DT vacancy rates continue to rise, now over 26%

[TheArtist]

I knew that vacancy rates were high, but its still discomforting to hear the actual stats.

http://www.tulsaworld.com/BusinessStory.asp?ID=070130_Bu_E1_Offic45349

The cities over all vacancy rate climbed by about .8%   One thing I would be interested to know is how much new office space was added throughout the city.  I have seen a lot of new office buildings and office parks going in.  Wouldn't adding those make for a more realistic picture, and what would the over all result then be?  For instance if you added a hundred thousand square feet or more of new office space in south Tulsa and all the old office space remained neutral, but a percentage of the new space had yet to be occupied, the result would be that there was more total space occupied but the percentage of vacant space would go up.

[robbyfoxxxx]

What do you expect when companies like Citgo, Occidential Petroleum, Vintage petroleum, Sunoco Petroleum, let alone Phillips Petroleum in Bartlesville,and Anadarko drilling, moves away and nobody fills the vacancy? Not one big company has relocated to Tulsa to fill this gap.

[cannon_fodder]

IBM has added hundreds of office jobs downtown.    

A couple major car rental companies moved their HQ to Tulsa.

There are a couple companies that have moved in to fill the gaps, off the top of my head. Though I would obviously like to see more moving in, most job growth comes from existing companies slowly but surely expanding their workforce.  How do you think all the companies you listed got thousands of workers in Tulsa?

Of course, companies moving in and growing dont usually make headlines.  If IBM was hiring 500 people and American Airlines laid off 300 people... the man on the street would think things are getting worse (not hearing as much about the hiring of 500 over a year, as opposed to the sudden drop of 300 in a month).

In any event, yes.  The addition of office space lowers the occupancy rate city wide.  I wonder if companies are being more cautious after the 1998-2002 economic downturn and are being more careful with their lease commitments.  Getting downtown really moving is certainly an uphill battle if office space is in the decline.

[shadows]

The removing of office space and converting it to apartment dwellings turns 1200 square feet of space to be occupied in most cases by two people.   In doing so it replaces 10 or more desk in the space and with the desk goes the jobs.  If downtown is to be converted to a bedroom community, why is anyone worrying about mass transportation downtown?

[si_uk_lon_ok]

quote:Originally posted by shadows

The removing of office space and converting it to apartment dwellings turns 1200 square feet of space to be occupied in most cases by two people.   In doing so it replaces 10 or more desk in the space and with the desk goes the jobs.  If downtown is to be converted to a bedroom community, why is anyone worrying about mass transportation downtown?

However the office space most likely to be converted is typically in older buildings and often not up todays requirements. Some jobs may be lost however with 26% vacancy rate I think it will add to a balanced community. Its a long way off a bedroom community yet.

[Renaissance]

The sky is not falling.  No one is fleeing downtown in droves these days; that already happened.  I mean, it's not good news either.  It's just a situation where the market is flat.  A lot of the added "vacancy" is actually space that was previously subleased but empty and is now back on the market.

Read this if you're curious:
http://www.toomanpartners.com/index.cfm?id=5

[inteller]

If the vacancy is 26% during the "good times"  I cant wait to see where it is when things get tough again.

oh and im sure ill take the wind out of the sails on this announcement, but Lvl3 is moving a contingent back to tulsa, but NOT in the WTC.

[Wrinkle]

quote:Originally posted by inteller

but Lvl3 is moving a contingent back to tulsa, but NOT in the WTC.

That's 'cuz the City of Tulsa is laying claim to the WTC. They plan to move in as soon as they can figure out how to tap property taxes to pay for it.

Of course, taking the largest, newest downtown office space off the ad valorem rolls has its' own costs.

But, it would improve vacancy by 5% or so.
And, all that old crummy former CofT space could be lumped into the Class "C" index.

Why is the City not negotiating with a developer to achieve this transaction and use the old City Plaza as the Hotel Development??

Of course, the Grand Master Library plan failed, so that building remains.

Then, there's the Federal Building sitting as an island amongst all that.

...what ever happened to City planning?

[robbyfoxxxx]

Maybe the picture is worse than 26%, the rate of 26% is still after all the buildings that have been razed for parking lots. Hypothetically, if we didn't level those buildings in the last 10-15 years, the vacancy rate would be 10%,20%,maybe 30% higher.

[swake]

quote:Originally posted by robbyfoxxxx

Maybe the picture is worse than 26%, the rate of 26% is still after all the buildings that have been razed for parking lots. Hypothetically, if we didn't level those buildings in the last 10-15 years, the vacancy rate would be 10%,20%,maybe 30% higher.

Not really, we have probably added far more space in the conversion of the former Williams Center Forum into office space and the construction of the Wiltel building. Those two together have to be in the range of a million square feet of new office space in the last ten years.

[perspicuity85]

quote:Originally posted by robbyfoxxxx

Maybe the picture is worse than 26%, the rate of 26% is still after all the buildings that have been razed for parking lots. Hypothetically, if we didn't level those buildings in the last 10-15 years, the vacancy rate would be 10%,20%,maybe 30% higher.

Razing buildings in favor of parking lots can actually increase the vacancy rate.  When historic buildings are torn down, that eliminates their possibility of being redeveloped into class A office space.  Parking lots also take up land that can be used for new building construction.

[Wrinkle]

quote:Originally posted by perspicuity85

quote:Originally posted by robbyfoxxxx

Maybe the picture is worse than 26%, the rate of 26% is still after all the buildings that have been razed for parking lots. Hypothetically, if we didn't level those buildings in the last 10-15 years, the vacancy rate would be 10%,20%,maybe 30% higher.

Razing buildings in favor of parking lots can actually increase the vacancy rate.  When historic buildings are torn down, that eliminates their possibility of being redeveloped into class A office space.  Parking lots also take up land that can be used for new building construction.

I'm thinking you don't quite have a handle on vacancy factors.

If 10 buildings provide 1,000,000 sf of Class A space with a 10% vacancy, there's 900,000 sf leased and 100,000 sf available. Knock down one building with 100,000 sf and a 90% vacancy, causing 10,000 sf of space to be moved to another building and 90,000 sf of available space goes, along with a gross 100,000 sf of the total.

We're then left with 900,000 sf of total space, occupied by 890,000 sf of leases, but then moving the 10,000 sf into that, making 900,000 sf leased. 100% occupancy = 0% vacancy.

Same total leased space, less building = better vacancy factor, every time.

So, if all those former buildings/now parking lots were in the mix, the vacancy would be very much larger. But, most of that was not Class A space either, in their then-current form, but some were not Class anything, too.

[perspicuity85]

^

Sorry, my post didn't really get to the point.  My point was that the removal of historic buildings contributes to the overall dying image of downtown.  This dying image can deter those seeking office space away from downtown at times.  If the historic buildings sit un-improved, then your right, they will contribute to the vacancy rate.  If I was looking for office space for my company and I had seen frequent news reports about several downtown buildings being torn down, I would tend to have a negative opinion about the office buildings downtown in general.  What is torn down can never be remodeled.

[swake]

And again, what has been taken down does not even come close to the million square feet of new class "A" space we have added in the last ten years.

[Wrinkle]

quote:Originally posted by perspicuity85

^

Sorry, my post didn't really get to the point.  My point was that the removal of historic buildings contributes to the overall dying image of downtown.  This dying image can deter those seeking office space away from downtown at times.  If the historic buildings sit un-improved, then your right, they will contribute to the vacancy rate.  If I was looking for office space for my company and I had seen frequent news reports about several downtown buildings being torn down, I would tend to have a negative opinion about the office buildings downtown in general.  What is torn down can never be remodeled.

Point taken.
Didn't quite come across that way first round.