Retail specialist Mendy Parish and Office & Industrial specialist Bob Pielsticker, both with local commercial real estate company CB Richard Ellis were the featured speakers at our April luncheon meeting. Mendy is a retail specialist with an emphasis on multi-tenant shopping centers, power centers, retail land and tenant representation.
Bob is a Vice President with CBRE and over his career has been involved in project leasing, new development, tenant representation, investment sales and outside brokerage services.
Mendy started her presentation with some statistics on the Tulsa retail marketplace. Vacancies were up to 13.56% in 2011 and lease rates were down to $10.21. Recent closures in the news included Sports Authority at 71st & 169 and a number of Blockbusters around town including, most recently, the one at 101st & Memorial. Peaking in 2007, retail construction has continued to drop. On the plus side, Dick's Sporting Goods has recently opened some stores including one in the old Ultimate Electronics space. One of the newer development is Yale Village at 91st & Yale due to be completed in 2013 that features a Whole Foods store.
Other new projects include the Village on Main and the new Fairfield Inn and Suites by Marriott at Main St. and Brady in downtown Tulsa. Trends in the business as related to the Tulsa marketplace seem to lean towards new grocery stores such as the new Green Acres Market, Fresh Market and the new Reasors in Sand Springs. Although Oklahoma City has produced a new outlet mall, there are no plans to put one in Tulsa as of right now.
Trends related to lease negotiations include landlord/tenant-seller/buyer disconnect, closer scrutiny of lease documents, longer due diligence, more involvement in deal points by lender as well as an extended period of time to complete deals. The result is that more investors and prospective tenants are likely to walk away from deals they perceive to be too complicated. This can lead to greater tenant improvement allowances and more creative solutions...whatever it takes.
Bob's presentation began with an article in the Tulsa World that morning. Bob was lamenting how a small deal Mendy had done for some retail space took up most of the business section with pictures and an article while his large commercial real estate deal was limited to a short article. "Happens all the time," Bob shared about being upstaged by Mendy.
From there we moved to a snapshot of the Tulsa marketplace. Some of the areas where we ranked # 1 included the # 1 place to live in the US according to Relocate America 2009, the # 1 state for entrepreneurship according to the Kauffman Foundation 2010 and the # 1 metro for cost of living according to Business Facilities 2010. Bob noted that Tulsa's cost of living is 11.5 percent below the national average and Tulsa County's per capita income is 20.7 percent above the national average.
Next up was a discussion of some of Tulsa's new and expanded companies. Those companies included the Cherokee Nation, Spirit Aerosystems, CFS II, St. Francis and ORS-Nasco. The latter company has been in the news recently for signing a large lease at the old Sun Oil building at 9th & Detroit. Some of the downsized companies included American Airlines, Zeledyne and Gannett Broadcasting.
While Tulsa has seen the ups and downs of expansion and new companies vs. those downsizing, the result has been an increase in Industrial vacancy rates for 2011 of 12.25%. Commerical saw an increase to 25.23% Lease rates were up to an average of $4.78 in 2011 for Industrial and $13.87 for commercial. Construction for office & industrial space stayed stagnant in 2011 with no increase or decrease and net abortion was at a negative 1.2 million for industrial space and also down for commercial space.
Recent new office construction was the building of the new Flight Safety facility in Broken Arrow. Some of the larger office lease transactions included the aforementioned CFS II and ORS Nasco along with SM Energy, H&P, Air Gas and Calvary Portfolio Services. On the sales side, there was the sale of the Mid-Continent Tower for $24,100, 000 or $72.00/sq. ft. along with the Blue Cross Blue Shield building for $1,250.000 or $9.61/sq. ft. for 130,000 sq. ft.
For the first time in many years, we have a new office construction project taking place in downtown Tulsa. The project, One Place, will be the new home for Cimarex Energy, Northwestern Mutual and Check 6. Cimarex will be occupying 239,000 sq. ft. and Northwestern Mutual will be occupying 20,000 sq. ft.
Our thanks to Mendy and Bob for a great and informative presentation.