A wise man once said, “When it’s raining money, grab a bucket not a thimble.” Coming off of recent pricing highs in the oil patch and forward-looking bullish sentiment continuing, the local Oklahoma City economy continues to see a strong recovery as we have officially entered the post-pandemic era. Oil prices hitting a 5-year high, commencement of large-scale construction projects such as Oklahoma City’s $200,00,000 Innovation Hall project, the filming of the Paramount+ tv series “Tulsa King”, and numerous other economic drivers are positioning Oklahoma City to have a strong finish to the year.
As many markets fight to see positive growth in office leasing and sales, Oklahoma City continues to positively outpace the national average in most quantifiable categories. For landlords, vacancy rates and months-on-market metrics are both trending downwards due to the recent uptick in leasing activity. For buyers, the average price per SF and cap rates still remain more competitive than the national average, indicating Oklahoma City as a market not having achieved saturation of investment dollars both institutional and local alike. Lastly, the market has not shown significant movement yet in regards to velocity, but we expect that to be more observable in the near-term because of the increase in rates and inflation.
Oklahoma City’s local Cushman office team is expected to transact on over 500,000 SF of space by year’s end, so we continue to remain optimistic.
Booked and busy. The local Oklahoma City economy continues to weather the national economic thunderstorm thanks to several large-scale economic drivers, such as, the First National Center, the brand-new Oklahoma City Convention Center, and College Softball World Series, just to name a few. As the energy sector has seen a strong recovery, many Oklahoma City based energy companies reporting higher earnings, increased employment opportunities, and an overall optimistic outlook. In addition to the recovery in the energy world, companies like Prairie Surf Studios and Total Energy are bringing additional diversity and jobs to the local Oklahoma City economy.
Halfway through the year, Oklahoma City’s office market continues to have a solid recovery from the COVID-19 pandemic. Q2 has seen improving trends in commercial real estate metrics such as, effective rents, leasing activity, leasing velocity and new product under construction. From a sales perspective, overall volume has seen a 300% increase over Q1 while the price per SF has seen nominal movement, and effective cap rates have seen a very small decrease over Q1.
While we continue to navigate issues such as rising interest rates, increased inflation, and supply chain constraints, the Oklahoma City office market is expected to remain positive. That said, we are seeing said forces significantly impact new construction and landlord tenant improvement concessions; however, the abundance of high-quality, second-generation buildings are expected to continue to see increased activity in both leasing and sales.