High-end hopes in OKC

Friday, February 22, 2013

by Molly J. Feming

The Journal Record

The commercial real estate market in Oklahoma City and across the country is looking up as the economy improves, according to reports from the Commercial Real Estate Council’s annual Beyond the Headlines conference Thursday at the Devon Energy Center.

Ford Price, managing partner with Price Edwards & Co., said an increase in median household incomes in the Oklahoma City metro has made the area more attractive to larger high-end retailers. Some of those retailers include Charming Charlie, Nordstrom, Costco Wholesale, Reasor’s, Einstein Bros. Bagels, Ruth’s Chris Steak House, Petland, Cabela’s, The Fresh Market and Versona Accessories.

He referenced Whole Foods, a high-end store that was once hesitant to enter the market, but has seen a large success here.

“They were afraid they wouldn’t do well in Oklahoma City because of pricing,” Price said. “But they have sold twice what they sold last year.”

He said other retail development includes Memorial Road and Pennsylvania Avenue and Fox Lake Plaza in Oklahoma City. He also mentioned Crossroads Mall, which is being redeveloped.

The total value of retail center transactions has nearly doubled from 2011 to 2012, with eight transactions worth $71.6 million in 2011, and 13 transactions in 2012 worth $127 million.

In downtown Oklahoma City, Price said, a resolution to the parking issue is still being sought.

“It’s continuing to get tighter and tighter,” he said.

Another development in downtown is the Stage Center, which may be the site of a corporate office in the future. The center is located at 400 W. Sheridan Ave.

As far as the office market goes, suburban occupancy rates are declining for Class A spaces.

This parallels the national trend, said Jim Costello, managing director for CBRE.

“Downtown submarkets are now preferred over the suburbs,” Costello said. “We’re at an incredibly lush trend in the amount of office space per worker. People can lay off workers, but they can’t get rid of office space.”

Price reported that in 2005, office sales peaked at $256 million. In 2012, he reported office building sales of $138 million, a slight increase from 2011 at $135 million.

In the metro area, industrial warehouse space also parallels the national trend, which is seeing a decline, but Costello said it will increase as demand rises again.

The number of industrial transactions decreased from 2011 to 2012, from 163 to 131, respectively. This decrease also caused a decline in the sales total, from $155.36 million in 2011 to $101.89 million in 2012.

The final sector of commercial real estate discussed was apartment homes, which had a positive outlook in the metro area.

The price of rent has increased steadily each year, as well as the price on units sold. In 2012, there were 4,578 units sold for a total of $287 million, an increase from 2011’s total of $136 million.

“There are a lot of people choosing to rent rather than purchase property,” Price said.

He said the outlook for Oklahoma City in all aspects of commercial real estate is positive.

“Oklahoma City needs to continue to do what it has to do to make the right kind of investments,” he said.