being purchased.

I suppose if that were the case (even greater growth) they could keep their current tower for overflow. But they could also make their new tower even bigger/taller.

Of course, the naysayers don't want to talk about that.

[DelCamino]

This proposal, the new Devon World HQ Building, is great, great news, don't get me wrong.

But for arguments sake, and stepping away from our civic pride and looking purely at aesthetics, is the building a good fit? While the city could handle a newer, taller building, is this proposal too tall? Does is blend in with the existing skyline or overpower it? Will it stick out and look like it doesn't belong? Is the height, size, the best look for the city?

[BDP]

Very true. My guess is that we'd see two towers before this one gets much taller.

[Pete]

stepping away from our civic pride and looking purely at aesthetics, is the building a good fit? While the city could handle a newer, taller building, is this proposal too tall? Does is blend in with the existing skyline or overpower it? Will it stick out and look like it doesn't belong?

I don't see things that way and would love it if the thing were even taller.

As I stated before, Devon Tower will set the bar higher (literally and figuratively) for all developments that follow. And that's a very good thing because the quality and height of buildings to date has been generally below the standards of many other cities.

Also, it may not blend in / fit in now, but as more development occurs and we have more new and less old, that will no longer be the case.

[BDP]

Does is blend in with the existing skyline or overpower it?

Probably if you just described it to me, I would have had that concern, but, really, after seeing the drawings, I think it fits in well and does a good job of being in a more modern concept without trying to prove a point. The features that make it different are very sleek and subtle in nature, imo.

I think from some angles it will look more like a monument than part of the skyline, but from others it will blend in nicely. Honestly, I think Chase looks a little isolated and bloated from some angles and, from those same angles, this building will probably help that as it will balance it out on the other side.

There's no denying that it's pretty tall, but a lot of familiar skylines have isolated buildings that tower over the rest of the structures. I think the greatest concern is how this building will shame buildings like Kerr McGee and Chase in terms of design. That's just my opinion though.

[BDP]

Also, it may not blend in / fit in now, but as more development occurs and we have more new and less old, that will no longer be the case.

Very true and you can't really improve something if you are simply trying to meet the same standards every time.

[Pete]

Particularly with Chase, at some point building owners have to perform major renovations to stay half-way current.

That building was finished in 1971, and in the 37 (!) years that have followed, not much has been done to the outside or inside.

In the near future they will have to get serious about replacing the outside glass and maybe even adding some design elements to the exterior. Otherwise, it's going to look horribly dated, and not in a classic sort of way like FNC.


I like the old Kerr McGee building, though. Yes, it's that 70's International style but at least there are some unique elements to it and at the time it received a lot of praise. With some cleanup I think it will be fine the way it is -- at least on the outside.

[CuatrodeMayo]

This is interesting: Will the Skyline Continue to Rise?