Cortez, managing principal, Vanguard Real Estate Advisors.
“However, the energy market has made great strides of late and
according to many industry prognosticators, this should only con-
tinue, which will bode well for Oklahoma as a whole and specifi-
cally the real estate community.”
To encapsulate the strengthening economy, the year-over-
year unemployment data (February 2018) for the two largest
metros via the Bureau of Labor Statistics tells the story. Tulsa’s
unemployment rate improved by 90 basis
points to 4.1% and Oklahoma City improved
by 60 basis points to 3.7%.
“The positive looking forward is that
Oklahoma City developers have scaled back
new starts and currently there are only five
conventional multifamily projects under construction, which will translate to positive
absorption,” Cortez observes.
The pool of qualified multifamily investors
is rapidly expanding as a number of new participants enter the marketplace. Many of these
investors are focused on acquiring pre-1990s
vintage workforce housing, says Cortez.
“They are bullish on the statewide econ-
omy with the energy sector’s improved outlook, as well as the
perception that they can achieve a better going-in cap rate and
price per pound metrics than in nearby states such as Texas and
Colorado,” he relates. “With the improving property fundamen-
tals, strengthening Oklahoma economy, improved investor sen-
timent and attractive yields as compared to other major metros,
a perfect storm has been created for the Oklahoma multifamily
markets which we expect to translate into a sizeable uptick in
sales volume across the state.”
Arkansas added 16,100 jobs in 2017, with the majority contrib-
uted by education, health services and manufacturing. This posi-
tive gels well for significant growth in the industrial market.
“Even as manufacturing job growth most certainly translates
into industrial real estate space gains, the real bread and butter
for the Oklahoma/Arkansas industrial real estate in this cycle
has been consumer goods,” says Cary Phillips, a CBRE managing
director for Oklahoma and Arkansas. “Job growth across the
region drastically increases the demand on consumer goods,
adding the need for more space to handle the production and
logistics of products to the expanded consumer base in
Oklahoma and Arkansas.”
Multifamily leads transactions in Arkansas with a rolling
12-month total of $364.7 million. The most notable difference
between the two states is the appetite for office product is stronger
in Arkansas and currently is the second most-preferred property
type with $197.2 million during the same time period, Phillips says.
Looking forward, demand for large space in Albuquerque
remains strong, specifically in the education industry and business services industry. The 11,000-square-foot addition to the
Century Link building remained under construction in second
quarter, the only new construction project, according to CBRE.
With slower activity and a handful of closures, Valencia County,
NM had 60,000 square feet of industrial completions added to an
existing manufacturing facility. A 970,000-square-foot data center
remained under construction with expected completion of
fourth quarter 2018.
New Orleans’ ProsperityNOLA is billed as a catalyst for economic transformation in the city’s tricentennial this year. At the
same time, Stephen Waguespack, president and CEO of Louisiana
Association of Business and Industry, acknowledged the state’s lagging economy, but said southwest Louisiana was leading the rest of
the state due to billions in current and
announced industrial development projects.
There are currently 92 industrial properties for sale in the New Orleans/Metairie
MSA, the same total as one year ago. The
average industrial property is on the market
for 322 days, according to Louisiana
Commercial Realty. Sale prices for industrial space averaged $40 per square foot as
of April 2018, down from 8.5% in the prior
month. The supply of industrial investment
property increased 6% or by 183,000 square
feet. During the past year, industrial sale
prices increased 24% while supply
decreased 217,000 square feet.
Office sales prices in the New Orleans/Metairie MSA averaged $105 per square foot as of April 2018, down 3.5% in the
previous month, according to Louisiana Commercial Realty.
During the past year, office prices increased 2.8% while supply
increased 183,296 square feet.
The answer to whether many of these metros can continue at
this lightning speed is anyone’s guess. But the upside is that much
of the building is in response to demand, which is a welcome
respite from the no-holds-barred days of the past. ◆
The strength of the region’s economy, with
the ports, transportation, medical centers
and the oil and gas sectors, combined with the
fact that it’s a great distribution center for
goods and services, make it very desirable.
TUCKER KNIGHT | Berkadia
The economy is the fuel that propels the real
estate engine and right now, the tank is
pretty full. We have had sustained job growth for
some time and the number of people employed in
our area is the highest in history.
DON MORROW | NAI Horizon