Newspaper article THE JOURNAL RECORD

Downtown Tulsa in Flux: Changes in CBD Could Affect Vacancy Rate

Newspaper article THE JOURNAL RECORD

Downtown Tulsa in Flux: Changes in CBD Could Affect Vacancy Rate

Article excerpt

The Tulsa office sector ended 2011 at an 11-year-high 25.23- percent vacancy rate, according to a new report by CB Richard Ellis of Oklahoma.

The historical gap may actually exceed 11 years, which marks the extent of Journal Record data from CBRE. Officials with the Tulsa- based brokerage were contacted about older records Monday.

Lease rates at year-end 2011 did not follow that trend. At $13.87 per square foot, the CBRE survey found average office rental rates equaled year-ago marks and managed a slight 2-cent increase from the midyear-2011 survey.

With 144 buildings surveyed, the CBRE report found 5.4 million square feet vacant of the total 21.56 million square feet in metropolitan Tulsa.

The declining occupancy rate reflected 219,000 square feet of negative absorption in the second half of 2011, bringing the annual total to more than 400,000 square feet. CBRE Tulsa office department head Mary Martin, who wrote the year-end report, said this mirrored recent trends.

"Over the past 30-month period, which would be six reports, we've had only one of those reports that had a positive absorption," she said in a telephone interview Monday.

With 115,574 square feet of negative absorption, Martin said downtown Tulsa represented a key problem area - one that could worsen as Cimarex prepares to leave 175,000 square feet at the First Place Tower for its preleased space in downtown's One Place construction project, which is scheduled to open next year. With Chase Bank reportedly considering vacating its First Place space as well, such moves could leave a gaping hole in Kanbar Properties' flagship tower.

Such moves could spur a few years of aggressive leasing activity in the Central Business District, according to the report.

"My outlook for the CBD is alarming because of what's going on down there," Martin said in a telephone interview. "It's in flux, what will happen with their square footage."

Kanbar has already closed two of its lower-class buildings, the Avanti and the Oil Capital Building. Both have appeared on the sale block at different times.

Despite these issues, that 39-building, 8. …

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