SandRidge Energy is halting expansion of its campus and converting two buildings under construction — the Braniff Building and the 120 Robert S. Kerr building — into leasable office space.
Both buildings originally were intended to accommodate SandRidge Energy as it was on track to employ 1,500 people. But with a cutback in spending taking place after a proxy fight waged with investor group TPG-Axon, the company has sold off its holdings in the Permian Basin and is under direction to trim building, promotion and salary costs.
“We have had a lot of recent developments,” said Greg Dewey, vice president of community relations and communications. “With the divesting of the Permian, which was a third of the company, it made sense to make this decision.”
The Braniff Building, at the southeast corner of Dean A. McGee and Robinson avenues, was a historic structure that SandRidge began renovating in 2012. The 11-story building, built in 1923, is already home to Kitchen No. 324 and the Barbershop Salon on the ground floor.
The 120 Robert S. Kerr building, previously referred to as the “amenities building,” was scheduled to be a five-story structure home to a restaurant, auditorium, fitness center, day care center, rock climbing wall and other accommodations for SandRidge employees.
While construction on the Braniff Building is set to wrap up this summer, the 120 Robert S. Kerr building construction is limited to the foundation and an elevator tower currently rising from the ground.
Dewey said that building, stripped of the auditorium, gymnasium and other amenities, will now be an 11-story office building renamed the Parkside Building.
Both buildings will be 100 percent leasable space, Dewey said, with plans still calling for a restaurant on the ground floor of the Parkside Building. Some “re-engineering” may delay the opening, but Dewey said the overall facade design will remain the same.
SandRidge Energy employs 713 people in the 29-story SandRidge Building, formerly known as Kerr-McGee Tower. Dewey said renovations are wrapping on the last two floors of the tower, and the building is able to house 900 workers.
Up until last year, the SandRidge Commons development envisioned the top 10 floors of the Braniff Building, and another building to be built at Broadway and Robert S. Kerr, being needed to accommodate the company's growth.
The shareholder group TPG-Axon is asking the company to reduce overhead spending by up to 75 percent, with cuts to include flight operations, buildings, advertising and luxury suites at Thunder games.
Lease space demand is high
Mark Beffort, managing director, Grubb & Ellis-Levy Beffort, who is assisting in the leasing of the SandRidge properties, noted the two buildings represent the first new Class A leasable space added to downtown since the opening of Leadership Square in 1984.
The demand for Class A downtown office space is at a 30-year high, Beffort said, with vacancy rates of just 5 percent. Beffort estimated the buildings will cater to firms needing 8,000 to 80,000 square feet.
“They're (the SandRidge buildings) absolutely considered Class A, even though typically Class A is a much larger space,” Beffort said. “But the quality is Class A and the amenities are Class A in terms of 24-hour-a-day security, conference facilities, the park and plaza area, the barber salon and the restaurant.”
The Parkside Building encompasses 66,000 square feet while the Braniff Building has 90,000 square feet. Beffort believes the staggered openings — the Braniff will be completed this summer while the Parkside Building won't be done until the third quarter of 2014 — will assist in successfully leasing out both buildings.
Beffort, who also is representing the Oklahoma City Community Foundation in the sale of the former Stage Center theater at Hudson and Sheridan Avenues, has over the past year predicted downtown will see construction of a new high-rise tower. He said the addition of the SandRidge space is not expected to effect any such discussions.
“What is discussed or planned for any of the other sites downtown are much larger facilities than this would accommodate and will be driven by a particular use or a particular tenant,” Beffort said.
Dewey said the change in plans for the two buildings do not change SandRidge's place in the downtown community and added the company is still committed to working with Chesapeake Energy and the city in creating a new Kerr Park that will adjoin the Parkside building when it opens.
“We believe it's (the campus and new office space) a gift to the city and one that will come with a return on the investment,” Dewey said. “We do believe SandRidge Energy will continue to grow. It's the pace at which we grow that is changing.”
Dewey said the only pending questions involve parking for the properties, which is being studied. He predicted the Braniff Building, with its restored historic facade and modern glass alleyway facade, won't go empty for long.
“The Braniff has turned into such a beautiful building,” Dewey said. “It's very, unique and unlike anything I've ever seen in any other city.”