Downtown Development Overview

[SXSW]

I agree, but I get the impression this project is stuck on high center in large part because of the grocery store issue.

I fear that Santa Fe Plaza is going to end up as underwhelming as One Place (or was it Place One).

The Development team behind Santa Fe Square is solid.  I think there just isn't enough of a current market for it.  The first phase, Hotel Indigo, is finished and seems to be doing well.  The second phase is the office building and parking garage at 2nd & Elgin which needs a certain amount of square footage pre-leased before starting construction.  The final phase is the retail/residential which ARG is involved in and likely won't start until they get closer to completing The View.  I'd rather them take their time and create a high quality project than create another One Place. 

[DTowner]

The Development team behind Santa Fe Square is solid.  I think there just isn't enough of a current market for it.  The first phase, Hotel Indigo, is finished and seems to be doing well.  The second phase is the office building and parking garage at 2nd & Elgin which needs a certain amount of square footage pre-leased before starting construction.  The final phase is the retail/residential which ARG is involved in and likely won't start until they get closer to completing The View.  I'd rather them take their time and create a high quality project than create another One Place. 

Again, I agree, but the Santa Fe office project is in a Catch-22.  They won't start building until they get enough commitments, but most potential tenants won't commit because there is no start/move-in date.

This is a problem for my firm.  Our lease is coming up and we have been looking at all available and planned space downtown for more than a year. Vast Bank really jumped over Santa Fe by getting construction underway first.  It helped that they had less leasable space, but they really sucked up some of the potential office tenants that Santa Fe needed.  Now with WPX building its own building, a lot of space is going to open up in the BOK Tower that will be further headwinds for Santa Fe.

Unless you have a really flexible lease that you can get out of on relative short notice, it's hard to commit to a building that is still just a picture on a sign in a parking lot with no foreseeable start date.  Unless something really gooses demand for downtown office space, I fear we will be having this same conversation about Santa Fe in 3-5 years.

[SXSW]

What I've heard is that Laredo Petroleum was originally going to lease several floors at SFS.  Then the oil downturn happened and they wouldn't commit.  Then they approached WPX who was interested but that evaporated when they bought the Spaghetti Warehouse and decided to build their own tower.  A year ago I would've said why not try to recruit WeWork but they are not the most stable enterprise right now. 

Without a big company moving into Tulsa I think you're right it may be a couple years until we see the demand for 200k+ sq Ft of new Class A office space downtown.  Maybe a large local company like NORDAM or NGL Energy Partners would shift operations into a downtown HQ?

[shavethewhales]

The next couple years at least are going to be pretty rough for the O&G market. Going to be a lot more consolidation and a general slow down in activity among these companies. The work will continue to slip away from Tulsa. WPX is pretty committed to staying and expanding, but they are among the few companies that are truly locked in here. Not a lot of hope for our current crop of companies to want to expand into a new building anytime soon. The need for fresh corporate jobs in DT Tulsa is growing.

My hope is that Tulsa can become an incubator for some new energy industry leaders in the "green" energy fields of solar, wind, etc. We've got a huge manufacturing base here that is geared towards O&G. Lots of opportunity, just wish I was smart enough to be the guy who could capitalize on it.

What other major companies do we have in Tulsa besides O&G?

[SXSW]

What other major companies do we have in Tulsa besides O&G?

BOK Financial, NORDAM, Matrix, QuikTrip, AAON, Manhattan Construction are the big ones.  Lots of smaller ones in all kinds of different sectors.  O&G and related industries is a big but so is aerospace, manufacturing, finance and engineering.  The health systems like Hillcrest, St John and St Francis are actually some of the biggest employers though.

[TulsaGoldenHurriCAN]

What I've heard is that Laredo Petroleum was originally going to lease several floors at SFS.  Then the oil downturn happened and they wouldn't commit.  Then they approached WPX who was interested but that evaporated when they bought the Spaghetti Warehouse and decided to build their own tower.  A year ago I would've said why not try to recruit WeWork but they are not the most stable enterprise right now. 

Without a big company moving into Tulsa I think you're right it may be a couple years until we see the demand for 200k+ sq Ft of new Class A office space downtown.  Maybe a large local company like NORDAM or NGL Energy Partners would shift operations into a downtown HQ?

The timeline is weird then. They announced Santa Fe in late 2015, when the oil downturn had been going on for over a year (so even Santa Fe square planners should've known O&G wasn't going to be a promising rent market for a while).

It was well known, even early in the downturn that this oil-price depression would likely last years. Our management told us in 2014 to brace for a late 1980s type downturn where oil prices might not recover for years (in large part due to US and OPEC reaching record capacities at the same time while Iraq oil wells were coming on line; but a variety of more predictable factors than usual).

Laredo was doing fairly well recovering quickly and outpacing rivals for several years until 2018. Not sure what's going on there but a lot of oil companies are still falling and struggling. Might be the beginning of another wave of oil downturn, but potentially more permanent and far more bleak for O&G.

[TulsaGoldenHurriCAN]

The next couple years at least are going to be pretty rough for the O&G market. Going to be a lot more consolidation and a general slow down in activity among these companies. The work will continue to slip away from Tulsa. WPX is pretty committed to staying and expanding, but they are among the few companies that are truly locked in here. Not a lot of hope for our current crop of companies to want to expand into a new building anytime soon. The need for fresh corporate jobs in DT Tulsa is growing.

My hope is that Tulsa can become an incubator for some new energy industry leaders in the "green" energy fields of solar, wind, etc. We've got a huge manufacturing base here that is geared towards O&G. Lots of opportunity, just wish I was smart enough to be the guy who could capitalize on it.

What other major companies do we have in Tulsa besides O&G?

You're right. We need to diversify even more fully.

The future cannot be oil if we want to survive long with 8 billion people living with AC and heaters. If the US and the world adjust course based on known scientific facts, O&G should be a pretty rough industry for the foreseeable future and eventually be mostly cut out of the energy market, even though crude will always be essential for many materials (plastics, consumables, industrial fluids, chemicals).

O&G will be vilified (rightfully) and cars will transition to electric to at least cut down gas/diesel. Natural gas will be more critical until renewables can take more of the burden. Nuclear power is the best long-term feasible solution but takes so long that O&G will likely be the primary fuel for a long time still.

O&G has been exceptional at providing high salaries for many people who otherwise would be either right around or far below average pay (especially those who have no degree). It'll likely be impossible to replicate that. Then you add automation potentially taking trucking/taxis/transportation in general, and in the not too distant future it'll be really rough to get by without a formal education or some sort of trade skill.

It's rough because we have a global problem that is not the fault of any of the people who will suffer the most for it. But regardless of the struggle, it'll be far worse if we continue the current course. The mass die-off of insect, fish and other wildlife is extremely serious, but few are even talking about it, and fewer are doing anything to help while many are still in denial. We are on course to make the planet uninhabitable for most wildlife (and many humans in result) within 100 years. Our jobs and even our lives are pretty menial compared to a threat like that. I hope Tulsa can transition to become a hub for green technology.

[SXSW]

Tulsa has used its O&G expertise to transition into other industries in the past.  Aerospace, manufacturing and telecom to name a few.  Energy built the city and made it what it is; the downtown skyscrapers, museums, midtown mansions, Utica Square, etc are all byproducts.  I agree another pivot is necessary to stay nationally relevant.

[TheArtist]

This has turned into the oddest conversation. If people were saying this about 20 years ago, ok I get it, little late than never, but today it's like.... seriously.  The writing has been on the wall for the oil industry in Tulsa for a loooooong time.  The writing has been on the wall for quite a while now for the oil industry in general.

[heironymouspasparagus]

BOK Financial, NORDAM, Matrix, QuikTrip, AAON, Manhattan Construction are the big ones.  Lots of smaller ones in all kinds of different sectors.  O&G and related industries is a big but so is aerospace, manufacturing, finance and engineering.  The health systems like Hillcrest, St John and St Francis are actually some of the biggest employers though.

AA has about 5,200 employees in Tulsa.  That is pretty big.

Overall, O & G has quite a few, but spread among a LOT of companies - the big ones employing up to several hundred each in Tulsa.  Added together, it is a bunch, though.

https://tulsaenergynow.com/custom/showpage.php?id=12&toplevel=2

St John (Ascension) has about 8,000, so pretty good sized.   Don't know about St Francis...

[TulsaGoldenHurriCAN]

This has turned into the oddest conversation. If people were saying this about 20 years ago, ok I get it, little late than never, but today it's like.... seriously.  The writing has been on the wall for the oil industry in Tulsa for a loooooong time.  The writing has been on the wall for quite a while now for the oil industry in general.

That doesn't reflect the reality of it at all: Oklahoma's largest oil producing days have been in the last 5 years (along with the US's total which is at/near records the last couple years). Oil & Gas had a massive boom in the 2010s due to fracking and horizontal drilling technologies. Per capita incomes in Tulsa and Oklahoma skyrocketed over the last 10-15 years, largely driven by increases in income from O&G. Had someone in 1999 decided to have Oklahoma choose to abandon O&G, they would've missed out on the biggest oil boom in Oklahoma and US history (which local companies benefit from by supplying the rest of the US with O&G supplies/expertise).

So 20 years ago, anyone saying the oil industry's time had come and gone would've been completely wrong (Many did say this both about Oklahoma and the US, and "peak oil", and they were all proven wrong). Maybe you're referring to the fact that big oil companies keep getting bought by even bigger ones. That is another topic altogether, but yes that does threaten our state and jobs here.

O&G is only around 8-10% of the Oklahoma economy though, so Tulsa has diversified quite a bit from back in the days when it was oil capital of the world. I don't think many economies around here are ready for what CO2 taxes and a big push to electric vehicles will do to O&G long term. The Oil part of that is the big money maker and gas prices have been the real price setter.

People have been crying to diversify Oklahoma's economy for decades and many have done that, but the climate change risks will add another dimension to that which people in Oklahoma don't want to believe. People won't like what self-driving cars or robots do to their jobs either.

There is enough oil for us to completely destroy the environment and heat the world up beyond the worst climate change predictions, and if we do, O&G in Oklahoma will continue to make money from it. The question is whether we will wise up and use nuclear and other renewables rather than keeping the status quo (Oklahoma is near the top in wind energy at least!).

[TheArtist]

That doesn't reflect the reality of it at all: Oklahoma's largest oil producing days have been in the last 5 years (along with the US's total which is at/near records the last couple years). Oil & Gas had a massive boom in the 2010s due to fracking and horizontal drilling technologies. Per capita incomes in Tulsa and Oklahoma skyrocketed over the last 10-15 years, largely driven by increases in income from O&G. Had someone in 1999 decided to have Oklahoma choose to abandon O&G, they would've missed out on the biggest oil boom in Oklahoma and US history (which local companies benefit from by supplying the rest of the US with O&G supplies/expertise).

So 20 years ago, anyone saying the oil industry's time had come and gone would've been completely wrong (Many did say this both about Oklahoma and the US, and "peak oil", and they were all proven wrong). Maybe you're referring to the fact that big oil companies keep getting bought by even bigger ones. That is another topic altogether, but yes that does threaten our state and jobs here.

O&G is only around 8-10% of the Oklahoma economy though, so Tulsa has diversified quite a bit from back in the days when it was oil capital of the world. I don't think many economies around here are ready for what CO2 taxes and a big push to electric vehicles will do to O&G long term. The Oil part of that is the big money maker and gas prices have been the real price setter.

People have been crying to diversify Oklahoma's economy for decades and many have done that, but the climate change risks will add another dimension to that which people in Oklahoma don't want to believe. People won't like what self-driving cars or robots do to their jobs either.

There is enough oil for us to completely destroy the environment and heat the world up beyond the worst climate change predictions, and if we do, O&G in Oklahoma will continue to make money from it. The question is whether we will wise up and use nuclear and other renewables rather than keeping the status quo (Oklahoma is near the top in wind energy at least!).

Very good points.  I stand corrected, especially per the oil industry in general.  Demand has gone up, and will likely continue to do so baring a global recession. One could argue it "shouldn't have" per the environment, not just for any climate change reasons, but for healthy lifestyle and air quality ones.  Was behind a truck just yesterday, heading to the fair, that was billowing black smoke so bad it was blinding, let alone how it was negatively affecting mine and everyone elses health. How that is even legal is beyond me.

But it is interesting when people talk about where we need to be "not using oil wise" not at lower estimates, but even the higher ones... for many big oil companies their long range investments/return on investments/long range planning and current financial health on paper requires they continue selling far past the worst case scenario crisis points.

Its like the rich guys are thinking, "I will hang in there and make money, taking the risk that I will be able to bail before the shat hits the fan and the other guy gets hit." "Won't be me that suffers it will be the other guy."

It is interesting to think that Oklahoma and Tulsa is doing so well economically because of oil, if what you say is true.  There is so much angst and stress in the air (good chunk of that per the current President) that even if things are going well, it doesn't feel like it at all.  Even if people are doing better financially, so many feel worse than if we were in a financial recession.  Whats the point in that? I start to wonder.

[heironymouspasparagus]

 

Was behind a truck just yesterday, heading to the fair, that was billowing black smoke so bad it was blinding, let alone how it was negatively affecting mine and everyone elses health. How that is even legal is beyond me.

It's not legal.  And it's disgusting.  We just have no will to enforce what so many feel is a minor offense.  They didn't drive around in Tulsa before pollution controls started showing up on cars - the 60's - and have not experienced how truly disgusting it is.  Not to mention the much worse conditions in bigger cities, starting with Dallas.  Driving through there in the 60's and even early 70's was an exercise in self abuse from the stench most days.

Didn't make it out to LA during that time...glad I didn't.

[SXSW]

Because it pertains to the future of office space demand here is an interesting graphic.  Note this is nationwide where markets like SF and NY will skew this but it's pretty clear tech/coworking isn't going anywhere and it's a relatively untapped market in downtown Tulsa

[Conan71]

This article presented some interesting metrics regarding Oklahoma cities and towns to digest.  It's about America's most miserable cities which I rarely take time to read data from a negative view but there's good data to mine here and try and figure out where Tulsa is lacking amongst others in state.  While Tulsa has grown 2.2% since 2010, OKC has grown by 11.9% and averages about $5000/year higher median income.  Also from the article:  Moore has grown 12.7%, Edmond almost 15%, Norman by 11.3%, and Broken Arrow by 10.5%.  BA's average median income is $70K, $26K higher than Tulsa.  There's no mention of Jenks, Sapulpa, or Owasso in the study so no idea about their growth vs. Tulsa and the OKC area.

OKC and it's suburbs are growing at more than 10% each.  I can't imagine that OKC's school system is vastly superior to Tulsa's which is the #1 reason given as to why people move to Tulsa's suburbs, rather than to Tulsa.  So OKC's growth is still slightly behind three of it's major suburbs but not by much.  For as long as I can remember, Tulsa's been stuck in this negligible growth pattern, at least 30 years.

Why is this?  What is the OKC metro doing which is so vastly different?  Geographically speaking, Tulsa is a far more compelling place with beautiful rolling hills, access to beautiful lakes within 90 minutes or less, great urban spaces, and is much closer to NW Arkansas for quick weekend getaways, etc.  OKC is flat and sprawling, I've never been enamored with it.  Bricktown always seemed just a bit contrived to me.  It seems from a sense of natural resources and recreation that Tulsa should be leading in growth and attracting major employers but it is just not happening.  Maybe Pryor had better infrastructure readily in place for Google, but landing a business like that would have been huge for Tulsa and could have been a beacon for other companies like that.

I vacillate constantly about whether or not 5-6% annual growth like Austin, is such a great thing for an area or if Tulsa should be happy it's plodding along slowly.  That kind of growth would better justify developments like SFS or the TPAC development but at what price?

Most people I meet from Austin these days are talking about what a shithole it is becoming due to the rapid growth and would love to find a way to get out of there, but the employment picture is great, so they deal with the headaches of a metro growing faster than infrastructure can keep up. 

Of course, most contact I have with people from other areas is while they are on vacation and it's natural to idealize what it would be like to live in a small village or ski resort town instead of a sprawling metro area when you are a visitor to such a place.  We get a lot of people from DFW, Houston, Austin, San Antonio, and all over the Texas Panhandle as well as Tulsa and OKC metros at our inn and brewery and I generally take time to get to know people while they are in our establishments as much as you can in brief bursts of conversation.  If I'm tending bar at the brewery, I can get into pretty spirited hour long conversations on a slow day with a guest or three.

Tulsa had explosive growth like Austin is experiencing, to an extent, during the oil boom of the late '70's and early '80's where anything south of roughly 61st Street was maddening to get around in rush hour as that's where all new construction was, but we still had a network of two lane roads without so much as turn lanes at that time.

So here's the data set I was looking at:

https://www.tulsaworld.com/news/local/list-of-miserable-cities-in-america-includes-in-oklahoma/collection_d578ee89-4bfa-5455-8885-b0c7aaa02472.html?utm_source=WhatCountsEmail&utm_medium=NEWS%20-%20Latest%20News&utm_campaign=Latest%20News&utm_content=Latest%20News#7

Tulsa:

2018 population: 400,669

Population change from 2010 to 2018 (estimated): 2.2%

Percentage of people working: 65.8%

Median household income: $44,577

Persons without health insurance: 19.8%

Median commute time: 18.4 minutes

Percentage in poverty: 20%

OKC:

2018 population: 649,021

Population change from 2010 to 2018 (estimated): 11.9%

Percentage of people working: 66%

Median household income: $51,581

Persons without health insurance: 18%

Median commute time: 21.3 minutes

Percentage in poverty: 17.1%

Broken Arrow:

2018 population: 109,171

Population change from 2010 to 2018 (estimated): 10.5%

Percentage of people working: 70.4%

Median household income: $70,788

Persons without health insurance: 11.4%

Median commute time: 20.7 minutes

Percentage in poverty: 7.6%