Real Estate

By Julie Buxton, Gary Krisman, Kevin King and Neil Dailey of McGraw Realtors

Retail

During COVID-19, the Tulsa retail market fared much better than the national retail market. The greater Tulsa market has a strong presence of locally owned businesses, and the community has been a consistent partner continuing to support those businesses both during COVID and in the post-pandemic market. While e-commerce has driven large, big-box retailers and anchor tenants to reduce existing footprints and/or eliminate expansion, the Tulsa retail market inventory as whole has mostly smaller spaces and singletenant spaces as inventory.

There has been and will continue to be very little local large-scale retail speculative construction except for the new outlet mall. Simon Malls recently announced it will resume development of its 330,000-square-foot outlet mall in Jenks with a planned opening in 2024. Properties in the vicinity with space for lease will most likely benefit as over 100 retailers are slated to open within this regional outlet mall.

As of this publication, there is currently 325,000+/- square feet of retail under construction of which 200,000 square feet is the new Owasso Costco. Vacancy rates should remain fairly stable — around 3.1% — with a potential for a slight increase from Q3 into Q4.

Local investors, as well as those out-of-state, have been and will continue to view Tulsa as a strong retail market with opportunities as evidenced by the sales volume over the past 18 months. Deal volume in 2021 hit its highest volume on record of $356 million, according to CoStar.1

Office

CoStar also states, “Tulsa’s office market is improving through 2022 after two years of negative net absorption. Through the fourth quarter, CoStar is reporting 720,000 square feet of positive net absorption and projected a total of 283,000 square feet of move-ins by the end of 2022. While the market’s vacancy rate remains elevated, it remains below the U.S. average and the inflection point in demand is keeping vacancies from rising further” (CoStar, p. 3).

Tulsa’s vacancy rates have been happily below the U.S. average and are continuing to rise as net absorption picks up after a downturn in energy from 2015-2016. Net absorption is expected to remain positive for years, with 295,000 square feet already reported year-to-date. An impressive 316 new leases were signed this past November alone totaling 720,159 square feet — an encouraging sign of strong leasing momentum that will likely continue into 2023.2

Industrial

Tulsa’s industrial market is a beacon of strength in the commercial real estate sector. Demand has been driven largely by logistics activities and, more recently, medical marijuana initiatives — although this influence appears to be weakening as cultivation operations come up for sale and some dispensaries close. No speculative construction projects exist within the metro area due to tight vacancy rates (3.6%) which are putting pressure on rents that have grown an impressive 6.7% annually — their highest performance ever recorded.

Tulsa has maintained a lower industrial vacancy rate than the U.S. average since 2006, and in 2022 is showing net absorption of 75,000 square feet with 58 new/direct lease signings. The Tulsa industrial investment market has traditionally been dominated by local players, however outside investors have recently taken an increased interest in the metro area. Despite slight fluctuations from year to year this decade, sales volume has remained consistently above average for several years now — a trend that’s sure to continue into 2023 and beyond.2

Multifamily

In 2022, there were 58 projects sold for $408 million. The average price per unit was $96,273 and the overall average capitalization rate was 6.2%. Average occupancy for the year (all classes) was 91.98%. A total of 363 new units came online this year with an additional 900-plus units scheduled for 2023 (CoStar, 2022).

Sales fell off during the second half of 2022 primarily because of higher interest rates and recession fears. The higher interest rates pushed CAP rates higher, thus lowering potential sales prices. For the most part, owners made decisions to hold assets rather than sell at a lower price. The economy in the Tulsa metro remains strong and growing, and apartments play a major role in affordable housing — especially now that higher mortgage rates preclude many home buyers from the purchase of a home. Finally, we see a good year ahead for owners and their tenants with rent rates staying flat and occupancies holding steady.3

Residential

Tulsa is becoming an increasingly popular destination for home buyers, who are drawn to the stability of its housing market and wide range of urban amenities — all while enjoying a more affordable cost-of-living than many other large cities.

Experts predict residential real estate in Tulsa will continue to grow steadily over the next few years. With a steady job market, Tulsa is an ideal place for individuals looking to purchase residential real estate now or in the future. The 2023 forecast for residential real estate in Tulsa looks very promising with increased demand from buyers and relatively stable prices. This is great news for both current and prospective residential real estate buyers in Tulsa.

1 Tulsa Retail Market Report, Prepared by Julie Buxton, McGraw Commercial Properties. CoStar, 2022

2 Tulsa Office & Industrial Market Report, Prepared by Neil Dailey, McGraw Commercial Properties. CoStar, 2022

3 Tulsa Multifamily Market Report, Prepared by Gary Krisman, McGraw Commercial Properties. CoStar, 2022