Chesapeake Energy Corp. cast an 800,000-square-foot shadow over Oklahoma City’s office market last year, but the city shined on.
Suburban vacancy still dropped from 11.8 percent to 11.6 percent “despite the onslaught of inventory,” Price Edwards & Co. reported in its 2013 year-end office market summary. “The suburban markets continue to thrive,” the firm said, even with Chesapeake’s divestiture of office buildings and consolidation onto its corporate campus at NW 63 and Western Avenue.
It was a year for the suburban record books.
“To put things in perspective, the largest single year for suburban absorption since we began tracking the market 28 years ago was 1994 when an additional 486,000 square feet was occupied by local tenants,” according to the report by Craig Tucker, office specialist and managing broker. “This year the net absorption was a modest 22,000 square feet, but that’s a net number.
“Despite approximately 800,000 square feet of inventory being added to the suburban market, more space is occupied than it was a year ago. Had the Chesapeake space not been added to the market, it would have easily been the best year for the suburbs since the inception of our reports.”
Meanwhile, downtown “was admirably fighting through the task of replacing its largest user of leased space” as Devon Energy Corp. vacated some 225,000 square feet at First National Center, 120 N Robinson, and the newly renovated Braniff Building added another 90,000 square feet at 324 N Robinson.
The Central Business District absorbed just 161,000 square feet of space, pushing vacancy up from 24.6 percent to 28.6 percent, according to Price Edwards.
In Oklahoma City as a whole, vacancy climbed from 16.2 percent to 17.5 percent, yet average lease rates rose in every submarket for an overall average rent of $16.74 per square foot per year, the firm reported.
Last year “has to be considered one of the best in recent years for the Oklahoma City office market. That may seem counterintuitive on its face, but given what the market has withstood in the past 12 months, it was truly a successful year,” Price Edwards said. “Despite nearly 1 million square feet of additional inventory being added to the market by two different energy companies, the market was incredibly stable and rental rates actually increased.”
Price called the market’s performance in 2013 “staggering.”