PAC Parking Lot Development

[SXSW]

Really hoping we hear something soon on this. Anyone have their ear to the ground. The final deadline is getting close, but interest rates are a lot higher and the economy is slowing down. I still think there's a ton of demand in Tulsa for hotel, grocery, and apartments, but the deals aren't as lucrative as they were a couple years ago.

If they couldn't make it work with 3% rates it certainly won't work now.  Unless the city kicks in a LOT more incentives, which they may do

[LandArchPoke]

If they couldn't make it work with 3% rates it certainly won't work now.  Unless the city kicks in a LOT more incentives, which they may do

This was definitely partly the developers fault - I think they were taking the PAC Trust for granted because they were not enforcing timelines, etc. so they thought well we have control of the site and can move on it when it is the most convenient for us. They waited too long and now rates are very difficult to deal with for construction and even if deals still pencil out which this one should finding banks willing to lend even on a good deal is increasingly difficult. The credit markets are freezing especially in the very large "regional" banks like the BOKs, Prosperity, PNCs of the world and in the medium size regional banks like a BancFirst, Midfirst, Arvest, etc. that would typically be really interested in a deal like this.

A big part of it too was Reasor's really killed this deal and after they pulled out officially the developer just kind of sat on things like I said above. Reasor's strung people along for way too long and was committed but not committed and makes me think some of that was because the family was ready to just get out of the business. The Reasor's model is changing now that it's under new management. The new South BA store is over 60,000 sq. ft. and they are closing the Jenks store to open a new one at 121st & US 75 that will be close to 70,000 sq. ft. It's going in a new Tulsa Hills style strip center called Coal Creek or something like that, it was on the Jenks agenda last week.

They managed to get a bite from Homeland but that never made sense to me why Homeland would come back into the market and that be their first store of all places.

Hopefully with Oasis on board and they have plenty of $$ from ARPA funds this should be on solid footing. The developer has said there is 0% chance they will build this without a grocery anchor. If they can't get one, the project is dead. They build into their apartment model the premium associated with grocery mixed-use and are not interested in doing a concrete construction multifamily project without that anchor to drive a premium to the rental rates. This would be a project with lease rates likely $3.00 or more on small units and mid $2.00's for the larger units. Rental rates and occupancy remain high in Tulsa so market fundamentals are great and cap rates have not budged hardly at all here - there's Class B stuff selling still in the 5% range which is crazy given the rate increases.

Their biggest problem will be finding a bigger bank that is willing to make a loan that size in the current market given how much pressure the larger banks are under at the moment.

[SXSW]

^ You nailed it.  Lots of headwinds now that didn't exist a year ago.  It comes down to how much the city wants to get the deal done and what other incentives they can add in to "close the gap".  This type of project would absolutely be $2.50+/sf and will lease up fast even at those rates since it will be the only new midrise downtown, and arguably a better location than any other new downtown apartments especially with the grocery store component.  F&C certainly has the capital and relationships to get this deal done but also have not developed in this market and their only rent comp's are office conversions, older highrises and new wood-frame apartments.

[LandArchPoke]

^ You nailed it.  Lots of headwinds now that didn't exist a year ago.  It comes down to how much the city wants to get the deal done and what other incentives they can add in to "close the gap".  This type of project would absolutely be $2.50+/sf and will lease up fast even at those rates since it will be the only new midrise downtown, and arguably a better location than any other new downtown apartments especially with the grocery store component.  F&C certainly has the capital and relationships to get this deal done but also have not developed in this market and their only rent comp's are office conversions, older highrises and new wood-frame apartments.

I think almost all the units at The View leased over $2.00 sq ft (except the restricted affordable/moderate income units). Given the lease up rate for that project it does add some good support that a new concrete mid-rise can support those types of rents. An extra $0.50-$1.00 a sq ft is worth it to not hear your neighbors every move too. Concrete flooring makes a huge noise difference as long as they don't cheap out of the party walls in the interiors.

[shavethewhales]

Haven't heard any more on this as the clock runs out. Oasis is currently expanding in Killeen, TX, so I'm not sure if they are still interested in downtown Tulsa or not. Seems like they aren't so big that they would be expanding to multiple locations at once. I still feel like there's tremendous demand for hotels downtown, as well as apartments, so hopefully a new proposal will come along soon.

[SXSW]

Haven't heard any more on this as the clock runs out. Oasis is currently expanding in Killeen, TX, so I'm not sure if they are still interested in downtown Tulsa or not. Seems like they aren't so big that they would be expanding to multiple locations at once. I still feel like there's tremendous demand for hotels downtown, as well as apartments, so hopefully a new proposal will come along soon.

With all of the incentives this should still be a good deal for F&C.  Not sure what the hold up is but if F&C can't get it done I'm sure there is another group that would be interested.

I would put this as the highest priority project in downtown Tulsa for the following reasons:
1. Fills an entire city block that is currently a big parking lot with new development
2. Adds a GROCERY STORE which has been sorely needed for additional residential development
3. Adds an additional 260 apartments - so we're talking potentially up to 500 new residents
4. Adds another 100 hotel rooms
5. Connects the CBD to the Blue Dome District and continues to build up 3rd St as a commercial corridor
6. Adds a 12 story tower to the skyline which will require a tower crane - tower cranes are a good way to show growth/progress in a city

[ComeOnBenjals]

Assuming this is dead, no? Hopefully something can go on this lot within the next 5 years.. so many surface lots still in downtown.

[SXSW]

Assuming this is dead, no? Hopefully something can go on this lot within the next 5 years.. so many surface lots still in downtown.

The deadline is June 30

This is from the last TW article about the project - anyone know if this is in for any kind of permit with the city?

Some trustees expressed concern about what might happen if the project does not move forward. To address those fears, trustees included in the motion to extend the developer's purchase agreement deadline a clawback provision that would provide legal recourse for the trust to regain ownership of the property should Flaherty & Collins fail to get the project done.

"Honestly, my takeaway from today is that most of the onus between Jan. 1 and June 30 is on our team at the city with the building permit side," Bynum said. "So I am going to go back and talk with our Development Services team and make sure they are hooked up with these guys and working on it on the front end."

[shavethewhales]

Well, no news is bad news. Guessing the PAC is going to claw back the property soon. At least with things starting over again we can see some "progress" instead of waiting for something to kick off for years. I get that the past few years have been crazy, but this was a big missed opportunity. Hopefully the next iteration is something even better than what was planned.

[SXSW]

Well, no news is bad news. Guessing the PAC is going to claw back the property soon. At least with things starting over again we can see some "progress" instead of waiting for something to kick off for years. I get that the past few years have been crazy, but this was a big missed opportunity. Hopefully the next iteration is something even better than what was planned.

I know for a fact they have a permit set of construction documents completed.  I have talked to subcontractors who have priced it.  But I don't know if they ever actually submitted for permit or if they received an extension from the PAC. 

With this being the most important project downtown I would hope the City would be all over either assisting F&C to get started or involved in selecting a new developer to lead the project.

[SXSW]

Did some digging on the City permit site and there are a couple of active permits in review for the Annex project at 220 E 2nd St:

IDP-149728-2023
Applied Date: 5/23/23
Status: In Review
Description: Streetscaping for The Annex on 2nd & 3rd Streets and Cincinnati & Detroit Avenues. Pavement modifications, accessible ramps, sidewalks, trees, light poles, signs, and storm sewer in right of way. A parallel water line extension on Detroit.

BLDC-150884-2023
Applied Date: 6/8/23
Status: In Review
Description: The Annex: Core and Shell for a Parking Garage and Residential Tower

So there's that...

[Tulsan]

Yes this is going forward

[shavethewhales]

That's awesome if this is still creeping forward. I know it takes time, I just want to see something concrete after waiting 7 years since the first contract was signed.

[SXSW]

That's awesome if this is still creeping forward. I know it takes time, I just want to see something concrete after waiting 7 years since the first contract was signed.

Never a done deal until the tower crane goes up

[ComeOnBenjals]

Anyone heard updates on this? Today they have all the entrances blocked off.. only a few City of Tulsa vehicles are parked. Hoping that means something is happening.