Commercial building owners see drop in occupancy rates
BY ROBERT EVATT World Staff Writer
Wednesday, January 18, 2012
1/18/12 at 8:54 AM
The weak economy continues to take its
toll on local commercial buildings as vacancies
keep rising.
Office buildings grew emptier, with vacancies
at the end of 2011 reaching 25.2 percent
compared with 23.1 percent at the end of
2010, according to a report released by CB
Richard Ellis/Oklahoma.
And retail buildings, which ended 2010
with a decrease in vacancies to 11.7 percent,
reversed the improvement and grew to 13.6
percent empty.
That increase comes despite a renewed interest
in Tulsa by retailers, said Mark Rooney,
author of the retail report.
He noted the area added three Dick’s
Sporting Goods locations simultaneously,
continued development in the Tulsa Hills
shopping center area with Staples, Sam’s
Club and some out-parcel restaurants, and
saw announcements of three new natural
foods grocers in the southern metro area and
development of Lifetime Fitness near 106th
Street and Memorial Drive and a second Sky
Fitness center at Tulsa Promenade mall.
“The interest in the Tulsa market has a lot to do with the low unemployment
rate and how
the economy is doing compared
to other metro areas,”
Rooney said.
Unfortunately, the new
developments are mostly going
into newly constructed
or newly renovated spaces
termed “class A.” Older, class
B and C properties have had
much less success drawing or
keeping tenants and have had
to focus on leasing to riskier
tenants, he said.
But the class A properties
aren’t having an easier
time of things, either. Building
owners have been forced
to be much more aggressive
with rental prices, driving the
overall average down from
$10.89 per square foot last
year to $10.21 now.
Office buildings have
seen a similar competition
between older and newer
buildings.
Mary Martin, author of
the office report, said the
17-story One Place project
under construction downtown
has found tremendous
success getting tenants
signed up, including a
175,000 square foot commitment
from Denver-based
Cimarex Energy. However,
Cimarex will move out of a
building at Fifth Street and
Boston Avenue, and Martin
fears other downtown tenants
will follow.
“My main concern with
what happens with the office
market is what’s going on
with the central business district,”
she said.
Other factors contributing
to the increased vacant
space include relatively
slow leasing of the 1 millionsquare-
foot Eastgate Metroplex
development, petroleum
companies moving to Houston,
companies becoming
more efficient with space
in a slow economy and the
decision by Kanbar Properties
to vacate the Avanti and
Oil Capital buildings, Martin
said.
However, she believes office
buildings outside of
downtown should fare relatively
well in coming years.
The strength of the suburban
areas has helped
keep rental rates at $13.87
per square foot, nearly unchanged
from approximately
$14 a year ago.
Original Print Headline: Vacancies on the rise
Robert Evatt 918-581-8447
robert.evatt@tulsaworld.com
Associated Images:
Dick’s Sporting Goods entered the Tulsa market with three locations in 2011. Many expanding companies are moving into newly constructed spaces, while older properties struggle to draw and keep tenants, says the author of a retail report. JAMES GIBBARD / Tulsa World
The One Place project downtown has had success getting lease commitments. The author of a report on office space says despite increased vacancies, even office buildings outside of downtown should fare relatively well in coming years. MIKE SIMONS / Tulsa World file
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