It might seem odd that PwC picked now to open an office in Oklahoma City when its own highly regarded real estate market report found reason to ratchet down the city’s potential for attracting outside investment.
“Emerging Trends in Real Estate 2014,” in fact, stepped Oklahoma City down 11 spots, to No. 43, in its Markets to Watch list. “Emerging Trends” is a joint annual publication by PwC, formerly PricewaterhouseCoopers, and the Urban Land Institute.
It is widely read for its outlook on real estate investment and development trends, real estate finance and capital markets, property sectors, metro areas and other real estate issues throughout the United States, Canada, and Latin America.
The report is based on surveys and interviews with more than 1,000 specialists — investors, fund managers, developers, property companies, lenders, brokers, advisers, and consultants. And Oklahoma City dropped in their estimation from late 2012 to late last year, when the current “Emerging Trends” was compiled.
Yet PwC itself, citing demand from energy services, industrial products, health care and other clients, just opened an office downtown at Leadership Square. PwC said it was seeing growth in its accounting assurance services, as well as increased demand for advisory and tax services.
So, what gives? Is we is, or is we ain’t, on a roll?
Well, as it says in the front of “Emerging Trends,” “The views expressed herein, including all comments appearing in quotes, are obtained exclusively from these surveys and interviews and do not express the opinions of either PwC or ULI.”
Clearly. PwC was looking to do business in Oklahoma City, as opposed to investing in Oklahoma City. Here’s how PwC summarized investment capital’s take:
“Oklahoma City (43). In this year’s survey, Oklahoma City dropped 11 spots to number 43. The 2014 survey respondents have a less favorable outlook for Oklahoma’s largest city. The outlook for investment and development is down in this year’s survey, but remains in the ‘fair’ range. The outlook for home building did rise, but the increase was not enough to keep pace with other markets.”
That last part is a head-scratcher. If the outlook for home building here didn’t rise as fast as in other markets, it’s because housing recovery here had a shallower hole from which to emerge.
Rising mortgage rates, among other things, did put a damper on housing everywhere late last year and the first part of this year. When and if the housing markets that rushed to recover stumble and fall again, they’ll fall faster, too.
Oklahoma City housing hardly ever gets any credit for being relatively stable. It’s boring. Not even low unemployment could stop the souring of “Emerging Trends” respondents’ perception of us compared to last year.
According to the report, “By the end of 2014, employment levels in over half of the markets in the survey will be back to their pre-recession peak. What this means is that additional employment from this point could be accretive to positive real estate demand. (There is a) correlation between market position in the survey and employment recovery. The top markets in regard to employment recovery, with the exception of Oklahoma City, are all ranked near the top of this year’s survey.”
Maybe the few scary headlines from the energy sector here spooked people. In any case, we still have a way to go to be able to sustain a positive perception among national players.
Byron Carlock, PwC’s national practice leader for real estate, who is based in Dallas, said he counts Oklahoma City among revitalized second-tier cities, such as Pittsburgh and Charleston, S.C., “which have really made a collective effort” to remake themselves.
Housing affordability, general livability and growing walkabilty are positives especially in attracting millenials, especially in home building, neighborhood retail and office, he said. The performing arts, he added, make up a “hidden gem.”
Housing, both multifamily and single-family, has attracted a lot of outside investment. Other property sectors aren’t exactly wallflowers at the dance of economic recovery.
But all the good “does not necessarily mean investors want to put their money” here, Carlock said.
It’s perception. Oklahoma City needs to Thunder Up in more ways than one.