ECONOMY: Turning The Corner

Tulsa’s economy has been steadily rebounding over the past year and is considered to have entered an expansion mode. The Q4 unemployment rate rose 0.1% from Q3 to 3.4% (up 0.7% year over year (YOY)) and the current workforce has dropped 33k from Q3 to 461k (up 21k YOY). The population of the Tulsa area has topped 1.0 million for the first time, adding over 7,000 new residents last year alone. The Tulsa job market also grew throughout the year. Low rents, energy costs, and taxes help to make the cost of doing business in Tulsa 11% lower than the national average. Tulsa’s low cost of doing business continues to drive companies to the metro. With aviation, aerospace, and to some extent, oil and gas industries providing demand, the industrial market has remained stable.

DEMAND: : Consistent Pace Into 2023

The Tulsa industrial market has enjoyed consistent occupancy and rent growth over the past year. Overall, the industrial market is proving to be better insulated and is a point of strength in the commercial real estate market compared to other assets. Demand has continued to be focused on logistics properties, and development has reflected this growth. The passing of medical marijuana in Oklahoma has contributed to the budding demand for industrial space also. Consistent leasing has kept vacancy rates tight at 4.1 In turn, annual rent growth measured 6.6% at year-end 2022, the best performance on record. There has been a lack of speculative construction in the metro, resulting in increased competition among tenants, and rent growth has averaged around 3% annually over the past five years.

PRICING: Industrial Rents Softened In Q4

Overall Industrial Rents dropped $.10/per square foot (psf ) since third quarter. While Flex properties continue showing the highest overall rents in Q4 2022 ($6.55 psf ) this category took a $0.45 psf loss from Q3. Among the large area submarkets, the highest rents are found in Southwest ($10.25 psf ), South Central ($9.70 psf ), and East ($7.00 psf ) Tulsa. In contrast, rents are typically lower in North Central ($4.00/ psf ) and the CBD ($4.00 psf ). Tulsa’s asking rents remain affordable relative to the national average and are on par with regional metros like Oklahoma City and Northwest Arkansas.


ECONOMY: Consistent Outlook For 2023

Tulsa’s economy is steadily rebounding over the past year. The Q4 unemployment rate rose 0.1% from Q3 to 3.4% (up 0.7% year over year (YOY)) and the current workforce has dropped 33k from Q3 to 461k (up 21k YOY).

DEMAND: The Market Is Improving Ahead Of The New Year

Steep move-outs are in the rearview mirror as the market is reporting net absorption in the black through late 2022. Net Absorption has made a sizeable shift YOY from 170k to 366k in Q4 2022. The vacancy rate has decreased from 14.5% to 11.9% in the same timeframe. Through the fourth quarter, CoStar is reporting a total of 283,000 square feet (sf) of move ins by the end of 2022. While the market’s vacancy rate remains elevated, demand’s inflection point keeps vacancies from rising further. As of Q4, the market
reported 388 new leases totaling 1 million sf along with 283,000 sf of move ins. The average deal size was 2,900 sf.

Despite ongoing uncertainty surrounding the office market, the area is reporting annual rent growth of 1.6%.

PRICING: Small Market Rent Increase For Q4

The Tulsa total market saw a $.05 per square feet (psf ) increase finishing the quarter at $16.62 psf , with the total Central Business District (CBD) showing a $.06 ($17.10/ psf ) decrease and Non CBD a $.07 ($16.37/ psf ) increase. Class A space continues to struggle with fluctuations in demand. Total Class A vacancies were up .5% (up 2.2% YOY) within the CBD and Non CBD Class A vacancies were down .3% (down 2.3% YOY).

The highest rents are found in the metro area outside of the CBD. The South submarket has the highest asking rent at $21.84/psf followed closely by the Northeast and Southwest submarkets at $20.00/ psf , and all rank ahead of the CBD with a near $ psf premium at $17.10/psf. Due to continued consolidations and closing in the downtown area, the CBD has struggled to see any significant rent gains.



Dancing in the rain will oftentimes produce a better result than waiting for the storm to pass. Amidst a national economic crisis, Oklahoma City has continued to push forward toward growth and progress. Canoo to buy a vehicle manufacturing facility, $3.8 billion in positive economic impact from tourism, Mexican consulate to open in Oklahoma City, and over $400,000 granted to OKC Minority Founder Accelerator are just a few notable Q4 headlines to be released. As we close out the year, Oklahomans are hopeful and excited for the years to come given the fact that a multitude of indicators are foreshadowing a prosperous future for the local Oklahoma City economy.


Although certain growth metrics such as market rents, vacancy, net absorption indicate a slower Q4, the local Oklahoma City office market continues to challenge the mainstream narrative that, “office is dying a slow death.” Oklahoma City will be closing out the year a fifth consecutive quarter of positive net absorption. Market rents continue their accension with 1.5% positive growth for Q4. New construction office commencement saw a significant decline, which sheds some light on the fact that 2nd generation office landlords are seeing some real opportunity to capitalize on both leasing and sales opportunities, as tenants transition back to working in the office and investors are seeking to place capital in stabilized assets. Notable leasing transactions for the local CW team include a landlord rep 40,000SF midtown office lease with a prominent local law firm, and a landlord rep 50,000SF suburban office lease with the State of OK. Notable sales transactions for the local CW team include a seller rep $8.5 million sale to a local owner user group and a $10 million sale to a local investment group. While we anticipate continued growth in office leasing, we anticipate a minor decrease in sales volume due to the current rate environment.


Oklahoma City’s local CW team is sprinting toward a strong finish to the year and is expecting to carry that same momentum well into 2023, as the economy attempts to recover, the fed gets a handle on inflation, and organizations continue to make their way back to the office.