Chesapeake empire marches on

[blangtang]

That looks like a good location for an oil rig to start drilling. Seriously, they ought to focus on their energy business with all the renewed scrutiny, not this whatever it is.

[ChargerAg]

do they usually buy blocks of houses under the same LLC or is it one LLC per property and then they use a new one.

It would seem simple enough to just look at all property transactions and pull out the LLC ones. I am probally making this way simpler then it is.

What got you started with your obsession tracking these guys anyhow?

[skanaly]

Question: Aubrey never liked tall buildings because he believed that everyone who works in the same building should know each other. Now that he is not the CEO anymore, does that mean there is a greater possibility in the future(I'm talking about 15, maybe 20 years)for a high-rise built downtown?

[Snowman]

Question: Aubrey never liked tall buildings because he believed that everyone who works in the same building should know each other. Now that he is not the CEO anymore, does that mean there is a greater possibility in the future(I'm talking about 15, maybe 20 years)for a high-rise built downtown?

He is still the CEO (at least for now), the position he stepped down from was the chairman of the board. Even if he was replaced though given how nice and new much of their facilities are, there is little reason to expect them to move.

[Spartan]

Question: Aubrey never liked tall buildings because he believed that everyone who works in the same building should know each other.

I'll be honest, I like Aubrey, and his ideas..and I think this is a great one. How right he is... what a shame.

[mugofbeer]

I'll be honest, I like Aubrey, and his ideas..and I think this is a great one. How right he is... what a shame.

He definitely has that old fashioned gamblers, wildcatters mentality.

[skanaly]

there is little reason to expect them to move.

I was never expecting them to move. The idea of abunch of 4-5 story buildings is great. The landscaping around it is amazing an I dont dislike one thing about it. What I was saying was that with the growing amount of employees, will they just build more buildings on there campus? Or will they go other places such as: Moore or Norman? Downtown okc?

[BDP]

Aubrey never liked tall buildings because he believed that everyone who works in the same building should know each other.

So, if people don't know each other, you should build separate buildings for them? What does that even mean? That's a better model if your desire is for separate departments to never know each other, which may make sense in Chesapeake's case. There is a lot more communal feeling when you are in one building than when you are fragmented and spread out. I've worked in buildings where people who worked in completely different departments with completely different cultures knew each other and intermingled without manufactured gatherings. This does not happen as much when you are spread out across a campus and the only way you get to know each other is through organized "extracurricular" events.

I think Aubrey's position stems more from a personal need to make sure certain people don't get to know each other, rather than any motivation to for employees to be more familiar with each other. Normally, you would think it had more to do with growing incrementally to preserve cash flow, but that certainly wouldn't be, uh, let's just say it wouldn't be consistent with normal operating procedure. Either way, it would be illogical to argue that a vast campus has any communal advantage over housing everyone under one roof.

[ChargerAg]

So, if people don't know each other, you should build separate buildings for them? What does that even mean? That's a better model if your desire is for separate departments to never know each other, which may make sense in Chesapeake's case. There is a lot more communal feeling when you are in one building than when you are fragmented and spread out. I've worked in buildings where people who worked in completely different departments with completely different cultures knew each other and intermingled without manufactured gatherings. This does not happen as much when you are spread out across a campus and the only way you get to know each other is through organized "extracurricular" events.

I think Aubrey's position stems more from a personal need to make sure certain people don't get to know each other, rather than any motivation to for employees to be more familiar with each other. Normally, you would think it had more to do with growing incrementally to preserve cash flow, but that certainly wouldn't be, uh, let's just say it wouldn't be consistent with normal operating procedure. Either way, it would be illogical to argue that a vast campus has any communal advantage over housing everyone under one roof.

Couldn't you get the same effect by building a high rise and just putting the related people in groups of floors? I don't see the advantage of the current CHK campus either.

[Spartan]

I think the bigger reason is that CHK is growing faster than it can plan for the long term.

[Pete]

It's taking them over 2 years to build each of those five-story buildings. That's about how long it took for Devon to build their entire complex and have all their employees under one roof.

CHK's campus already is way too spread out to be practical and it's only going to get worse. They own buildings from west of Portland all the way to Lincoln Blvd.; and on their campus alone some of their buildings will be half a mile apart.

When it became obvious they were going to need tons more space, they should have switched to building taller/bigger buildings.

[Spartan]

Well I think they're getting there, by placing the Georgian model aside.

[BDP]

I think the bigger reason is that CHK is growing faster than it can plan for the long term.

I'm not sure that makes sense either. If they KNOW they are going to grow, then, like Pete said, they should have built vertical and not wasted so much money on land acquisition. Campuses are a better idea when you're not sure what's going to happen, as they are scalable. In that sense, and in Chesapeake's case, a campus is probably a good idea. At least, it makes more operational/planning sense than Aubrey's bizarre isolated work place theory.

[BDP]

Well I think they're getting there, by placing the Georgian model aside.

Really? The new ones look different, but it's all still way more horizontal than vertical. From what I can tell, the new ones have monster footprints compared to their profiles.

[Pete]

Well I think they're getting there, by placing the Georgian model aside.

All their buildings will be five stories or shorter.

It's taking them far, far longer to build a decent amount of office space by constructing all the separate buildings. Each has unique architecture, engineering, floorplans, furniture, etc. They have to clear land and dig foundations every time they want to add five floors of space and once they start, it still takes them two years to bring it on line.

They've been building that campus for 10 years and still have nowhere close to the amount of space needed to house their employees. So, they've had to go buy a bunch of buildings -- at a big premium, of course -- that will never be part of their campus.

The model they've been using to buy/build office space is outrageously expensive, is taking them a decade longer than Devon or SandRidge, and in the interim and even the long-term, is wildly inefficient.


At least they are doing it 63rd & Western rather than 150th & May.

[OKCTalker]

How will CHK's financial difficulties affect their real estate operations? I'm guessing that pending and future acquisitions are at a standstill, current construction projects will be completed, and future construction plans are on hold. That goes for both core (campus for employees) and non-core (off-campus speculation like CC & NH Plaza).

[Pete]

How will CHK's financial difficulties affect their real estate operations? I'm guessing that pending and future acquisitions are at a standstill, current construction projects will be completed, and future construction plans are on hold. That goes for both core (campus for employees) and non-core (off-campus speculation like CC & NH Plaza).

I believe this will be how things unfold.

The big unknown is employment levels given their asset sell-off plan. I know they will be laying off lots of field people (landmen) but not sure how that is going to affect the employees at HQ.

Jeff Records & MidFirst may regret having played hard-to-get all these years.

[Pete]

Well, looks like CHK is still heating up the check book...

Two new building permits today:

$1.5 million to renovate floors 5 & 6 in the Central Park North building
$.4 million to renovate the ground floor at Atrium Towers South building

[Steve]

Noticed that as well.... can't get the dang list done....

[OKCTalker]

Thinking macroeconomically, if the non-core real estate is liquidated and sold at much lower prices than what CHK paid, then their property tax valuation for each would decrease, as would the amount of taxes collected by the assessor. In the big picture, would this have a substantial impact on the assessor's revenue, or would it be just a rounding error? Secondly, would putting a lot of product on the market suddenly plunge valuations and decrease stability in a way that the large number of residential REO has in certain markets around the country?

[Pete]

Thinking macroeconomically, if the non-core real estate is liquidated and sold at much lower prices than what CHK paid, then their property tax valuation for each would decrease, as would the amount of taxes collected by the assessor. In the big picture, would this have a substantial impact on the assessor's revenue, or would it be just a rounding error? Secondly, would putting a lot of product on the market suddenly plunge valuations and decrease stability in a way that the large number of residential REO has in certain markets around the country?

The assessment is based on the market value, not what CHK paid for it. For the most part, assessments have not gone up dramatically on the properties that have been purchased, even when the purchase price was 2 to 4 times the previously assessed value.

So, regardless of what happens to Chesapeake and their real estate holdings, I don't think property tax collections would be affected in any significant way. In the larger scheme, CHK properties are a drop in the bucket and there is tons of new construction around town, and improved properties yield much more in taxes.


Regarding the general market, if the worst-case scenario played out and all of CHK's properties had to be sold, then of course there would be huge effect on the entire OKC office market. They own/occupy or have under construction almost 3,000,000 square feet of office space. This does not include another 2.5 million square feet they have proposed (assuming a complete building out of the campus master plan).

They do own a lot of undeveloped land as well but that is mostly in the 63rd & Western area, and much of it was vacant or practically vacant to start.

[ChargerAg]

Any word what is supposed to go in by Anthropologie? I was at the complex a week ago and it looks totally done. Are they having trouble getting people to lease it?

the covered area next to anthropologie has a very weird feel to it. Doesn't feel right for any kind of business.

[Pete]

No, it's now clear that was built without a particular tenant in mind, as they have been finished for a while and no interior build out has commenced.

I know McClendon and CHK have been working with the Economic Development Trust in trying to attract new national retailers. I suspect they are holding out for one of the companies they have been wooing.

It seems they want to keep Classen Curve all local businesses with the Triangle area devoted to nationals. McClendon recently said he wants the area north of Whole Foods to be for national chains.

[Larry OKC]

I presume Anthropologie is open for business? It looked like it was but just barely as there was only 1 or 2 cars in front and I presume they were employes...in sharp contrast to the bustling parking lot of Whole Foods.

[OKCTalker]

Anthropologie doesn't seem to attract many shoppers. I don't know if that is by design, if shoppers spend money in less-apparent ways, or if they're simply not performing well.