What’s the “second story” — the next-to-most-significant news — in Price Edwards & Co.’s midyear office market summary?
(The main story starts on the cover of this section. Downtown forecast in a nutshell: “Vacancy rates will continue to drop until new inventory hits this submarket.”)
The second story is Class A space, Part 2 — in the north and northwest submarkets, according to Craig Tucker, managing broker, who compiled the summary (available at www.priceedwards.com).
Will new office buildings on the drawing boards make it to the ground?
“You’re seeing the first build-to-suit out there for Linn Energy. They’re moving out of 80,000 square feet at Quail Springs Office Park, building their own 120,000-square-foot building,” Tucker said. “That whole Memorial corridor’s only at about 1 percent vacancy now. So that’s going to create space that there’s a lot of demand for.
“It’ll be interesting to see how quickly that fills up and if moves like that, when people are creating those holes, is going to kind of cause some developers to pull back on their thoughts of going out and doing spec construction.”
Price Edwards’ northwest submarket forecast: “Vacancy rates should drop as this submarket remains the market’s strongest, and new inventory is gradually absorbed. Quoted rates will increase as landlords enjoy a healthy market with no new buildings coming online in 2014.”
The north submarket forecast: “Vacancy rates should trend downward as this submarket stabilizes from the negative effects of Chesapeake’s downsizing. Rental rates will remain near current levels. The construction of at least one new building should commence before year-end.”
The third story? For sheer size of space, it has to be the move of the Oklahoma Health Care Authority from about 150,000 square feet of space at Shepherd Mall into a refurbished and converted hotel at 4345 N Lincoln Blvd.
Developer Richard Tanenbaum said he spent about $19 million on the conversion. The state agency previously leased space just north at 4545 N Lincoln.
The big move whacked the Midtown submarket, the smallest, but was a wash across the market as a whole for leased office space, Tucker said, since the agency didn’t expand much, if at all.
Price Edwards’ Midtown submarket forecast: “Vacancy rates will likely remain near current levels for the remainder of the year. Rental rates will remain at or near current levels.”
The west submarket forecast: “Vacancy rates should improve slightly. Rental rates in the submarket should remain flat.”