Newspaper article THE JOURNAL RECORD

Industrial Development Ripe for Growth

Newspaper article THE JOURNAL RECORD

Industrial Development Ripe for Growth

Article excerpt

Despite positive forces for industrial development, there has been little speculative construction in Oklahoma for several years. The reason lies in simple economics.

"Current rents cannot support new construction projects," explained Jerry Hocker, president of Coldwell Banker Commercial, Hocker-Sullivan & Associates.

Rates now average between $2.75 to $3.25 per foot in the Oklahoma City area. In order for new construction to be justified, Hocker believes rates need to top $4 per foot.

But with Oklahoma's steady economy and one of the tightest industrial markets in the country at 3.3 percent vacant, rates are steadily rising -- up 6 percent in the last year -- resulting in an increased demand for new construction. Furthermore, Oklahoma's low construction and land costs make the state a tempting market for industrial developers -- as the Oklahoma Department of Commerce has flaunted in the national arena.

According to the latest RS Means Construction Cost index, composite construction costs in the state are 83 percent of the national average.

Using Oklahoma City as a basis, construction costs are 40 percent higher in Boston, 44 percent higher in San Jose and 26 percent higher in Seattle.

Composite construction costs, consisting of labor, materials and equipment leasing, are considerably higher in areas like Dallas and Phoenix, where high-technology and industrial development is booming with new construction.

For example, the May report indicated a company constructing a 100,000-square-foot facility, at a national average "building only" cost of $40 per square foot, could save $680,000 by constructing it in a suburban Oklahoma area. In comparison to specific high-tech development areas, the savings could be even greater.

Oklahoma's abundance of land at very low costs is another factor showing the area's readiness and affordability of industrial development. …

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