Little Change on Real Estate Forefront Anticipated in 1989
Lewis, Constance, THE JOURNAL RECORD
Brokers and leasing agents drew a collective sigh when asked their projections for the vacancy rate, hovering around 27 percent in metropolitan area offices. No dramatic variation is expected to occur. But, stabilization is better than a decline in occupancy, all agree.
Jim Austin, head of the Oklahoma City office of Coldwell Banker Commercial Real Estate Services predicted that "Class A" (newer, or better built) space would continue to show "some" improvement in leasing.
"Class B and C" leasing activity will conversly grow weaker and weaker, he said. But the feverish trend of moves to better quality accomodations is expected to slow down.
Architects and builders are focusing their sights out of state for development activity, or they are concentrating on projects of a lesser scope locally.
Dave Benham, a principal in the Benham Group, architects and engineers said that the firm's specialty thrust prompts it to react "to the national circumstance" more than the Oklahoma building market.
That won't change in 1989. What contracts for building are available will be associated with the expansion of Tinker Air Force Base as it gears up to accomodate the E6-A and the B-1 Stealth Bomber.
But Benham projected that national companies which "are concerned with getting their facilities in place to compete" will be investigating Oklahoma and Oklahoma City which offers low-cost, quality living and an affordable labor market. That in turn could generate building. The prospect is an aloof prospect though, and nothing points to such an event in the new year.
TAP, the Architectural Partnership, consisting of John Ward and Anthony McDermid is a small firm aiming to become a mid-sized firm, but that objective requires out-of-state business and design work, the pair said.
"I think the (commercial real estate) market has found the floor where it is sitting though," said McDermid.
Until an upturn results, however, renovation and remodeling projects will be about all there is to fill the plate of local construction, they said.
A bright spot on the horizon is the industrial and office/warehouse sector. Leasing improved throughout 1988 and the forecast for continued good health is expected in 1989.
If any major building project is launched, it would likely be a build-to-suit endeavor rather than a speculative venture. And those in the know are betting that it will be a warehouse, or warehouse complex, capable of providing large contiguous space to a particular company, since nothing of great magnitude is available in the metropolitan market.
Acquisitions of major properties numbered in the teens during 1988, with most of the purchases being made by out-of-state investors. But if 1989 differs from 1988 to any degree, it is expected to be in the area of sales.
In most cases, however, the ideal of investors will reflect that of the past year - retention of ownership until the economy improves and a profitable resale can be made. It's the old theory of "buy low and sell high."
Property sales have included all types - hotels, motels, apartments and major office buildings - as the climate of stagnation in the brokerage community improved in 1988, but only in one or two instances were revenues from leases expected to yield a short-term return on investments.
A caveat to increased sales is the difficulty of obtaining financing.
"It takes a great deal of cash," said Harrison Levy, president of the brokerage company that bears his name.
"Financing is available for the right deal, but it depends on the borrower," he said. …