Down to the river

Now a third in the series of MAPS is on the drawing board, and it's expected to be put to a citywide vote this October. Money raised from the new MAPS initiative will likely target an area south of downtown. City leaders are chomping at the bit to begin development of a 750-acre piece of land stretching from the southern edge of downtown to the Oklahoma River, the so-called “Core to Shore.”

In the next few years, the area will be ripe for redevelopment once the state moves crosstown Interstate-40 — which now bisects the area — to the south. Plans are focusing on a new 1 million sq. ft. convention center and a destination-styled central park, both designed to be a magnet for the area. “It's frankly time to have new construction like this that is substantial,” says Amy Dunn, a 24-year veteran broker in the Oklahoma City office market and vice president with the local franchise office of CB Richard Ellis.

Before that can occur, the city could encounter some headwinds. According to Grubb & Ellis/Levy Beffort, in the first quarter the office market for Class-A and B space posted negative net absorption of 163,000 sq. ft. The vacancy rate for Class-A space rose from 17% at year-end 2008 to 18.2% in the first quarter.

While the oil and gas industry remains a staple of the local economy, lower energy prices during late 2008 and early 2009 were largely to blame for much of the recent downward pressure on the office market.

Development across the city has slowed to a crawl, with only 197,000 sq. ft. of speculative office space under construction in the first quarter of 2009. “We never overbuilt like a lot of markets do when times are good,” says Bob Sullivan, head of NAI Sullivan Group, “but we are definitely going to see vacancies increase.”

For corporate users, in particular, the market dynamic could spell opportunity. “I think we're really well positioned because we're agile, we're smart, we're able to react much more quickly than a more entrenched urban environment and political environment,” says Michael Laird, chair of the real estate practice group at law firm Crowe & Dunlevy.

Charles Wiggin, head of Oklahoma City-based Wiggin Properties, agrees. “We don't tend to get crippled in acrimonious debate. And that's a hugely powerful characteristic.”

Ben Johnson is an Oklahoma writer.

OKLAHOMA CITY - BY THE NUMBERS

LARGEST PRIVATE EMPLOYERS

• OG&E Energy Corp.
  3,100 employees

• AT&T
  3,000 employees

• Chesapeake Energy Corp
  2,800 employees
  Source: Greater Oklahoma City Chamber

CITY POPULATION
1.2 million
Source: U.S. Census Bureau

UNEMPLOYMENT RATE:
5.7%
Source: U.S. Bureau of Labor Statistics

METRO AREA VITAL SIGNS

Office:
16.6% vacancy, 1Q 2009
14.5% vacancy, 1Q 2008
$12.34 rent per sq. ft., 1Q 2009
$12.58 rent per sq. ft., 1Q 2008
Source: Reis

Multifamily:
8.9% vacancy, 1Q 2009
8.2% vacancy, 1Q 2008
$519 effective rent 1Q 2009
$502 effective rent 1Q 2008
Source: Reis

Retail:
13.1% vacancy, 1Q 2009
11.8% vacancy, 1Q 2008
$9.71 rent per sq. ft., 1Q 2009
$9.97 rent per sq. ft., 1Q 2008
Source: Reis

Industrial:
9% vacancy, 1Q 2009
14.2% vacancy, 1Q 2008
$3.60 rent per sq. ft., 1Q 2009
$1.14 rent per sq. ft., 1Q 2008
Source: Grubb & Ellis/Levy Beffort

Hotel:
55.8% occupancy, 1Q 2009
61.3% occupancy, 1Q 2008
$75.90 average daily rate, 1Q 2009
$75.75 average daily rate, 1Q 2008
Source: Smith Travel Research

MAJOR PROJECTS

Devon Tower: The new corporate home for Devon Energy Corp. will change the city's skyline. The $750 million, 54-story tower is expected to break ground in October 2009. At 1.9 million sq. ft., the structure could eventually house as many as 3,000 workers. Devon is the largest U.S.-based independent oil and gas producer. The tower represents the city's biggest current office project.

Developer: Hines

Completion: Late 2012

Cost: $750 million

Core to Shore: This 750-acre area of undeveloped land between the southern edge of downtown and the Oklahoma River is the “next big thing” on the city leadership's agenda. As part of the city's 20-year plan, the area will be home to retail, housing, hotels, offices and a new convention center. Development of a centerpiece for the project, a large urban park, could begin as early as next year.

Developer: To be determined

Completion: 2030

Cost: Unofficial estimate $3 billion