Don't look up to the skyscrapers downtown for Oklahoma City's commercial real estate fundamentals, look underground.
For most of the past decade, mining as a percentage of Oklahoma's gross domestic product — and mining here mostly means oil and gas extraction — doubled from nearly 7 percent to nearly 14 percent in 2003-2008 before settling to just under 10 percent the past couple of years.
The growth essentially was a reverse of the decline from 1981 to 1986, when mining dropped from almost 16 to about 7.5 percent.
But it's not quite the 1970s-1980s all over again, said realty executive Ford Price, who presented those figures from the U.S. Bureau of Economic Analysis to start his update of the city's real estate market at The Mayor's Development Roundtable.
“It's interesting the similarity that we now have to the 1980s, but I think it is equally clear that the quality and capitalization of the companies generating that GDP are vastly different than the 1980s,” Price, managing partner at Price Edwards & Co., said at the event Thursday at Cox Convention Center.
Oil and gas — and jobs, with Oklahoma among the 10 “best state job markets” the past three years — provided the backdrop for his property sector updates.
Except for 2009, the bottom of the Great Recession, Oklahoma City's 15 million-square-foot office market has seen more space filled than vacated every year since 2006, Price said, noting that last year saw 200,000 square feet of space absorbed, “so ... we're on a good track with that.”
In 2006-2009, suburban office vacancy plummeted from 21.6 to 8.8 percent in the best space — Class A — and was stable in Class B space, between 10.6 and 11.8 percent. Class C vacancy, however, jumped from 16.6 to 29.5 percent, he said, “but the bottom line is that if you're a quality large tenant looking for space, it's going to be a tight market.”
Downtown has seen about 200,000 square feet of space absorbed over the past five years, “a great sign” for the central business district, Price said, although the downtown office market has been choppy, with as many years negative as positive since 1986.