Newspaper article THE JOURNAL RECORD

Economist: Best Real Estate Buys Now Are Retail and Industrial

Newspaper article THE JOURNAL RECORD

Economist: Best Real Estate Buys Now Are Retail and Industrial

Article excerpt

OKLAHOMA CITY - The best sectors for real estate investment are retail and industrial, said Ted Jones, chief economist for Stewart Title Guaranty Co.

"Retail and industrial segments are going strong," he said. "We have millennials forming their first households. When they rent their first apartments, they have to buy sheets, curtains, kitchen appliances, and more. We have this retail boom taking place."

Jones was in Oklahoma City on Tuesday giving presentations at the Edmond Board of Realtors and with associates from Stewart Abstract & Title of Oklahoma. He lives in Houston and said the change in commercial activity in Houston is similar to Oklahoma City.

"This may be the best oil and gas downturn we've seen thus far," he said. "In a typical downturn, you can lose multiple percent of your jobs. Oklahoma City hit an all-time record employment in March with 635,600 jobs. (The city) is up 5,200 jobs as of July. Jobs are everywhere."

And when jobs aren't lost, retail remains a valuable investment sector. From this year's first quarter to the second quarter, the Oklahoma retail vacancy rate decreased 0.5 percent, according to NAI Sullivan. The second-quarter vacancy rate was 5.5 percent. The Outlet Shoppes of Oklahoma City average rental rate increased 9 cents, rising to $16.95 per square foot.

The industrial vacancy rate also dropped slightly, reaching 4 percent in the second quarter, according to NAI Sullivan.

But the office and multifamily markets haven't fared as well. The office vacancy rate rose to 17.8 percent in 2016's first half, according to CBRE|Oklahoma. The market ended 2015 with a 16.7- percent vacancy rate.

Price Edwards & Co. office broker Tre Dupuy said there's a lot of shadow space still on the market, meaning companies are subleasing their own office spaces as they are emptied. He said rental rates haven't decreased yet, but that could happen as companies work to fill their own spaces. Concessions are starting to be offered so the vacancies can be filled quicker, Dupuy said. …

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