311 N Boulder Ave Highest & Best Use and Feasibility Analysis

311 N Boulder AveHighest & Best Useand FeasibilityAnalysis

September 17, 2019

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Purpose of the Study

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Hunden Strategic Partners (HSP) was engaged to determine the highest

& best use for the one-acre site at 311 N Boulder Avenue (Site) in the

Arts District. Further, once the highest & best use is determined for the

Site, HSP will conduct a developer solicitation process including a

Request for Qualification and Request for Proposal.

As part of the study HSP is conducting a market analysis for multi-

family, office, parking, restaurant and retail and special event uses.

Further, the analysis is to determine which, if any, of these uses is

feasible via private development based on a comparison of potential

rental revenues and the cost to construct of each use. Then, HSP will

create a recommended program of the uses that produce that greatest

feasibility.

HSP was also instructed to research potential uses that could induce

greater place making or economic impact, even if not as feasible from

a private investment standpoint. This perspective was taken individually

while assessing the market’s capacity and needs, as well as a blended

approach to potentially marry fully feasible and less or unfeasible

concepts as part of the Project.

The findings shown herein present the market analysis and

recommendations.

Table of Contents

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❖ Executive Summary

❖ Chapter 1: Project & Site Profile

❖ Chapter 2: Economic & Demographic and Tourism Analysis

❖ Chapter 3: Retail & Restaurant Market Analysis

❖ Chapter 4: Office Market Analysis

❖ Chapter 5: Residential Market Analysis

❖ Chapter 6: High-Level Special Events Market Analysis

❖ Chapter 7: Parking Analysis

❖ Chapter 8: Recommended Scenarios

❖ Chapter 9: Demand & Financial Projections

❖ Chapter 10: Economic, Employment & Fiscal Impact

Executive Summary

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Reality Check

HSP identified the following trends that impact the overall feasibility of any mixed-use project in the Arts District.

The longstanding effort to revitalize the Arts District is gaining momentum. Due to significant investments from Sharp Development, George

Kaiser Family Foundation (GKFF) and other property owners in the District, additional investment and activity is gravitating to the Arts District as an

established entertainment district and a burgeoning live, work, play environment. Most owners and operators in the area have been local with little

attention from regional and national investors. That is changing. As will be shown, many projects are in the pipeline totaling hundreds of millions of

dollars which will diversify the offerings available and strengthen the fabric of the Arts District.

Legacy investments have acted as a springboard for the Arts District but may also be slowing performance growth. Just a few large investors

have made many investments in the Arts District’s places and people, which has helped many residents, businesses and investors enter the area as

well, at least partially, through the use of New Market Tax Credits. As mentioned above, these investments have acted as a catalyst for the

growing trend of investment and activity seen currently. On the other hand, the New Market Tax Credits also limit the rental rates that landlords

may charge on its properties, essentially implementing an artificial rent ceiling. This is helpful for tenants, but negatively impacts the commercial

market because it has hindered the growth of rental rates for all landlords in the area.

Parking is an issue of perception and suburban culture. Downtown Tulsa has plenty of parking as stated in the TPA’s 2015 Downtown Tulsa

Parking Analysis. The parking situation has changed in the past four years, but through public and private investments in parking structures, supply

is keeping up with demand. However, when speaking with stakeholders about parking in the Arts District, there is a major concern about the lack of

available parking. It has been expressed repeatedly that area visitors are not typically willing to walk multiple blocks from their parking space to

their destination. The market is also highly price sensitive for parking due to longstanding free and inexpensive parking. This point is emphasized

by the highly underutilized North Garage, offering 900 spaces at $2 per night.

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Recommendations Rationale

The market analysis presented previously in this report along with the parameters established by the Tulsa Parking Authority (TPA) has determined

the recommendations shown in this section. HSP gathered various performance metrics for the potential uses to be included in the Project, as well as

the costs for construction and operations in order to establish the feasibility of each use and combinations thereof.

There were a few assumptions and directives provided by the TPA, which narrowed the available options for development on the Site. First, 70 of

the 130 parking spaces existing on the surface lot at 311 N Boulder Avenue must be replaced in any and all scenarios. Further, any additional

parking demands created by the Project should mostly be accommodated by additional onsite parking. HSP was directed to take a strict highest

and best use perspective in order to determine the most feasible scenario according to the market and conversely determine what is the most

compelling use of the site in order to maximize the impact of the Project on the Arts District. Lastly, HSP was directed not to study lodging/hotel as

a use for the Project, as the City is considering the development of a convention center headquarter hotel for the Cox Business Center.

HSP further assumed that a structure on the Site would be able to occupy approximately 40,000 SF of space per floor due to the nearly one-acre

size of the Site. Based on this footprint, each level of parking is assumed to house 110 +/- parking spaces. Parking will be housed within the

structure beginning on the second floor in each scenario extending upward for the required number of floors to offer the recommended number of

spaces.

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Arts DistrictPerformance Metrics

HSP has collected the estimated performance metrics for new, high quality

mixed-use development for the Arts District from brokers, property owners and

business owners. All things considered each of the uses is expected to perform

similarly. Office is expected to generate the highest rents per SF, but these

figures are on a gross lease basis, meaning the landlord must pay expenses

shown, while restaurant and retail tenants are paying the expenses, which

offsets the lower rental rates.

Arts District Commerical Real Estate Performance Estimates

Use Low Rent/SF High Rent/SF Low Rent/SF High Rent/SF Lease Type Expenses/SF Vacnacy

Office $32.00 $38.00 $24.66 $30.66 Gross $7.34 8%

Residential* $21.00 $25.00 $19.75 $23.75 Modified Gross $7.06 6%

Restaurant $30.00 $35.00 $23.00 $28.00 NNN $7.00 5%

Retail $27.00 $31.00 $20.00 $24.00 NNN $7.00 5%

Source: Various sources

* Residential tenants pay $1.25 of expenses via utility charges on average

Gross Net

Recommended Scenarios

HSP recommends the two scenarios shown above. Each shows a different level of

investment. As the Project becomes denser, it also becomes less feasible.

Scenario 1 is a total of eight stories tall with parking on floors 2 – 5. Then two

three-story towers (one office, one apartments) would be on floors 6 – 8.

Scenario 2 has three floors of parking with a floor of office on top.

Scenario Summary

Use Type Scenario 1 Scenario 2

Stories (including parking) 8 6

Office (SF) 60,000 40,000

Apartments (SF) 60,000 0

Retail / Restaurant (SF) 30,000 30,000

Parking (Stalls) 370 270

Total SF* 272,100 159,100

Source: Wallace Engineering, Hunden Strategic Partners

* Assumed 330 SF per parking stall, incl. driveway etc

Construction Costs

Construction costs were estimated on the recommended scenarios. These are based

upon the assumption that the first floor will be constructed as a concrete and steel

podium, since levels above will be constructed of concrete for parking.

These costs exclude soft costs, which would add another 20 – 30 percent.

Parking is expected to cost between approximately 25 and 30 percent of total

construction costs. Parking is the most expensive and least feasibly use of all

analyzed for the Project.

Construction Costs


Office $ 14,400,000 $ 9,600,000

Apartments $ 14,400,000 $ -

Retail / Restaurant $ 6,000,000 $ 6,000,000

Parking $ 9,157,500 $ 6,682,500

Total Construction

Spending

$ 43,957,500 $ 22,282,500


Scenario 1Summary of

20-Year ImpactsScenario 1 is expected to generate $211 millionin net new spending, $188 million in net newearnings and 167 new ongoing full-timeequivalent jobs at peak.

Fiscal impact is expected to be approximately$4.1 million from sales tax with another $5.3million from property tax for a total of $9.3million.

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Scenario 1 - Summary of 20-Year Impacts

Net New Spending (millions)

Direct Spending $121

Total Net New Lodging $42


Total Net New Spending $211

Net New Earnings (millions)

From New Employees in New Offices $118

From Direct Project Spending $42

From Indirect Spending $13

From Induced Spending $14

Total Net New Earnings $188

Net New FTE Jobs Actual

From New Employees in New Offices 79

From Direct 50

From Indirect 17

From Induced 20

Total Net New FTE Jobs 167

Net New Taxes Collected (millions)

Sales Tax (3.65%) $4.1

Property Tax $5.3

Total Net New Taxes $9.3

Source: Hunden Strategic Partners




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From Direct 41

From Indirect 14

From Induced 17



Sales Tax (3.65%) $3.5

Property Tax $2.4



Chapter 1: Project & Site Profile

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Project Overview

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TPA owns the one-acre site located within the Arts

District at 311 N Boulder Avenue, which currently

offers approximately 130 parking spaces

available for daily, nightly, weekend and monthly

paid parking.

The Arts District is a burgeoning entertainment

district with many locally owned restaurants, live

music and night life. With many major projects in

the area recently completed, under construction

and planned, the Arts District is poised to become

a walkable, live-work-play environment.

Due to the growing popularity of the area, TPA

has realized the potential for redevelopment its

311 N Boulder Ave. site possesses. This same

popularity has also come to strain the available

surface lot and on-street parking during peak

usage periods on nights and weekends. Therefore,

TPA has undertaken efforts to have the site

redeveloped as a mixed-use project.

Site Overview

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The Site at 311 North Boulder Avenue is part of a

super block that extends north from Cameron

Street to Easton Street between Boulder Avenue

on the west and Main Street on the east.

The parcels that TPA owns constitute the surface

parking lot pictured at the bottom of the image to

the right. The remaining land within the super

block is owned by Interak. The grass lot

immediately north of the parking lot, known as the

Mayo Green, remains undeveloped. North of the

Mayo Green is the True Turn industrial facility and

Inner Circle Vodka bar. Further north is another

surface parking lot.

The parking lot at the northern end of the block

has been bifurcated. The half located near the

corner of Main Street and Easton Street has been

donated to the OKPOP project, while Interak

retains ownership of the remaining land to the

west.

Chapter 2: Economic, Demographic and

Tourism Analysis

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Regional Drive-times

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1-hour Drive-time:

• Population: 1,182,600

• $51,891 Median Household Income

• $71,794 Average Household Income

2-hour Drive-time:




3-hour Drive-time:




Population Population in the metro area has increased at a rate faster than the U.S.

as a whole, although city limit population has shown slower growth.

Tapestry Segments - Arts DistrictHSP researched the demographic of the Arts District to better understand the Households in the area. The Arts District is made up of two

main tapestry segments, which are tracked and defined by ESRI as, “Social Security Set” and “Metro Renters.” These two segments make

up 97.8 percent of this District’s Households. HSP profiled the two segment groups below. National statistics offering consumer behavior

and detailed demographic information are included in the following slides.

“Social Security Set” – 52% of Households. This segment is an older market with one-fourth of the house owners being ages 65 and

older. They are dependent on low, fixed incomes primarily from Social Security. Residents live in low-rent, high-rise buildings located in

or near business districts.

• Median Age: 45.6

• Median Household Income: $17,900

“Metro Renters” – 45.8% of Households. This segment is said to be highly mobile and educated. They live in older apartment

buildings and condos with a spouse or a roommate in the center of a city. This is one of the fastest growing segments and their income is

above the US average. They live close to their jobs and like to be able to walk or take a quick cab to do leisure activities.


• Median Household Income $67,000

As the Arts District becomes more vibrant, additional young professionals will demand housing in and around the area. Currently, the

district lacks a critical mass of retail, office and residential that would create a well-rounded live, work, play environment. These types

of areas are often very attractive for young professionals and empty nesters.

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Social Security Set - Arts District“Social Security Set” (SSS) is the largest ESRI segment

found in the Tulsa Arts District.

“Social Security Set” – 52% of Households. This segment

skews older than Metro Renters. One-fourth of these house

owners are ages 65 and older. They are dependent on

low, fixed incomes, primarily from Social Security. Residents

live in low-rent, high-rise buildings located in or near

business districts.


• Median Household Income: $17,900

Implications: The median HHI is fixed for this market segment.

It is important to reasonably price new housing supply in order

to attract a sufficient occupancy level in any multi-unit rental

building. This user group spends well-below the national

average on housing, food, apparel, health care, education and

other items. Filling the new rooms in the mixed-use building with

SSS members might be a fine way to create inclusion in the Arts

District, but challenging to fill all units if the average price per

room is above this segment’s fixed monthly budget.

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Metro Renters - Arts District“Metro Renters” is the second largest segment that makes up this

district’s Households according to ESRI.

“Metro Renters” – 45.8% of Households. This segment is said to

be highly mobile and educated. They live in older apartment

buildings and condos with a spouse or a roommate in the center

of a city. This is one of the fastest growing segments and their

income is above the US average. They live close to their jobs and

like to be able to walk or take a quick cab to do leisure activities.

Renters occupy about 80% of all residential housing supply.


• Median Household Income $67,000

Implications: Opposite of SSS market segment, Metro Renters

are ambitious, interested in consuming goods and services well-

above the national average in categories like housing, food,

apparel and education. As the Arts District diversifies in housing,

retail and commercial space, Metro Renters are a prime target

group for new residential and multi-unit supply. This target group

could also benefit from the City’s relocation incentive for remote

workers. Due to the Project’s proximity to 36 Degrees North

(across the street), remote working tenants could walk across the

street and work in the co-working building reducing any

transportation needs.

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Number of Passengers Annual Demand

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Annual demand is often assessed by several

factors. One of which is measured by number of

passengers that fly to and from the closest

airport. In this case, Tulsa International Airport is

a convenient 15-minute trip from the Project site.

Trends show that the number of annual

passengers using Tulsa International Airport over

the last ten years reflect a dip in flights taken as

economic factors like increased unemployment

rates in Tulsa constrained the disposable income

consumers could spend.

Since 2016, the number of passengers have

increased following improved employment rates

in Tulsa. As city incentives are utilized to attract

and grow businesses and as increases in

marketing for tourism related activities occur, the

number of passengers should continue to

increase.

Source: Bureau of Transportation Statistics

Number of FlightsAnnual Demand

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Annual demand is also measured by the

number of flights frequented at Tulsa

International Airport.

Like the trends seen in number of

passengers which dipped over the last

ten years, so have the number of inbound

and outbound flights at Tulsa

International Airport.

Likely a reflection of the improved

economy in Tulsa, since 2017, the number

of flights have increased year-over-year.

A reflection of increased demand, in part

driven by large tourism events like the

NCAA March Madness Men’s Basketball

Tournaments in March 2011, 2017 and

2019.


Passengers Per FlightAnnual Demand

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Annual demand is also measured by the number

passengers per flight frequenting Tulsa International

Airport.

Measurements like passengers per flight offer a

snapshot of the health of the economy, as planes are

mixed with residents and tourist, alike. Over the ten

years that these tables illustrate, the average number

of passengers per flight generally increases, providing

some positive impacts for the tax base, commerce and

residential growth as new dollars are injected into the

Tulsa economy.

While it appears that fewer flights were offered

between 2009 to 2013, the average passengers per

flight increased, showing that airlines were reducing

supply to meet demand and maximize efficiency.

That changed from 2013 to 2014 through the end of

2018, as enplanements and deplanements increased

as the average passenger count per flight, suggesting

a turnaround in the Tulsa economy and growth within

the City.


Source: Tulsa International Airport

Employment by Industry

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Total employment in Tulsa County at the end

of 2017 was roughly 477,000 employees.

Businesses moving from the city to the

suburbs is a trend that recent cities, such as

Tulsa continue to observe.

Employment in Tulsa County is highly

diverse with no industry shown representing

more than ten percent of the economy’s

employment. However, based on household

income in Tulsa County, approximately 14%

of household income comes from the mining

sector, which in Tulsa primarily means gas

and oil. Diversified economies are more

resilient in the face of economic downturns.

The revitalization of the Downtown Tulsa

area will attribute to more jobs and

businesses coming back to the downtown

area.

Tulsa County Employment by Industry - 2017

Industry Employment Percent of Total

Total Employment 476,789 100.0%

By Industry

Nonfarm employment 475,794 99.8%

Farm employment 995 0.2%

Private nonfarm employment 438,596 92.0%

Retail trade 47,776 10.0%

Administrative and waste management services 40,468 8.5%

Manufacturing 36,723 7.7%

Accommodation and food services 36,405 7.6%

Finance and insurance 27,052 5.7%

Other services, except public administration 25,242 5.3%

Construction 25,056 5.3%

Transportation and warehousing 20,853 4.4%

Real estate and rental and leasing 20,094 4.2%

Wholesale trade 17,152 3.6%

Arts, entertainment, and recreation 8,392 1.8%

Information 8,317 1.7%

Other 125,066 26.2%

Government and government enterprises 37,198 7.8%

State and Local 31,371 6.6%

Local government 26,462 5.6%

State government 4,909 1.0%

Military 2,401 0.5%

Federal, civilian 3,426 0.7%

Source: Bureau of Economic Analysis

Unemployment

Tulsa became known as the “Oil Capital of the World” in the early 1900s. Energy

companies began to fill downtown Tulsa in the 1970s. As oil prices plummeted in the

1980s, Downtown Tulsa employment diminished. As a result, telecom firms began to

spring up in Tulsa in the early 2000s, but they did not last long after the 2008

downturn. Since 2008, the unemployment rate has steadily declined. For most of the

2000’s Tulsa’s unemployment rate has been lower than the national unemployment, as

well.

Downtown Walkability

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Walkability is defined here as any point within

1,500 linear feet of the Site, labeled in red.

This distance is approximately ¼ of a mile and

the typical distance between major anchors in a

large mall.

As shown here, the Site is walkable from just

south of the railroad tracks but north of 1st

Street. The walkable area from the Site also

extends west to the David L Moss Justice Center,

east nearly to ONEOK Field and north beyond

Interstate 244.

However, HSP has determined through

interviews that the railroad tracks act as a

mental barrier deterring most people from

walking to the Arts District from the Deco

District. This is the same reason that parking can

be at maximum capacity in Arts, while the North

Parkade’s (1st & Boston) 900 parking spots will

be virtually empty.

Downtown Walkability – Continued

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Walkability offers a range of benefits, including

basic mobility, resident cost savings seen through

efficient land use and connectivity to commerce

within a city. Improved fitness, public health and

economic clusters can result from pedestrian-

friendly, “walkable” cities.

The map on the right shows multiple possibilities for

walkable paths from the Project site to major

venues located across the City. The purpose of this

map is to highlight the accessibility and proximity

to major attractions. Along these paths, multiple

retail and small businesses count on foot traffic. The

location of the Project site is positioned in a

favorable location to reach multiple major venues

by foot, complementing the City of Tulsa’s vision of

developing a more “walkable” Downtown area.

Major Attractions

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This list contains outdoor activities, entertainment

and sports venues and museums.

Tulsa has many attraction options for the array

of consumers that live and/or visit Tulsa.

Travel Oklahoma lists A Gathering Place as the

top attraction to see in Tulsa in 2019. A

Gathering Place has outdoor activities, a café,

an outdoor patio, and an entertainment venue.

Many of the attractions listed hosted many

events during 2018, which attracted hundreds of

thousands of attendees on average. The BOK

Center had the greatest attendance of any

attraction with data shown. The Cox Business

Center, Guthrie Green, ONEOK Field and

Performing Arts Center each attracted more than

250,000 attendees during 2018, too.

Tulsa Major Attractions

Attraction Type 2018 Events 2018 Attendance

A Gathering Place Outdoor / Park -- --

BOK Center Sports / Entertainment 95 675,285

Cain's Ballroom Entertainment 84 105,197

Cox Business Center Convention 141 315,008

Guthrie Green Outdoor / Event 350 330,000

ONEOK Field Sports 125 450,000

Performing Arts Center Cultural 524 267,238

Tulsa Botanical Garden Garden -- --

Tulsa Theater Entertainment 36 80,640

Tulsa Zoo Zoo -- --

Woody Guthrie Center Museum -- --

Source: Travel Oklahoma, City of Tulsa

A Gathering PlaceLocation: South of downtown Tulsa

Open: Currently open to the public

Funding/Operation: $465 million from private businesses and philanthropic

donations in the community.

Description: Dubbed as Tulsa’s Riverfront Park, it is the newest attraction in the Tulsa

market. With over 100 unique and interesting experiences, the Gathering Place

offers special events and activities aimed to attract adults and kids across all ages

and demographic groups. Named the Best New Attraction by USA TODAY the

Gathering Place includes events like Dog Play Wednesdays or Yoga in the Park,

along with read-aloud Story Time in the evening for kids or vibrant BBQs like the

Riverside Ribfest, music concerts and basketball tournaments. Community shuttles are

available for those who cannot drive. Weddings are allowed as well. This project is

the largest private gift to a community park in U.S. history. Funded by donations from

businesses and private residents totaling $465 million dollars, the vision to create a

central location that unifies Tulsa in activity, common purpose and a sense of place is

now open to the public and sees lots of visitors each day.

Proximity to Project Site: 3 miles

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Blue Dome DistrictLocation: Blue Dome District


Description: The Blue Dome District is one of Tulsa’s most popular and must-see

areas in the City. Noticeable from afar by the iconic Blue Dome Building built in

1924, the district is known for its “down-to-earth” vibe, plentiful nightlife scene

and selection of dining options. Both tourists and locals continue to patron this

district and the support has grown the district tremendously. To date the Blue

Dome District includes retail shops, commercial properties, an art studio, a

comedy club, a salon, bowling alley and residential developments are underway

as daily needs are clustered conveniently and are within walking distance of one

another. The Blue Dome District hosts the Blue Dome Arts Festival, Eat Street Tulsa

food truck festival and holiday celebrations like district-wide St. Patrick’s Day

parties and a Mardi Gras parade.

Proximity to Project Site: 10 blocks

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Utica Square

Location: In-between Mid Tulsa and Mayo Meadow


Description: Utica Square is an upscale shopping center filled with over 40

retail shops ranging from name brands like Saks Fifth Avenue, Pottery Barn,

Williams-Sonoma, West Elm, SALT Yoga, to name but a few. Utica Square

holds over 10 dining options ranging from fast casual coffeeshops to fine

dining. Live music like the summer concert series feature jazz musicians to

rock bands which adds a layer of local culture and flare to make this

unique shopping center reflect the vibe of Tulsa. Utica Square is designed

to attract consumers from across multiple market segments and keep visitors

entertained and engaged beyond the traditional tasks that make up a

basic shopping center. Concerts are free to attend and focus on family-

friendly music options.

Proximity to Project Site: 3.5 miles

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Catch A Live ShowLocation: Tulsa Arts District


Description: Tulsa is home to rich, cultural and musical roots. Tulsa has built its reputation on Arts, entertainment and music. Tulsa is filled with several venues like Cain’s Ballroom, the The Tulsa Theater and the Tulsa Performing Arts Center. While the BOK Arena pulls many of today’s top acts, headliners like U2, Eddie Vedderand The Deftones have played in Tulsa Theater, too. Cain’s Ballroom since the 1920’s has hosted a diverse offering of musical genres ranging from country, western swing, rock-n-roll to punk rock. Culturally, Cain’s became a popular night spot during the oil boom for Tulsa. Its importance is still observed today with the steady stream of acts and guests who patron shows that span across multiple genres.

The Tulsa Theater formerly known as the Brady Theater has a 4,200 person capacity and was once a vaudeville venue. Often a popular, must-stop for touring, national music acts.

The Tulsa Performing Arts Center adds a distinct, more sophisticated assortment of programming than the previously mentioned venues. The Tulsa Performing Arts Center features the Tulsa Ballet, musicals, and other theatrical performances.

Proximity to Project Site: Various

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Gilcrease MuseumLocation: Gilcrease Hills


Description: The Thomas Gilcrease Institute of American History Museum is

home to a collection of art, history and culture from across North America

and more specifically is the largest, most comprehensive collection of art

from the Western portion of the United States. The Museum also includes

artifacts from Central and South America.

The name of the museum came from Thomas Gilcrease who was a citizen of

the Muscogee Creek Nation and an avid art collector who was successful in

the oil business in Tulsa. When he passed away, he deeded his his collection

as well as the building and property to the City of Tulsa in 1958. Today,

the Museum is managed by a public-private partnership of the City of Tulsa

and the University of Tulsa.

Proximity to Project Site: 2.5 miles

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ONEOK FieldLocation: Greenwood District


Funding/Operation: $45 million in construction costs adjusted for

inflation as of 2018. Initial costs were $39.2 million.

Description: ONEOK Field has been home to the Tulsa Drillers since

2010 for the Double-A affiliate of the Los Angeles Dodgers seating

7,833 at max capacity. ONEOK Field also hosts college baseball

teams, USL soccer and concerts during non-game days. ONEOK is

named after the ONEOK Foundation and paid $5 million dollars for

the naming rights which carry a term of 20-years which began on

January 12, 2009. Located in the Greenwood District, the ballfield is

positioned to take advantage of the mix of restaurants and emerging

nightlife located nearby in the Arts District.


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Guthrie GreenLocation: Tulsa Arts District


Description: Largely funded by the George Kaiser Family

Foundation, the Guthrie Green is a development designed to create

a sense of place similar to the Gathering Place, but on a smaller

scale. Guthrie Green hosts concerts, fitness bootcamps, yoga, story

time with Curious George, food truck festivals and movie nights.

All of these events are free to the community. Playing off the

famous lyrics, “this land is your land … this land was made for you

and me,” Guthrie Green embodies the same philosophy to create a

unified gathering location in the Arts District for everyone to

celebrate Tulsa’s culture. Guthrie Green is 2.2 acres of green space

in the middle of the Arts District. Casual dining as well as fine dining

options are located nearby.


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ahha TulsaLocation: Tulsa Arts District


Description: The Arts and Humanities Council of Tulsa recently

changed its name to ahha Tulsa, ”to something modern that

encompasses the organization’s mission to cultivate creativity in

Tulsa, while honoring its decades-long history,” according to Tulsa

Public Radio. Ahha Tulsa is home to a mix of contemporary art,

classrooms, studios, artist services and hands-on learning

opportunities for the entire family. Classes include artistic

expressions and lessons of some of the most unique art like graffiti

painting to stop motion animation.

Open Wednesday through Saturday, Noon through 9 p.m. and

Sunday Noon through 7 p.m. Tickets are $12.75 for Adults and

$8.75 for children (3-12). Kids under 3 and members are free of

charge.


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Woody Guthrie Center

Location: Tulsa Arts District


Funding/Operation: $9 million. Architects Kinslow, Keith & Todd.

Designed and digital media by Gallagher and Associates. Made

possible by the George Kaiser Family Foundation.

Description: The Woody Guthrie Center was founded to spread

Woody Guthrie’s message of inclusion, diversity, equality and social

justice. The building in which the WGC is located is owned by City

and leased to the WGC. The Center celebrates Woody’s life work

and achievements and aims to impact future generations through

interactive displays and other exhibits like song writing lyrics station

and an option to be able to submit those works into the Center’s

database. The Center opened in 2013 and is one of only a few

official Grammy museums.


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Major Project Pipeline

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The Arts District has experienced a recent

resurgence in popularity from a 30-year

process of redevelopment and revitalization.

Much of the momentum in the district is due to

projects undertaken by a few major investors.

The initial projects that have come online have

created more activity, traffic and interest in the

Arts District, which has encouraged the most

recent wave of investment and development,

which can be seen here.

Currently, the Arts District is mostly known for

live music and nightlife, but these new museums,

office buildings, and mixed-use developments

will offer more variety. However, they will also

create additional parking demand in the

District.


All of the projects described above are located within the Arts District or the

adjacent East Village district, meaning all will impact the Arts District as a whole and

the Project Site specifically. Most of these projects are expected to be completed by

the end of 2022, though some have not stated a timeline. These projects also

represent more than 470,000 SF of various uses, 500 for rent and for sale multi-

family residential units and nearly $400 million of investment flowing into the Arts

District.


Development Name Use Type Qty Units Estimated Cost (millions)

OKPOP Museum Museum 50,000 SF $45

Block 44 (VAST, 2 N Elgin) Mixed-Use 107,000 SF $43

Davenport Urban Lofts Condos 32 Units $24

LA King Redevelopment Mixed-Use 26,000 SF $2

The View Residential 198 Units $40

USA BMX Indoor Sport 55,000 SF $19

Bob Dylan Archive Museum N/A -- --

WPX Headquarters Office 250,000 SF $100

UCAT Property Mixed-Use N/A N/A --

Greenwood Cultural Center Cultural Center 10,000 SF $9

Western Supply Office 40,000 SF $110

Total $392

Source: City of Tulsa Office of Economic Development

OKPOP MuseumLocation: Tulsa Arts District

Open: TBD

Funding/Operation: The Oklahoma Historical Society received $25 million from the state to build OKPOP and parking space. A private fundraising campaign to raise $15 million to fund exhibits and collections will be added to the overall expenses of the museum. The City of Tulsa has pledged $3 million.

Description: The OKPOP concept celebrates the ”creative spirit” of Oklahoma residents who have made an impact in arts and culture through music, TV, film, radio, writing and theater.

Proximity to Project Site: <1 block

40

Block 44/Vast Bank HQ

Location: Downtown Tulsa

Open: Estimated opening in 2020

Funding/Operation: The Ross Group Development, LLC and Valley

National Bank (now VAST Bank) own the building. The project costs

are estimated at $43 million. $11 million of that is for the 398-

space parking structure adjacent to the office building.

Description: VAST Bank intends to occupy approximately 25,000 SF

of the 100,000-SF office building. The remainder of the building

has been fully pre-leased during construction by other tenants,

including a rooftop sushi bar. The parking garage also offers 6,000

SF of retail space, which is also fully pre-leased by two separate

restaurants.


41

Davenport Lofts



Funding/Operation: Project costs estimated at $24 million.

Description: Located in the Tulsa Arts District, the building plans to offer 32 condos on floors 4 through 9 and a rooftop for indoor and outdoor common space. With 64 parking spaces and 5,000 SF for retail on Main Street, this mixed-use building is positioned to attract high-income residents into the Arts District. Condos to start at $600,000.

Proximity to Project Site: <1 block

42

The View


Open: Estimated in late 2020

Funding/Operation: $40 million dollars total cost. Set to be completed in late 2020. American Residential Group bought the block in 2015 and broke ground in the first quarter of 2019.

Description: Planned to come to market in 2020, this luxury apartment building will offer 198 units. In a partnership with City of Tulsa, the project will include 20 percent of its units as workforce units; the cost of which will be underwritten by a TIF. Located a few miles from the two major universities in Tulsa and steps from the Arts District, The View plans to attract tenants who want to live in a walkable area. The building is planned to be six stories tall.


43

USA BMX Headquarters and Arena

Location: Evans Fintube Industrial Site

Open: TBD

Description: USA BMX has signed a 30-year agreement with the City of Tulsa to build its new headquarters, museum and hall of fame, indoor arena on a portion of the Evan-Fintube site located in the northeast side of downtown. USA BMX will lease the location from the city and construction is not determined when it will be completed.

Proximity to Project Site: Three miles northeast on north side of I-244

44

Bob Dylan Center

Location: Archer St & MLK Blvd

(adjacent ahha Tulsa)

Open: 2021

Description: Currently located within the GilcreaseMuseum, an archive of more than 100,000 Bob Dylan-related items including artwork, documents, films, notebooks, photographs and more will be housed in a newly-built museum designed by Olson Kundig.

Proximity to Project Site: 4 Blocks

45

L.A. King RedevelopmentLocation: Tulsa Arts District

Open: Estimated opening 2021

Funding/Operation: The Tulsa Development Authority has agreed to pledge $2 million in a low-interest loan to Mayfield, LLC, the developer, for the purchase of the L.A. King Property. Proposed uses include a brewery, studio, along with retail and office space.

Description: The multi-use project is expected to include a brewery, studio and retail and office space.


46

WPX HQ

Location: Historic Greenwood District


Funding/Operation: Costs estimated at $110 million.

Description: The project will include 250,000 SF of office space for

WPX with roughly 15,000 SF of commercial space and about 700

parking spaces. There are plans to include ground-level retail with

10 floors of office space above.


47

GreenwoodCultural Center

48

Location: Historic Greenwood District

Open: October 1995

Funding/Operation: There are plans for a $9-million renovation

and expansion of the current Greenwood Cultural Center. This

money has been pledged by private sources and hopes construction

will begin in the Fall of 2019. The total cost of the center was close

to $3 million. In 2011, the Center lost all of its funding from the

state, so alternate forms of revenue was needed to be leveraged.

Description: The Greenwood Cultural Center mission is to serve

Tulsa by focusing on and promoting educational programs and

cultural experiences rooted in preserving African-American

heritage. Until 2007, the Oklahoma Jazz Hall of Fame was housed

in the Greenwood Cultural Center.


Western Supply BuildingLocation: Tulsa Arts District

Open: N/A

Funding/Operation: Few details have been published about the project, but most of the residential units will house members of the GKFF’s philanthropic organizations (Artist Fellowship, Teach for America, etc).

Description: GKFF project which plans to bring 267 apartments to the market of which an estimated 50 – 70 units will be market rate apartments. The related mixed-use development plans to develop 40,000 SF of office space with retail, restaurant and other space to be determined upon completion.


49

Chapter 3: Retail & Restaurant

Market Analysis

50

Supply & Pipeline

51

Regional Supply Map

52

The entire Tulsa market consists of

17 submarkets, which are shown to

the right here. The project Site is in

Downtown Tulsa, which is labeled

15 on this map.

Overall Supply & Demand

53

Tulsa has averaged deliveries of

nearly 500,000 SF annually since

2010. Growth was robust before the

Great Recession with nearly 4 million

SF opening between 2007 and 2009.

Absorption has remained relatively flat

from 2007 to YTD.

Construction and absorption are

projected to remain on the same

trajectory for the next few years as

well.

Inventory Net Absorption

Year SF SF Growth Percent of Growth SF Percent of Inv Construction Ratio

2023 70,213,120 451,975 0.6% 225,098 0.3% 2.0

2022 69,761,145 407,135 0.6% 193,718 0.3% 2.1

2021 69,354,010 395,728 0.6% 277,943 0.4% 1.4

2020 68,958,282 454,236 0.7% 373,649 0.5% 1.2

2019 68,504,046 364,881 0.5% 256,839 0.4% 1.4

YTD 68,352,739 213,574 0.3% 84,150 0.1% 2.5

2018 68,139,165 428,703 0.6% 185,834 0.3% 2.3

2017 67,710,462 472,400 0.7% 138,843 0.2% 3.4

2016 67,238,062 574,026 0.9% 975,374 1.5% 0.6

2015 66,664,036 802,043 1.2% 1,006,284 1.5% 0.8

2014 65,861,993 794,191 1.2% 1,172,563 1.8% 0.7

2013 65,067,802 523,863 0.8% 630,287 1.0% 0.8

2012 64,543,939 637,383 1.0% 456,079 0.7% 1.4

2011 63,906,556 693,288 1.1% 953,159 1.5% 0.7

2010 63,213,268 488,478 0.8% 504,835 0.8% 1.0

2009 62,724,790 1,093,467 1.8% 761,653 1.2% 1.4

2008 61,631,323 1,837,274 3.1% 1,882,857 3.1% 1.0

2007 59,794,049 917,307 1.6% 638,527 1.1% 1.4

Source: CoStar Report

Tulsa Retail Overall Supply & Demand

Downtown Tulsa Overall Supply and Demand

54

The retail market in Downtown Tulsa has

seen decay in the past three years.

Inventory has remained mostly flat during

the period shown with a net closure of

10,000 SF since 2007. Inventory is

projected to grow in downtown Tulsa nearly

to the CBD’s peak in 2017.


Year SF SF Growth Percent of Growth SF Percent of Inv

2023 1,119,684 14,029 1.3% 14,003 1.3%

2022 1,105,655 12,545 1.1% 13,181 1.2%

2021 1,093,110 11,042 1.0% 11,307 1.0%

2020 1,082,068 4,653 0.4% 7,672 0.7%

2019 1,077,415 (34,017) -3.1% (37,692) -3.5%

YTD 1,072,184 (39,248) -3.5% (39,536) -3.7%

2018 1,111,432 (12,000) -1.1% (9,631) -0.9%

2017 1,123,432 12,000 1.1% 17,458 1.6%

2016 1,111,432 18,820 1.7% 4,246 0.4%

2015 1,092,612 2,760 0.3% 1,378 0.1%

2014 1,089,852 0 0.0% 12,585 1.2%

2013 1,089,852 (10,100) -0.9% (12,004) -1.1%

2012 1,099,952 9,928 0.9% (572) -0.1%

2011 1,090,024 0 0.0% 12,042 1.1%

2010 1,090,024 3,731 0.3% (13,009) -1.2%

2009 1,086,293 3,080 0.3% (1,261) -0.1%

2008 1,083,213 0 0.0% 23,181 2.1%

2007 1,083,213 0 0.0% (19,318) -1.8%


Downtown Tulsa Retail Overall Supply & Demand

Under Construction Inventory Average Building Size

Submarket Bldgs SF (000) Pre-Leased SF (000) Pre-Leased Percentage All Existing Under Constr

Southeast Tulsa 6 211 57 27.2% 14,691 35,120

South Tulsa 5 155 151 97.8% 12,069 30,930

North Central Tulsa 4 36 32 88.8% 7,376 8,903

Northeast Tulsa 3 11 6 58.3% 9,077 3,600

South Central Tulsa 2 10 10 100.0% 16,549 4,899

MidTown Tulsa 2 9 5 60.1% 11,310 4,387

East Tulsa 1 6 6 100.0% 10,994 6,035

Tulsa CBD 1 6 0 0.0% 8,240 6,000

Northwest Tulsa 1 5 5 100.0% 6,496 5,325

Wagoner County 1 3 3 100.0% 7,586 2,919

All Other 0 - - - 8,135 -

Totals 26 451 276 61.2% 10,345 17,332


Tulsa Retail Submarket Construction

2 N Elgin is the only space within downtown that is currently under

construction. This location is part of the VAST Bank/Block 44

development profiled in Chapter 2. The 6,000 SF available at 2

N Elgin is fully pre-leased with three restaurants.

Construction

Market Performance

56

Market Rent

57

Tulsa as a whole has an average rental

rate of just more than $12 per SF per

year. The US has an average rate that is

nearly double that of Tulsa.

However, as will be seen later in this

section, downtown Tulsa has higher rental

rates than those shown here and Main

Street in the Arts District is performing

closer to the national average.

Source: CoStar

Submarket Asking Rents & Effective Rents

58

Six of the ten submarkets listed have asking

rents per SF above $11.00. Downtown

Tulsa has the highest with $16.10 average

asking rent per SF. Competition in this area

is driving retail prices up at a steady

growth rate.

During the past 12 months, almost all

submarkets have seen an increase in asking

rents by at least 3%.

Asking Rent 12 Month Asking Rent

Submarket Per SF Growth

Downtown Tulsa $16.10 3.7%

South Tulsa $15.99 2.8%

MidTown Tulsa $14.63 4.6%

South Central Tulsa $13.61 2.5%

Northeast Tulsa $12.84 3.7%

Southeast Tulsa $12.27 3.3%

Rogers County $11.23 3.4%

North Central Tulsa $9.77 3.8%

Creek County $9.54 3.3%

West Tulsa $7.90 3.2%


Tulsa Retail Submarket Rent - Market Supply

Vacancy

In 2017, the most notable increase in vacancy occurred within the power

center market. Tulsa on average increased its vacancy rate by about 1

percentage point as as result of that loss, in 2017. To date, Tulsa’s vacancy

rate is roughly right in line with the national average.

The large spike in mall vacancy in 2019 occurred due to large anchor

tenants exiting the market.

Source: CoStar

Downtown Tulsa Vacancy and Rent

60

The retail market in Downtown Tulsa has

shown a small growth in dollars per sf and

small growth overall throughout the years.

Total SF and vacancy have not changed

much either. This is potentially due to

competition and over population.

In 2018, downtown restaurants averaged

$255 per SF in sales, retail shops averaged

nearly $144 per SF.

Effective Rent Vacancy

Year Per SF Percent Growth SF Percent of Vacancy Percent Change

2023 $16.30 0.0% 52,278 4.5% -0.1%

2022 $16.29 0.1% 52,482 4.6% -0.1%

2021 $16.27 0.0% 53,377 4.7% -0.1%

2020 $16.28 0.4% 53,929 4.8% -0.3%

2019 $16.22 0.7% 57,099 5.2% 0.5%

YTD $16.13 0.2% 53,695 4.9% 0.2%

2018 $16.10 3.7% 53,407 4.7% 0.0%

2017 $15.53 2.8% 54,267 4.7% -0.5%

2016 $15.10 0.3% 59,725 5.2% 0.9%

2015 $15.06 1.3% 48,651 4.3% 0%

2014 $14.87 1.9% 43,769 3.9% -1.1%

2013 $14.59 0.9% 56,354 5.0% -0.3%

2012 $14.46 -0.6% 60,316 5.3% 1.4%

2011 $14.55 1.4% 43,950 3.9% -1.1%

2010 $14.35 0.5% 55,992 5.0% 1.5%

2009 $14.28 1.3% 39,252 3.5% 0.4%

2008 $14.10 -1.1% 34,911 3.1% -2.1%

2007 $14.26 -1.2% 58,092 5.2% 1.7%


Downtown Tulsa Retail Overall Vacany & Rents

Vacancy & Absorption

61

The Tulsa Retail Submarket vacancy

and net absorption shows that South

Tulsa has the highest percent of

inventory based on 12-month net

absorption.

Downtown Tulsa had a relatively

average vacancy rate compared to

the rest of the retail submarkets.

The negative absorption shown for

MidTown Tulsa is a result of the

Macy’s closing.

Vacancy 12 Month Net Absorption

Submarket SF Percent SF Percent of Inv

South Central Tulsa 912,277 6.1% 59,587 0.4%

North Central Tulsa 500,153 6.5% 37,810 0.5%

Southeast Tulsa 453,338 5.5% 28,708 0.4%

West Tulsa 271,640 7.8% (30,589) -0.9%

MidTown Tulsa 263,649 5.3% (16,086) -0.3%

South Tulsa 164,196 3.1% 150,864 2.9%

Northeast Tulsa 125,515 2.0% 87,444 1.4%

Rogers County 64,965 1.9% 11,075 0.3%

Downtown Tulsa 53,695 4.7% (39,536) -3.5%

Creek County 31,049 1.1% 48,545 1.7%


Tulsa Retail Submarket Vacancy & Net Absorption

Arts District Profile:Retail & Restaurant

62

Arts DistrictRestaurants

63

The Project site is located in the heart of the

Tulsa Arts District within walking distance of a

diverse restaurants mix catering to the wide

range of consumer tastes that work, live and visit

in the District.

Most of the restaurant supply is characterized

by casual dining in the Arts District and in the

surrounding Districts.

Currently, the share of restaurant options skew

toward casual dinning. Although, as more office

and residential space comes to market, adding

unique, higher-end dining options or health

conscious food options may emerge as an

untapped opportunity. With limited space in the

proposed mixed-use structure, several small,

pop-up or trial food providers could test new

food concepts and get a chance to test the

market’s palate.

Arts DistrictRetail

64

The Project site is located in the heart of the Tulsa

Arts District within walking distance of a diverse

retail mix.

There are no Big Box or national chain stores

located in the Arts District, as the map illustrates.

When considering reasonable retail options that

would complement the neighborhood and future

plans to continue to make Tulsa more “walkable,”

developers ought to consider tapping local

entrepreneurs like those retailers who may be

part of 36 Degrees North membership who need

a site to open a shop that requires a small

footprint.

On the first floor of the proposed mixed-use

building, a smaller section of space could be set

aside to provide retailers an area to sell goods

and capitalize off of the foot traffic generated by

patrons from the food options.

RetailNotably there are few major chain retailers, few retailers in general even,currently in the Arts District. Still there are select, locally-operated shopscatering to local needs. The Arts District mainly consists of one- to three-storybrick-faced buildings that were built before automobiles gained popularity,leading to a walkable district.

Colors of Etnika is a boutique retailer with a passion for handmade fashion.Etnika offers artisan jewelry purchased through fair-trade practices withnature themed designs in mind. The first image illustrates some of the itemsavailable for purchase.

Glassblowing School founded in 2007, the Glassblowing School offersclasses to learn how to create-your-own glass objects for practical anddecorative uses in its studio. Novices and experts frequent the location notonly for classes but to also purchase items from their gallery. Items found inthe gallery have either been donated by students or staff or guest artistsand all proceeds benefit the school.

Made: The Indie Emporium started nearly 20 years ago with a goal tocreate a venue for artists and craft makers to selling and promote theirwork. Made is a modern, handmade boutique which features workshops,social crafting, retail and part of the Downtown culture that symbolizesTulsa’s homegrown retail sector providing opportunities for other artists andcraft makers to sell their goods in her storefront.

65

RestaurantsRestaurants in the Arts District are also almost exclusively locallyoperated concepts. While the District is still gaining momentum andlegitimacy commercially, it is a very popular area for dining andnightlife among locals.

Caz’s Chowhouse is a local comfort food option branded as“upscale, down-home cooking.” Named one of the most uniquerestaurants in Downtown Tulsa partly due to the range of foodoptions and names for the entrees.

Phryme is a high-end, white tablecloth steakhouse featuring craftcocktails and a venue for residents to ”wine and dine” after takingin an afternoon at Guthrie Green or shopping in the District. Thefirst image shows a snapshot of an active evening at the restaurant.

The Tavern is touted as a “modern interpretation of the classicneighborhood pub.” Private dining options are available as well asgeneral seating. Oklahoma products like craft beer are sold alongwith casual, American cuisine options.

66

Restaurant Market:Food Hall

67

Mother Road MarketLocation: 1124 S Lewis Ave


Funding/Operation: $5.5 million development done by the Lobeck Taylor Family

Foundation. The development was completed in 2018.

Description: Marketed as Tulsa’s first and only food hall, Mother Road Market is a

26,000-square foot entrepreneurial development. Mother Road Market has 16 small

shops at roughly 320 square feet each and one anchor tenant shop at roughly 640

square feet. The market also includes a bar, outdoor seating, pop-up shops, and room

for children’s activities.

Proximity to Project Site: 3.1 miles south

68

Stakeholder Feedback

69

Summary of Interviews –Retail and Restaurant

Growth in the District’s restaurant inventory will be difficult without gaining interest from outside Tulsa. Most of the

restaurants in the District are owned by local operators, which lends to the character of the area. However, with the limited

number of local operators available, it is increasingly difficult to find legitimate restauranteurs able to support the rental

rates in the area long term. Regional and national operator interest is very limited at this point.

A food hall/restaurant incubator concept could be highly feasible and impactful. Food halls are becoming a

development trend across the United States. Tulsa has begun to realize this trend with Mother Road Market. Food halls are

often amenities that help increase rents on other uses above (office/residential), but by themselves are not necessarily very

profitable. The Arts District would be a prime location for another food hall concept for multiple reasons. Current

retail/restaurant space vacancies are in the range of 5,000 to 6,000 SF, which is much larger than most restaurant concepts

need and/or can support. As the roster of local operators willing and able to open new concepts in the District diminishes, a

food hall would allow for less established operators to test concepts with lower overhead. From the developer’s perspective,

turning over spaces for new tenants would be faster and cheaper due to very little, if any, build out and could avoid the

permit process between tenants.

70

Summary of Interviews –Retail and Restaurant

Apartments above retail/restaurant space makes it more attractive to tenants. There is somewhat of a

reciprocal effect of having food and beverage or shopping options in a building for residential tenants. These

uses are synergistic, hence the popularity of mixed-use projects.

Retail will continue to struggle in the area until a daytime population is established. While restaurant and

retail space are considered virtually the same thing when speaking about commercial real estate, the viability of

either does not necessitate the other. The District has become a nightlife and dining staple in Tulsa, but retail still

struggles to find footing. Brokers believe that as more residential projects are completed and occupied, retail will

become more viable. Currently, brokers are finding that a grocery or drug store would be the most beneficial to

the District. Even so, without a greater daytime population, attracting a reputable tenant of this type will be

difficult.

Current rental rates along Main Street come close to the market rate in the Arts District. Stakeholders have

expressed that the current rates being paid by retail and restaurant tenants along Main Street in the Arts District

are paying between $18 and $24 per SF annually. While some tenants have maintained lower rental rates,

especially in GKFF properties, the rent ceiling in the area is approaching true market rates.

71

Chapter 4: Office Market Analysis

72

Supply & Pipeline

73

Overall Supply& Demand

74

The overall supply of office units in the

Tulsa market has been steadily

increasing at around a half a percent

per year on average. In 2017, there

was a growth of 0.3 percent, with an

additional 131,074 SF in the market.

Office space is growing slowly, but

steadily.

Since 2007 to 2017, an additional

3,057,693 SF was added to the

market.

Additional office space is projected to

enter the market, but at a very steady

pace.


Year SF SF Growth Percent of Growth SF Percent of Inv Construction Ratio

2023 49,606,124 201,252 0.4% 171,396 0.3% 1.2

2022 49,404,872 189,942 0.4% 176,216 0.4% 1.1

2021 49,214,930 160,698 0.3% 175,568 0.4% 0.9

2020 49,054,232 51,474 0.1% 208,386 0.4% 0.2

2019 49,002,758 257,237 0.5% 103,027 0.2% 2.5

YTD 48,750,127 4,606 0.0% (252,835) -0.5% -

2018 48,745,521 67,485 0.1% (108,040) -0.2% -

2017 48,678,036 131,074 0.3% (241,240) -0.5% -

2016 48,546,962 601,470 1.3% 883,935 1.8% 0.7

2015 47,945,492 87,988 0.2% 89,870 0.2% 1

2014 47,857,504 273,750 0.6% 999,740 2.1% 0.3

2013 47,583,754 689,923 1.5% 774,671 1.6% 0.9

2012 46,893,831 76,740 0.2% 535,557 1.1% 0.1

2011 46,817,091 155,532 0.3% 298,366 0.6% 0.5

2010 46,661,559 357,950 0.8% (237,484) -0.5% -

2009 46,303,609 361,301 0.8% (2,325) 0.0% -

2008 45,942,308 321,965 0.7% 1,173,101 2.6% 0.3

2007 45,620,343 500,393 1.1% (82,149) -0.2% -


Tulsa Office Overall Supply & Demand

Inventory

Currently CBD is only second to South Central in terms of inventory of SF holding

nearly 13,000 SF. CBD has the most SF under construction at 144,000 SF, between

the VAST Bank and Midland buildings. WPX and Western Supply revealed plans for

projects not included in the data shown here.

VAST Bank, Western Supply and WPX Headquarters projects are in/near the Arts

District and are profiled in Chapter 2.

Inventory 12 Month Deliverables Under Construction

Submarket Bldgs SF (000) Percent of Market Bldgs SF (000) Percent of Market Bldgs SF (000) Percent of Market

South Central 555 14,031 14.4% 9 110 0.8% 3 31 0.2%

CBD 151 12,893 13.2% 1 21 0.2% 2 144 1.1%

Mid-Town 453 6,122 6.3% 2 28 0.5% 2 32 0.5%

North Central 271 3,543 3.6% 1 11 0.3% 1 5 0.1%

East 69 3,094 3.2% 0 0 0.0% 0 - -

Southeast 190 2,429 2.5% 0 0 0.0% 3 16 0.7%

Northeast 123 1,701 1.7% 0 0 0.0% 0 - -

South 185 1,283 1.3% 5 59 4.6% 2 23 1.8%

Rogers County 144 841 0.1% 0 0 0.0% 1 4 0.5%


Tulsa Office Submarket Inventory - Market Supply

VAST Bank is now 100% pre-leased, meaning that the CBD inventory under

construction is at least 70% pre-leased and likely more.

Five of the other submarkets shown have pre-leased percentages of 100%.

Many office spaces have been build-to-suit in recent years, but as with VAST,

office developments are beginning to include more speculative space.

Under Construction Inventory Average Building Size

Submarket Bldgs SF (000) Pre-Leased SF (000) Pre-Leased Percentage All Existing Under Constr

CBD 2 144 96 66.8% 85,382 71,951

Mid-Town 2 32 9 27.3% 13,514 15,851

South Central 3 31 31 100.0% 25,281 10,242

South 2 23 23 100.0% 6,934 11,343

Southeast 3 16 11 69.9% 12,786 5,322

Creek County 1 9 9 100.0% 7,345 9,156

North Central 1 5 5 100.0% 13,072 5,085

Roger County 1 4 4 100.0% 5,842 4,000

East 0 - - - 44,840 -

Northeast 0 - - - 13,833 -

All Other 0 - - - 8,075 -

Totals 15 264 188 71.3% 19,531 17,548


Tulsa Office Submarket Construction

Construction

Downtown TulsaSupply and Demand

77

The office market in Downtown Tulsa has

seen steady negative absorption in the past

five years. The projections for the Downtown

Tulsa office market are in-line with the

2019 projected deliveries.

Inventory growth saw declines in growth in

almost every year from 2015 to 2018. The

Santa Fe Square Office Building has a lot

to do with the future inventory square foot

growth.

The steady expectation of inventory growth

in 2019 is in-line with the following years

absorption projections.


Year SF SF Growth Percent of Growth SF Percent of Inv

2023 13,218,204 65,770 0.5% 50,381 0.4%

2022 13,152,434 62,079 0.5% 50,604 0.4%

2021 13,090,355 52,543 0.4% 45,189 0.3%

2020 13,037,812 16,854 0.1% 47,916 0.4%

2019 13,020,958 63,194 0.5% 78,317 0.6%

YTD 12,880,705 (77,059) -0.6% (36,324) -0.3%

2018 12,957,764 (114,566) -0.9% (90,417) -0.7%

2017 13,072,330 10,560 0.1% 130,617 1.0%

2016 13,061,770 (6,000) 0.0% 194,554 1.5%

2015 13,067,770 (58,070) -0.4% (167,102) -1.3%

2014 13,125,840 0 0.0% 252,128 1.9%

2013 13,125,840 299,959 2.3% 240,439 1.8%

2012 12,825,881 0 0.0% 139,904 1.1%

2011 12,825,881 (128,866) -1.0% (110,799) -0.9%

2010 12,954,747 0 0.0% (51,786) -0.4%

2009 12,954,747 0 0.0% (158,438) -1.2%

2008 12,954,747 0 0.0% 176,362 1.4%

2007 12,954,747 0 0.0% (90,611) -0.7%


Downtown Tulsa Office Overall Supply & Demand

Downtown Tulsa Construction

78

As mentioned in the previous slide, the

market for office in the Downtown Tulsa

area is going from minimal growth in 2017

and 2018 to more steady growth in 2019.

There was one recent delivery at 1110 S

Denver Ave and two buildings are currently

under construction. These office buildings

show a quick turn around time, making

proposals easy to meet demand.

Downtown Tulsa Office Construction

Property Name / Address Bldg SF Stories Start Date Completion Date

Recent Deliveries

1110 S Denver Ave 21,035 1 Jan-19 Jun-19

Under Construction

The Midland 42,840 2 Apr-19 Sep-19

Vast Bank 101,061 6 May-18 Oct-19

Proposed

Santa Fe Square Office Building 425,000 12 Jul-19 Oct-19

GreenArch Phase II 60,000 4 Jul-19 Dec-19

Total / Average 649,936 5

Source: CoStar

Market Performance

79

TulsaRent & Vacancy

80

Rents have increased slightly each year for

office space in Tulsa. The market average

surpassed $16 per SF per year in 2019.

Across the data set, occupancy is steadily

increasing since 2007. Projects show Tulsa

could reach a 90-percent occupancy rate by

the end of 2020.

These trends show office space is reaching

near full capacity across the city. The slight

uptick in the vacancy since 2016 has been

caused by a flight to quality that has driven

lower vacancy in Class A properties and

higher rates in lower class properties.

Rent Vacancy

Year Per SF Percent Growth SF Percent of Vacancy Ppts Change

2023 $16.33 -0.1% 5,197,752 10.5% 0%

2022 $16.35 0.1% 5,165,470 10.5% 0%

2021 $16.33 0.2% 5,149,243 10.5% -0.1%

2020 $16.30 0.7% 5,161,564 10.5% -0.3%

2019 $16.18 1.5% 5,315,904 10.8% 0.3%

YTD $16.07 0.8% 5,418,178 11.1% 0.5%2018 $15.95 1,5% 5,160,737 10.6% 0.3%

2017 $15.71 0.9% 4,985,212 10.2% 0.7%

2016 $15.56 0.0% 4,612,898 9.5% -0.7%

2015 $15.56 3.9% 4,895,363 10.2% 0%

2014 $14.98 2.8% 4,897,245 10.2% -1.6%

2013 $14.57 3.1% 5,623,235 11.8% -0.4%

2012 $14.13 2.4% 5,707,983 12.2% -1.0%

2011 $13.79 -1.6% 6,166,800 13.2% -0.4%

2010 $14.02 -2.3% 6,309,634 13.5% 1.2%

2009 $14.34 0.7% 5,714,200 12.3% 0.7%

2008 $14.24 1.7% 5,350,574 11.6% -1.9%

2007 $13.99 4.9% 6,201,710 13.6% 1.1%


Tulsa Office Overall Supply & Demand

Vacancy

In 2015, there is a notable increase in vacancy and is a result of the

lagging effect of the energy downturn. In 2017, a large move out from

State Farm created an increase in vacancy as well. Starting in 2019, the

market appears to have settled but Tulsa in general holds a larger vacancy

than the national average. The highest quality office buildings, which

include properties such as VAST Bank, have been more occupied than the

US average since 2013.

Source: CoStar

Market Rent

82

The Tulsa office submarket rent per SF is well

below the national average. With rates greater

than $34 across the country, Tulsa is just above

$16 per SF.

The chart shows that Tulsa’s 3-star rent per SF is

about the same rate as the market, as most office

buildings are 3-star.

For businesses with plans to relocated to Tulsa

and in need of 4-5 star accommodations, rental

rates for these buildings are affordable and well

below the national average as well.

Downtown Tulsa OverallVacancy and Rent

83

The office market in Downtown Tulsa has

shown a steady growth in dollars per sf.

The market has seen a slight decrease in

vacancy starting in 2016. The newest and

highest quality office developments have

occurred downtown, which is being driven

by increased interest in the downtown

market by office tenants and employees.

Brokers believe that the Arts District has the

opportunity to outperform the Tulsa and

Downtown Tulsa markets on average with

the most recent multi-tenant buildings

capturing up to $30 per SF gross annual

rental rates.

Effective Rent Vacancy

Year Per SF Percent Growth SF Percent of Vacancy Percent Change

2023 $16.20 -0.2% 1,378,133 10.4% 0.0%

2022 $16.23 0.0% 1,362,611 10.4% 0.0%

2021 $16.23 -0.1% 1,350,990 10.3% 0.0%

2020 $16.24 0.3% 1,343,503 10.3% -0.3%

2019 $16.20 1.2% 1,374,422 10.6% -0.2%

YTD $16.15 0.9% 1,349,637 10.5% -0.3%

2018 $16.00 0.7% 1,390,372 10.7% -0.1%

2017 $15.89 0.7% 1,414,521 10.8% -0.9%

2016 $15.78 1.2% 1,534,578 11.7% -1.5%

2015 $15.60 3.4% 1,735,132 13.3% 1%

2014 $15.08 4.0% 1,626,100 12.4% -1.9%

2013 $14.50 3.6% 1,878,228 14.3% 0.1%

2012 $14.00 3.0% 1,818,708 14.2% -1.1%

2011 $13.59 -1.4% 1,958,612 15.3% 0.0%

2010 $13.79 -2.0% 1,976,679 15.3% 0.4%

2009 $14.07 0.7% 1,924,893 14.9% 1.2%

2008 $13.98 1.5% 1,766,455 13.6% -1.4%

2007 $13.77 5.8% 1,942,817 15.0% 0.7%


Downtown Tulsa Office Overall Vacany & Rents

Office Market:Co-working

84

36 Degrees North Location: Tulsa Arts District

Open: October 2016

Description: 36 Degrees North, a co-working and resource center, was founded

after an entrepreneur study in 2014 by the George Kaiser Family Foundation.

36 Degrees North was named after the latitudinal line that runs through Tulsa

and founded primarily for start-up founders, small business owners, freelancers

and remote workers. After 18 months in business, 36 Degrees North outgrew

their capacity and opened a second location in the Arts District. Currently, 50

percent of the non-profit’s funding comes in the form of private donations.

Membership ranges based on use of space. Prices per month start at $20 for a

day pass. For seasonal, summer months, students and teachers can purchase a

package of $99 for three months. Next, $149 per month is offered for light

users looking for an open space for about 10-20 hours a week. For workers who

work around a 24/7, flexible schedule, $199 per month is offered. Individuals

who need a part to full-time workspace each week can purchase a $299 a

month package. Those who have a small team, requiring 40+ hours a week, get

the highest amenity package for $700 a month.

Proximity to Project Site: 1 block

85

Regus Tulsa


Open: Currently open

Funding/Operation: Regus operates in short-term and long-term leases for

co-working professionals. Office space ranges from $8-$10 per day. Other

rates for co-working, meeting rooms, and virtual offices range as well. The

lowest rate listed is roughly $3 and the highest is around $10 per day.

Description: The traditional, executive suite and working space set-up,

complete with business grade high-speed internet, a staffed receptionist and

fully furnished office spaces. Located close to the BOK Arena and the

Hardesty Arts Center, meeting clients and offering the traditional business

accommodations are what Regus co-working spaces market to potential

clients.


86

HQ Tulsa Location: Blue Dome District

Open: September 2019

Funding/Operation: N/A

Description: A co-working property featuring 10,800 SF for event space,individual meetings and for small businesses in Tulsa. Month-to-monthmemberships are offered to fit the growing needs of entrepreneurs. Thebenefits includes 24/7 access, high-speed WiFi, on-site support team,lockable storage, meeting rooms, ergonomic furniture, access to communityevents and classes, free parking, printers and business centers, bike storage,weekly food trucks and positioned near some of the best restaurants and barsTulsa has to offer. Memberships cost range depending on use. A day passbegins at $20 and meetings rooms for the day cost $25. For longer term use,entrepreneurs can purchase a “warm desk” which includes four days a month,one-person conference room for $60 a month and a mailing address for $50more per month. A “hot desk” package, for $200 a month grants 24/7 access,four-person conference room, a mailing address and access to all perks. A“dedicated desk” includes all amenities listed in the “hot desk” plus afurnished designated desk with lockable storage for $300 a month. Thehighest package, “2 to 8 private office” which includes all amenities listed plusaccess to a 12 to 16 person conference room for $750 a month.

Proximity to Project Site: 1 mile

87


88

Summary of Interviews – Office

89

Office rental rates are affordable providing opportunity for office developments and business attraction to

Tulsa. Office space in Tulsa continues to receive investments from large companies. WPX Energy has purchased

an entire city block and plans to build 700 additional parking spaces on the new site. Typically, smaller

businesses that only require 5,000 SF to 15,000 SF are viewed as the sweet spot in the market, as much of the

office space caters to this capacity Downtown. Rates for space range, but Class A rates fall between $16/SF to

$30/SF, more realistically fall between $24/SF to $30/SF for the newest spaces. The high end of these rates are

for the newest and highest quality space in the market. Brokers mention that there is not much movement on price

adjustments since rates are viewed as affordable.

Responses included an overview of the impact on demand for any proposed office use within the mixed-use

project site. Tulsa has vacancies mainly in the 3-star building properties. Recently, the impact was seen in the

energy sector which hit around 2016 and 2017. Office has the highest average vacancy rate of the uses

analyzed, especially for older and lower quality spaces. Some new office developments have come to market

which are trendy like co-working spaces. HQ, Regus, and 36 Degrees are the three leaders in this space to help

entrepreneurs who cannot afford traditional office space.

Summary of Interviews – Office Little opportunity to expand co-working space due to market saturation. 36 Degrees North came to market

about 3.5 years ago as a result of the George Kaiser Family Foundation (GKFF) survey commissioned to help

entrepreneurs. Membership experienced strong growth in its first few years, but now the market is maturing and

membership stands at a plateau. With both locations at virtual capacity, half of 36 Degrees’ revenue received

from donations and additional co-working projects coming online, the need for co-working space in the Arts

District is being met. Further, traditional office space would yield greater rents. 36 Degrees is expecting to

potentially consolidate and relocate its two locations into one within the District within three to five years, but

believe the market is currently at equilibrium.

Creative office/studio space could be an element of the Project to maintain the identity of the District as part

of the art community. The GKFF’s Artist Fellowship program provides approximately 60 artists a free apartment

and studio space in downtown Tulsa. Graduates, which come out of the program every year, represent a

contingent of demand that would be looking for affordable studio space. While other uses would produce higher

rental rates, studio space could strengthen the arts as part of the fabric of the District.

Parking remains a concern for office tenants in the Arts District. Business owners and members of 36 Degrees

cite parking as one of the greatest concerns. 98% of the members at 36 Degrees commute by car.

90

Chapter 5: Multi-Family Market Analysis

91

Supply & Pipeline

92

Overall Supply & Demand

93

Average growth is roughly 558 multi-

family units/year, with average

absorption following that at 537

units/year.

In 2017, there was a growth of 2.7%

when nearly 1,600 new multi-family

units were introduced to the market.

This resulted in high absorption for

2017 and 2018.

Construction has slowed in 2018 and

2019, but Western Supply and the

Davenport will add the District’s first

large-scale developments.

Tulsa Multi-Family Overall Supply & Demand

Inventory Absorption

Year Units Growth % Growth Units % of Inv

2023 60,511 473 0.8% 378 0.6%

2022 60,038 420 0.7% 365 0.6%

2021 59,618 310 0.5% 324 0.5%

2020 59,308 161 0.3% 298 0.5%

2019 59,147 543 0.9% 640 1.1%

YTD 58,730 126 0.2% 343 0.6%

2018 58,604 82 0.1% 1,569 2.7%

2017 58,522 1,594 2.7% 897 1.5%

2016 56,928 481 0.8% -750 1.3%

2015 56,447 686 1.2% 327 0.6%

2014 55,761 1,070 1.9% 788 1.4%

2013 54,691 495 0.9% 644 1.2%

2012 54,196 669 1.2% 1,049 1.9%

2011 53,527 719 1.3% 823 1.5%

2010 52,808 12 0.0% 293 0.6%

2009 52,796 1,086 2.1% 607 1.1%

Average 558 1.0% 537 1.1%

Source: CoStar

Submarkets Inventory

There are currently 58,730 multi-family units in the Tulsa submarket supply. South

Tulsa/Broken Arrow makes up a large percentage (40.2%) of the current multi-family

supply. There are 661 units under construction, with the majority of these units being

built in Creek County and Downtown Tulsa.

There have been 208 units introduced to the market in the last 12 months. Downtown

Tulsa currently has four buildings under construction.

Tulsa Multi-Family Submarkets Inventory

Inventory 12 Month Deliveries Under Construction

Submarket Bldgs Units % Market Bldgs Units % Bldgs Units %

Creek County 9 384 0.7% 0 0 0% 1 156 40.6%

Downtown Tulsa 166 3,370 5.7% 1 62 1.8% 4 402 11.9%

East Tulsa 31 6,162 10.5% 0 0 0% 0 0 0%

Midtown South 54 6,684 11.4% 0 0 0% 0 0 0%

Midtown Tulsa 85 4,065 6.9% 0 0 0% 0 0 0%

North Tulsa 46 3,525 6.0% 2 30 0.9% 1 13 0.4%

Okmulgee County 6 150 0.3% 0 0 0% 0 0 0%

Osage County 1 31 0.1% 0 0 0% 0 0 0%

Pawnee County 2 82 0.1% 0 0 0% 0 0 0%

Riverside/Peoria 40 3,787 6.4% 0 0 0% 0 0 0%

Rogers County 22 1,030 1.8% 1 9 0.9% 0 0 0%

South Tulsa County 26 3,657 6.2% 2 107 2.9% 0 0 0%

South Tulsa/Broken Arrow 111 23,631 40.2% 0 0 0% 1 90 0.4%

Wagoner County 7 638 1.1% 0 0 0% 0 0 0%

West Tulsa County 16 1,534 2.6% 0 0 0% 0 0 0%

Total 622 58,730 6 208 7 661

Source: CoStar

Downtown TulsaSupply and Demand

95

The projections for the Downtown Tulsa

multi-family market are in-line with the

recent growth.

There was a robust inventory growth in

2016 and 2017 that was followed by a

large absorption rate in 2018.

The large expectation of inventory growth

in 2019 may cause a halt in growth in

2020, but result in high absorption for

2020.

Downtown Tulsa Multi-Family Overall Supply & Demand

Inventory Absorption

Year Units Growth % Growth Units % of Inv

2023 4,048 117 3.0% 102 2.5%

2022 3,931 105 2.7% 117 3.0%

2021 3,826 197 5.4% 145 3.8%

2020 3,629 -3 -0.1% 149 4.1%

2019 3,632 262 7.8% 183 5.0%

YTD 3,370 0 0.0% 87 2.6%

2018 3,370 62 1.9% 300 8.9%

2017 3,308 139 4.4% 114 3.4%

2016 3,169 161 5.4% -172 -5.4%

2015 3,008 0 0.0% -67 -2.2%

2014 3,008 -28 -0.9% -42 -1.4%

2013 3,036 58 1.9% 101 3.3%

2012 2,978 75 2.6% 66 2.2%

2011 2,903 0 0.0% -5 -0.2%

2010 2,903 0 0.0% 20 0.7%

2009 2,903 0 0.0% -13 -0.4%

Average 72 2.1% 68

Source: CoStar

Tulsa Deliveries & Construction

96

Deliveries and construction of new

multi-family developments have been

trending downward in the Tulsa market

over the last two years.

An average of five buildings are

delivered and six are under

construction each year.

Tulsa Multi-Family Deliveries and Construction

Deliveries Under Construction

Year Bldgs Units Bldgs Units

2023 -- 484 -- --

2022 -- 432 -- --

2021 -- 321 -- --

2020 -- 173 -- --

2019 -- 546 -- --

YTD 3 126 7 661

2018 3 82 7 574

2017 11 1,810 5 359

2016 6 495 10 1,803

2015 7 1,325 7 616

2014 4 1,108 8 1,361

2013 3 629 5 1,393

2012 3 701 5 1,141

2011 4 719 3 701

2010 1 12 5 794

2009 6 1,277 4 724

Average 5 640 6 921

Source: CoStar

Multi-Family Project Pipeline

97

Tulsa has 13 multi-family buildings

under construction or proposed,

totaling more than 1,500 new units

expected to be opened within two

years. There are five properties that

are planned to be completed

on/around August 2019.

If all of these multi-family projects are

developed, the total units added to

the market will represent a nearly 3-

percent increase in Tulsa.

Tulsa Major Multi-Family Project Pipeline

Deliveries Under ConstructionProperty Name / Address Units Stories Start Date Completion Date

The Cosmopolitan Apartments 264 5 Sep-17 Aug-19

The Timbers 156 2 Sep-18 Aug-19

111 Lofts 69 10 Jan-19 Aug-19

Mowery Lofts 13 2 May-17 Aug-19

The Adams Apartments 60 13 Sep-18 Aug-19

1515 Cherry Street and The Lofts 15 4 Oct-18 Oct-19

The Village Flats 54 3 Mar-19 Dec-19

305 N Main St 90 4 Feb-19 Mar-20

111 Greenwood 50 5 Mar-19 Apr-20

The View 198 6 Jan-19 Jul-20

Davenport Urban Lofts 32 6 Apr-19 End of 2020

Santa Fe Square Apartments 291 7 -- --

Western Supply Site 267 TBD TBD TBD

Total / Average 1,559 6

Source: CoStar

Downtown Tulsa Deliveries & Construction

98

As mentioned in the previous slide, the

market for multi-family in the Downtown

Tulsa area is seeing rapid growth in

construction numbers.

Five properties are currently under

construction all of which are expected to be

completed by the end of 2019.

Two properties are being proposed. In

total, there are 774 units being introduced

into the Downtown Tulsa multi-family

market.

This list does not include the Western Supply

project, which incudes another 267 units in

the Arts District. More details are provided

in Chapter 2.

Downtown Tulsa Multi-Family Construction

Property Name / Address Units Stories Start Date Completion Date

Recent Deliveries

Flats on Archer 62 5 Jul-17 Nov-18

Under Construction

The Cosmopolitan Apartments 264 5 Sep-17 Aug-19

111 Lofts 69 10 Jan-19 Aug-19

The Adams Apartments 60 13 Sep-18 Aug-19

1515 Cherry Street and The Lofts 15 4 Oct-18 Oct-19

The Village Flats 54 3 Mar-19 Dec-19

Proposed

111 Greenwood 50 5 Mar-19 Jul-20

The View 200 6 Jan-19 Jul-20

Total / Average 774 6

Source: CoStar

Market Performance

99

Overall Vacancy& Rent

100

The average number of vacant multi-family

units/year in the Tulsa market over the past

ten years was 5,156.

This equates to 9.3% of the total units

being vacant, on average, per year across

Tulsa.

Average effective rent per unit/per month

is roughly $687/unit since 2009. Year-to-

date 2019 effective rent per month is

$713. This means the average effective

rent per square foot is roughly $0.82/unit.

Vacancy is projected to decrease slightly

while effective rents and the supply of units

increases through 2023.

Tulsa Multi-Family Market Vacancy & Rent

Vacancy Effective Rent

Year Units % Vacant Per Unit Per SF

2023 5,280 8.7% $739 $0.88

2022 5,186 8.6% $736 $0.88

2021 5,129 8.6% $731 $0.87

2020 5,144 8.7% $725 $0.86

2019 5,280 8.9% $715 $0.85

YTD 5,159 8.8% $713 $0.85

2018 5,374 9.2% $695 $0.83

2017 6,859 11.7% $676 $0.81

2016 6,157 10.8% $674 $0.80

2015 4,932 8.7% $691 $0.82

2014 4,573 8.2% $685 $0.82

2013 4,288 7.8% $664 $0.79

2012 4,439 8.2% $652 $0.78

2011 4,817 9.0% $640 $0.76

2010 4,921 9.3% $632 $0.75

2009 5,201 9.9% $629 $0.75

Average 5,171 9.1% $687 $0.82

Source: CoStar

Downtown TulsaVacancy and Rent

101

The multi-family market in Downtown Tulsa

showed a spike in Effective Rent per square

foot from 2014 to 2015. This resulted in a

lag effect of vacancy rates increasing in

2016 and 2017.

The market has since adjusted to the price

increase in per square foot and it is

projected to continue to grow. This increase

in effective rents shows room for revenue

opportunities.

Downtown Tulsa Multi-Family Market Vacancy & Rent

Vacancy Effective Rent

Year Units % Vacant Per Unit Per SF

2023 438 10.8% $1,098 $1.37

2022 423 10.8% $1,094 $1.37

2021 436 11.4% $1,087 $1.36

2020 384 10.6% $1,077 $1.34

2019 536 14.7% $1,060 $1.32

YTD 368 10.9% $1,061 $1.32

2018 454 13.5% $1,022 $1.27

2017 688 20.8% $1,017 $1.26

2016 664 21.0% $974 $1.21

2015 333 11.1% $1,004 $1.25

2014 267 8.9% $965 $1.20

2013 255 8.4% $957 $1.19

2012 297 10.0% $939 $1.17

2011 286 9.8% $918 $1.14

2010 281 9.7% $904 $1.12

2009 300 10.3% $889 $1.11

Average 401 12.0% $1,004 $1.25

Source: CoStar

Asking Rents &Effective Rents

102

The average asking rent per unit in

these submarkets is $695/unit. The

highest asking rents show up in

Downtown Tulsa at roughly

$1,070/unit.

Average effective rent for these

submarkets comes in a little lower than

asking rent at roughly $684/unit.

Yearly growth is roughly 2.4% and

3.9% for asking rents and effective

rents, respectively.

Tulsa Multi-Family Submarket Rents

Asking Rents Effective Rents

Submarket Per Unit Per SF Yearly Growth Per Unit Per SF Yearly Growth

Creek County $684 $0.76 4.1% $664 $0.74 6.9%

Downtown Tulsa $1,070 $1.32 2.1% $1,060 $1.31 2.9%

East Tulsa $629 $0.80 3.8% $621 $0.79 6.5%

Midtown South $648 $0.78 1.7% $629 $0.75 3.3%

Midtown Tulsa $627 $0.78 2.1% $614 $0.77 2.2%

North Tulsa $789 $0.90 4.8% $779 $0.89 6.3%

Okmulgee County $584 $0.78 0.9% $580 $0.78 1.0%

Osage County $421 $0.60 2.0% $418 $0.60 2.0%

Pawnee County $491 $0.67 0.7% $489 $0.67 3.4%

Riverside/Peoria $659 $0.84 3.3% $651 $0.83 4.4%

Rogers County $714 $0.83 4.7% $710 $0.82 7.4%

South Tulsa County $909 $0.99 4.7% $900 $0.98 7.1%

South Tulsa/Broken Arrow $732 $0.85 2.3% $714 $0.83 4.2%

Wagoner County $809 $0.86 1.9% $780 $0.83 2.9%

West Tulsa County $664 $0.88 -3.5% $647 $0.85 -1.6%

Average $695 $0.84 2.4% $684 $0.83 3.9%

Source: CoStar

Downtown Tulsa Market Rent/Unit by Bedroom

The market rent/unit increases as the number of bedrooms in each unit

increases. The “3 Bed” units have the lowest per bedroom rents. The

“Studio” and “2 Bed” layouts are seeing the same per bedroom rents at

roughly $750-$800/bed. Generally, the market rents have slowly

increased over the last five years. This data was pulled from a CoStar

report provided by CBRE.

Source: CoStar

Vacancy & Absorption

104

The total amount of current vacant

units in these multi-family

submarkets is 5,159 units. The

average percent vacant is 8.4%,

with the highest vacancy

percentage being in the submarket

of Riverside/Peoria. However, the

submarket with the most vacant

units (1,804) is the South

Tulsa/Broken Arrow submarket.

Average absorption is roughly 48

units per year.

Tulsa Multi-Family Submarket Vacancy and Absorption

Vacancy 12 Month Absorption

Sub Market Units % Vacant Units % of Inv

Creek County 40 10.4% 1 0.3%

Downtown Tulsa 395 11.7% 232 6.9%

East Tulsa 374 6.1% 146 2.4%

Midtown South 831 12.4% (67) -1.0%

Midtown Tulsa 390 9.6% (55) -1.4%

North Tulsa 322 9.1% (43) -1.2%

Okmulgee County 11 7.5% 2 1.3%

Osage County 2 7.1% 0 0%

Pawnee County 3 3.2% 0 0%

Riverside/Peoria 549 14.5% (86) -2.3%

Rogers County 46 4.5% 19 1.9%

South Tulsa County 210 5.7% 295 8.1%

South Tulsa/Broken Arrow 1,804 7.6% 259 1.1%

Wagoner County 50 7.8% (1) -0.2%

West Tulsa County 132 8.6% 17 1.1%

Average 5,159 8.4% 48 1.1%

Source: CoStar

Vacancy by Bedroom

Vacancy rates have been increasing in Tulsa during the past six

years to a peak in late 2017.

Studio apartments have had the highest vacancy rate since mid-

2013. One-, two-, and three-bedroom apartments have had similar

vacancy rates during the period shown, though three-bedrooms had

higher vacancy rates at various times, including currently.

Source: CoStar

Market Rent /Unit by Bedroom

Rents have been slowly increasing in Tulsa since mid-2013. Each unit

type has increased by approximately $50 - $70 per month during

the period.

Source: CoStar

Downtown Market

107

The supply of multi-family and

residential is spread across Tulsa

unevenly. The Deco District and the Arts

District hold the majority of housing

supply characterized by both large and

small buildings located near

entertainment clusters like ONEOK Field,

the BOK Center and Guthrie Green.

While there is an allotment of several

smaller sized buildings in the Arts

District, in the coming months the View,

Western Supply and Jacob Lofts will

add nearly 500 multi-family units within

the Project site’s immediate proximity

and affect competitive price point

determination.

Comparables

108

Downtown Tulsa Comparables

The Downtown Tulsa multi-family market is becoming a competitive landscape. The

average rents for one-bed, two-bed, and three-bed units are $814, $1,129,

$1,810, respectively. The most recent builds are all seeing rents around $1,000/bed.

Overall, any quality inventory that has come online in recent years has been

absorbed by the market quickly, and nearly all properties have reported occupancy

greater than 90 percent.

Additional inventory is likely to experience similar performance.

Downtown Tulsa Multi-Family Comparable Properties

Studio One-Bedroom Two-Bedroom Three-Bedroom

Occ. Avg. Size Rent Avg. Size Rent Avg. Size Rent Avg. Size Rent

Rate Units Rent (SF) PSF Rent (SF) PSF Rent (SF) PSF Rent (SF) PSF

111 Lofts - 69 $895 560 $1.60 $1,020 638 $1.60 $1,924 1,203 $1.60 $4,000 2,600 $1.54

The Flats on Archer 95% 62 - - - $1,405 854 $1.65 $1,894 1,128 $1.68 - - -

Edge-East Village 93% 161 - - - $1,223 678 $1.80 $1,850 1,105 $1.67 - - -

The Meridia 87% 93 - - - $1,249 775 $1.61 $2,599 1,545 $1.68 $2,699 1,635 $1.65

GreenArch Apartments 93% 70 $860 700 $1.23 $1,130 1,060 $1.07 $1,260 1,150 $1.10 - - -

Metro at Brady 92% 75 - - - $1,391 830 $1.68 $1,907 1,162 $1.64 - - -

Renaissance Uptown 94% 159 - - - $1,038 795 $1.31 $1,360 1,200 $1.13 - - -

Tribune Lofts 94% 35 - - - $1,293 883 $1.46 $2,046 1,899 $1.08 - - -

Total/Average 94% 2,968 $618 587 $1.05 $814 690 $1.18 $1,129 1,053 $1.07 $1,810 1,868 $0.97

Source: Development Strategies


110

Summary of Interviews – Residential

There is still excess demand for high quality downtown apartments. Three recent additions to the downtown

multi-family market have leased up quickly despite some of the highest rental rates in the market (Meridia, The

Edge, Mayo 420). Prices in Brookside and Cherry Street are beginning to price out prospective residents to other

areas, which poses an opportunity for the Arts District. Due to its popularity, brokers believe multi-family projects

located in the Arts District could demand some of the highest rates in Tulsa.

For-sale residential properties should be regarded with caution or even disregarded entirely…for now. It has

also been observed that for-sale residential projects downtown have fallen short of expectations. Highly

discounted sale prices and slow lease up have come to be the trend for these properties Some believe the

owner/occupied residential model should be avoided until the District becomes more established.

Since the District has a well-established entertainment and food and beverage scene, adding rental residential

options in the area will start to diversify the time of day and day of week demand to include more daytime and

weekday traffic. With more residents in the District, it is suggested that it could begin to support more retail.

Further, with the large office projects planned and under construction near the Site, area employees will likely

demand walkable residential options. All of these points speak to the synergistic nature of all of these uses.

111

Chapter 6: Special Events Market Analysis

112

Special Event Supply

113

The special event market in

Downtown Tulsa includes meeting

facilities and live music venues.

The majority of special event

facilities, especially those centered

around live music, are clustered in the

Arts District. These venues plus the

myriad food bars and restaurants

are the reason the area is considered

an entertainment district.

These amenities are and will be a

deciding factor for developers and

tenants to invest in the Arts District.

Market Supply The supply is mostly dominated with art centers and music venues.

The two venues with the highest seating capacity are the BOK

Center and the Cox Business Center.

Special Event / Meeting Venues

Tenant Address

Distance

(Miles) Seating for Event Type of Venue

Brady Theater 105 W Brady St 0.1 3,500 Music

36 Degrees North 36 E Cameron St 0.1 -- Incubator

Vanguard Music Hall 222 N Main St 0.1 500 Music

Cain's Ballroom 423 N Main St 0.2 700 Music

OKPOP 422 N Main St 0.2 300 Muesum

Ahha Tulsa 101 E Archer Street 0.3 -- Art Center

Gutherie Green 111 E Brady St 0.3 2,000 Garden/Performance Center

Living Arts 307 E Brady St 0.4 -- Art Center

BOK Center 200 South Denver Ave 0.5 19,200 Arena

ONEOK Field 201 N Elgin Ave 0.5 7,833 Outdoor Arena

Duet Jazz 108 N Detroit Ave 0.5 75 Arts & Entertainment

Oklahoma Jazz Hall of Fame 111 E 1st St 0.7 500 Muesum

Tulsa Performing Arts Center 110 E 2nd St 0.7 2,365 Music Hall

Cox Business Center 100 Civic Center 1.0 8,900 Convention Center

Source: Various Sources

Cox Business Center

The Cox Business Center offers more than 100,000 SF of exhibit space, 60,000 SF of ballroom

space and 10,000 SF of meeting space.

CBC is undergoing a $55-million renovation and expansion, which will include 41,000 SF of

divisible exhibit space and a 14,000-SF pre-function area.

The event mix is varied and diverse. CBC books conventions for the Department of Defense, to

CannaCon, to Educational leadership Conferences to InnoTech Oklahoma to high school

graduations.

Cain’s Ballroom

Cain’s Ballroom is a music and event venue located roughly one block from the Project site.

Pollstar reports from August 2018 to August 2019, 104 total shows have performed which

produced $3,175,417 in gross revenue. There have been 105,817 total tickets sold with

an average of 1,017 tickets sold per show. Each show averaged $30,533. On average,

65% of all tickets sold for each show. Average ticket price is $30. Located in the Arts

District, a block from the Project site, tenants of the mixed-use building can easily walk to a

show of their choice, any day of the week and purchase an affordable ticket.

Tulsa (Brady) Theater

The Tulsa Theater is a historic music venue located one block from the Project site. The

Tulsa Theater holds roughly three concerts per month and has 3,500 theater-style seats

for guests. According to Pollstar, YTD report, August 2018 to August 2019, 29 shows

have sold 41,480 total tickets. The total gross revenue is $1,944,066 with 1,442

tickets sold per show. The average gross per show is $67,037 with an average of 68%

of all tickets selling at each show. Cost to rent the facility is $10,000.

BOK (Bank of Oklahoma) Center

The BOK broke ground in in August of 2005 and opened in August 2008. Operated by SMG,

construction costs equaled $196 million at the time of opening. In today’s dollars, the

construction costs alone equaled $230 million. The BOK Center is the largest venue in the Tulsa

market and is a must-stop for top tier musical acts as well as nationally known special events

like the Men’s NCAA March Madness Basketball Tournament. According to Pollstar, since August

2018, there have been 40 shows with 273,000 tickets sold. Over the past year, these 40 shows

have produced $19.3 million gross revenue with shows selling an average of 8,800 tickets. BOK

events averaged $623,000 in gross revenue with 90% of all tickets sold. Average ticket price is

$70.75.

Special Events/Live Music Venues


Vanguard Music Hall prides itself as a small venue with a capacity of about 500 patrons showcasing independent artists and music acts on the rise. Proximity to the stage is no further than 200 yards from furthest seat in the house. Vanguard is located near Cain’s Ballroom and the Brady Theater, right in the heart of Tulsa’s Arts District. Pollstar reports an underrepresented amount of revenue and sales. YTD, Pollstar reports 201 tickets sold which produced $2,773 of gross revenue. Vanguard’s calendar shows a much busier schedule than only hosting one concert per year. Average ticket prices for upcoming shows range between $10 to $50.

Proximity to Project Site: 1 block

Duet Jazz is known as Tulsa’s only traditional jazz club and restaurant. With seating for about 75 patrons, Duet Jazz markets itself as an intimate food and music venue celebrating Tulsa’s jazz music scene as well as established jazz musicians. Pollstar does not have any data available for Duet Jazz. Average ticket prices for the shows range from $5 to $20 a ticket.


119


120

Summary of Interviews – Special Events

The Arts District could serve well as an off-site event space. According to management at the Cox Business Center, many

event groups wish to kick off their event or otherwise host off-site meetings in the Arts District. Currently, a sizable, available

high-quality space is generally lacking in the area. A floor of the Project could be dedicated to creating a ballroom space.

OKPOP is concerned that an event space on the Site would compete heavily with its space. With the meeting space

included as part of OKPOP, project managers are concerned that a similar space at 311 N Boulder would potentially

cannibalize their business. Stakeholders believe that it may be redundant to build out additional event space on the same block

as OKPOP.

The live music/entertainment market is well supplied at this point. Cain’s Ballroom, Brady Theater, BOK Center and other

live music venues have done well to cultivate a vibrant entertainment district in conjunction with the food and beverage outlets in

the Arts District. Stakeholder interviews have expressed that there is not an apparent need for additional live entertainment

venues currently, especially as a few newer venues are establishing themselves.

121

Chapter 7: Parking Analysis

122

2015 Downtown TulsaParking Study

123

In 2015, the TPA commissioned a study

conducted by Walker Parking Consultants

to study the then-current supply and

demand and the pipeline of parking and

demand generating projects. Walker

determined there were approximately

21,500 on-street, off-street and structured

parking spaces within downtown while

peak demand was 15,000 spaces leaving

nearly 6,500 unoccupied parking spaces.

Walker also projected demand would

increase by 3,800 spaces by 2020.

Ultimately, Walker recommended the TPA

construct a garage with 400 to 500

spaces downtown.

Downtown Parking Development

There are four recently opened, under construction and planned parking

structures in downtown Tulsa totaling 1,850 spaces and $47 million invested.

WPX will be the most impactful to the Project due to its size and proximity

to the Site. With 450 employees working within the WPX headquarters

daily, 250 spaces will be available for public use on weekdays and the

entire garage on nights and weekends.

New Parking Structures Downtown Tulsa

Location Owner Cost (millions) Spaces Use Status

Mathew Brady Street & MLK Boulevard* WPX $17.3 700 Mixed Planned

4th Street & Main Street Price Family Properties $12.8 500 Private Open

2 N Elgin VAST Bank $11.0 399 Mixed U/C

Boulder Avenue & 5th Street* Arvest Bank $4.5 180 Private U/C

405 N Main Street* Davenport Lofts $1.6 64 N/A Planned

Total $47.2 1,843

* estimated at $24,750 per space


Arts DistrictParking Requirements

Based upon Tulsa’s minimum parking ratios, HSP estimated the parking

required for the major projects profiled in Chapter 2. The available

information about these projects suggests 1,900 spaces will be required.

However, this does not consider any special parking agreements granted for

mixed-use projects.

The pipeline of parking structures almost completely offsets the required

parking, which is likely higher than the market reality.

Tulsa Parking Ratios

Location Spaces per Unit

Bar* 8.5 1,000 SF

Restaurant* 6.5 1,000 SF

Assembly - Indoor*** 2.8 1,000 SF

Retail* 2.5 1,000 SF

Office* ** 2.2 1,000 SF

Residential - 2+ BR 1.75 Unit

Residential - Studio or 1 BR 1.1 Unit

Event Space - Outdoor 0.8 1,000 SF

* none for first 5,000 SF

** 2.5 for every 1,000 SF above 30,000 SF

*** Includes event space and museum

Source: Tulsa Zoning Code

Major Project Pipeline Impact on Parking

Development Name Use Type Qty Units

Estimated Min.

Parking Required

OKPOP Museum Museum 50,000 SF 140

Block 44 (VAST, 2 N Elgin) Mixed-Use 107,000 SF 298

Davenport Urban Lofts* Condos 32 Units 46

The View* Residential 198 Units 282

The View Retail 13,000 SF 33

Bob Dylan Archive Museum N/A -- --

WPX Headquarters Office 250,000 SF 616

WPX Headquarters Retail 15,000 SF 38

Greenwood Cultural Center Cultural Center 10,000 SF 28

Western Supply Office 40,000 SF 49

Western Supply Residential 267 Units 380

Total 1,909

* Assumed 50% 1 BR, 50% 2 BR units

Source: City of Tulsa Office of Economic Development

Downtown TulsaParking Rates

126

In 2014, Walker gathered parking rates for

daily, event, multi-day and monthly parking.

Daily rates average between $0.50 and $0.75

per hour depending on the duration purchased.

Current daily rates start at $3 for surface

parking at the Site and $10 for structured

parking.

Monthly parking varied on pricing between non-

reserved and reserved parking with prices

ranging from $43 per month to $163 per month.

Newer garages are starting to charge higher

rates with VAST bank charging between $100

and $150 per month. Surface lot monthly

parking rates are still near the prices gathered

in 2014.

Considering these rates, a parking garage

would take at least ten years to pay itself off at

100% occupancy, which is not realistic.

Summary of Interviews - Parking

Development pipeline will simultaneously create demand and eliminate existing supply. While some of the major projects profiled

in the Arts District include some, if not significant, parking elements, they will not fully accommodate the demand generated. Fortunately,

other than during peak periods, the Arts District is well supplied with parking currently. However, it is paramount to the continued growth

of the Arts District that parking development be proactive versus reactive. This Site should include a level of parking development to at

least replace the surface parking lost to the mixed-use development and accommodate the demand for parking created by the Project.

OKPOP has a $2.7-million budget to fund parking development. OKPOP has been given a sum of money to put toward the

development of parking for its visitors by the City of Tulsa. While striking a parking garage from its plans, these funds have been

considered to help finance the development of another structure nearby. OKPOP executives have expressed that it will require

approximately 150 parking spaces for daily use and 300 during peak event periods.

Some existing and future demand may be relieved by a shift in transportation culture. The current state of transportation culture in

Tulsa lends to the perception of a severe lack of available parking in the Arts District including the desire for destination-adjacent

parking, as well as free or very low-cost parking options. Recent enhancements in parking enforcement has begun moving the needle on

visitor expectations for parking availability and pricing. While the railroad tracks act as a mental barrier for pedestrians currently, the

City and TPA should devise a strategy to enhance wayfinding and connectivity between the Deco District, Arena District and the Arts

District. Especially considering the availability of low-cost parking at the North Garage only a few blocks for the Arts District, the

perceived issue of a lack of parking is purely an issue of perception. Still, having easily accessible paid parking structures in the

growing Arts District is also critical to allowing and encouraging greater density and further enhancements.

127

Chapter 8: Recommended Scenarios

128

Reality Check

HSP identified the following trends that impact the overall feasibility of any mixed-use project in the Arts District.

The longstanding effort to revitalize the Arts District is gaining momentum. Due to significant investments in the District, additional investment

and activity is gravitating to the Arts District as an established entertainment district and a burgeoning live, work, play environment. Most owners

and operators in the area have been local with little attention from regional and national investors. That is changing. As will be shown, many

projects are in the pipeline totaling hundreds of millions of dollars which will diversify the offerings available and strengthen the fabric of the Arts

District.

Legacy investments have acted as a springboard for the Arts District but may also be slowing performance growth. Just a few large investors

have made many investments in the Arts District’s places and people, which has helped many residents, businesses and investors enter the area as

well, at least partially, through the use of New Market Tax Credits. As mentioned above, these investments have acted as a catalyst for the

growing trend of investment and activity seen currently. On the other hand, the New Market Tax Credits also limit the rental rates that landlords

may charge on its properties, essentially implementing an artificial rent ceiling. This is helpful for tenants, but negatively impacts the commercial

market because it has hindered the growth of rental rates for all landlords in the area.

Parking is an issue of perception and suburban culture. Downtown Tulsa has plenty of parking as stated in the TPA’s 2015 Downtown Tulsa

Parking Analysis. The parking situation has changed in the past four years, but through public and private investments in parking structures, supply

is keeping up with demand. However, when speaking with stakeholders about parking in the Arts District, there is a major concern about the lack of

available parking. It has been expressed repeatedly that area visitors are not typically willing to walk multiple blocks from their parking space to

their destination. The market is also highly price sensitive for parking due to longstanding free and inexpensive parking. This point is emphasized

by the highly underutilized North Garage, offering 900 spaces at $2 per night.

129

Recommendations Rationale

The market analysis presented previously in this report along with the parameters established by the TPA has determined the recommendations

shown in this section. HSP gathered various performance metrics for the potential uses to be included in the Project, as well as the costs for

construction and operations in order to establish the feasibility of each use and combinations thereof.

There were a few assumptions and directives provided by the TPA, which narrowed the available options for development on the Site. First, 70

parking spaces must be included in any and all scenarios in order to replace existing on the surface lot at 311 N Boulder. Further, any additional

parking demands created by the Project should completely or at least mostly be accommodated by additional onsite parking. HSP was directed to

take a strict highest and best use perspective in order to determine the most feasible scenario according to the market and conversely determine

what is the most compelling use of the site in order to maximize the impact of the Project on the Arts District. Lastly, HSP was directed not to study

lodging/hotel as a use for the Project, as the City is considering the development of a convention center headquarter hotel for the Cox Business

Center.

HSP further assumed that a structure on the Site would be able to occupy approximately 40,000 SF of space per floor due to the nearly one-acre

size of the Site. Based on this footprint, each level of parking is assumed to be able to house 110 +/- parking spaces. Parking will be housed

within the structure beginning on the second floor in each scenario extending upward for the required number of floors to offer the recommended

number of spaces.

130

Arts DistrictPerformance Metrics

HSP has collected the estimated performance metrics for new, high quality

mixed-use development for the Arts District from brokers, property owners and

business owners. All things considered each of the uses is expected to perform

similarly. Office is expected to generate the highest rents per SF, but these

figures are on a gross lease basis, meaning the landlord must pay expenses

shown, while restaurant and retail tenants are paying the expenses, which

offsets the lower rental rates.

Arts District Commerical Real Estate Performance Estimates

Use Low Rent/SF High Rent/SF Low Rent/SF High Rent/SF Lease Type Expenses/SF Vacnacy

Office $32.00 $38.00 $24.66 $30.66 Gross $7.34 8%

Residential* $21.00 $25.00 $19.75 $23.75 Modified Gross $7.06 6%

Restaurant $30.00 $35.00 $23.00 $28.00 NNN $7.00 5%

Retail $27.00 $31.00 $20.00 $24.00 NNN $7.00 5%


* Residential tenants pay $1.25 of expenses via utility charges on average

Gross Net

Recommended Scenarios

HSP recommends the two scenarios shown above. Each shows a different level of

investment. As the Project becomes denser, it also becomes less feasible.

Scenario 1 is a total of eight stories tall with parking on floors 2 – 5. Then two three-

story towers (one office, one apartments) would be on floors 6 – 8.

Scenario 2 has three floors of parking (2 – 4) with a floor of office on top.

Scenario Summary


Stories (including parking) 8 6

Office (SF) 60,000 40,000

Apartments (SF) 60,000 0

Retail / Restaurant (SF) 30,000 30,000

Parking (Stalls) 370 270

Total SF* 272,100 159,100


* Assumed 330 SF per parking stall, incl. driveway etc

Construction Costs

Construction costs were estimated on the recommended scenarios. These are based

upon the assumption that the first floor will be constructed as a concrete and steel

podium, since levels above will be constructed of concrete for parking. These costs

are exclusive of soft costs, which would increase costs by 20 – 30 percent.

Parking is expected to cost between approximately 25 and 30 percent of total

construction costs. Parking is the most expensive and least feasibly use of all

analyzed for the Project.

Construction Costs


Office $ 14,400,000 $ 9,600,000

Apartments $ 14,400,000 $ -

Retail / Restaurant $ 6,000,000 $ 6,000,000

Parking $ 9,157,500 $ 6,682,500

Total Construction

Spending

$ 43,957,500 $ 22,282,500


Chapter 9: Demand and Financial Projections

134

Scenario 1Revenue & Expense

Revenues are expected to increase from nearly $1.7 million in Year 1 to nearly $5.9

million in Year 20. Office and residential rents are expected to produce similar levels of

revenue during the period. Expenses are projected to be generated mostly by retail and

restaurant space. Total expenses are expected to increase from $375,000 to $945,000.

Office and retail and restaurant are projected to produce the most NOI in the first few

years, but residential will increase beyond retail and restaurant. By the end of the period,

NOI is expected to exceed $3.9 million per year.

Scenario 1 - Revenue & Expense

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 15 Year 20Revenue

Office $688,800 $1,053,864 $1,318,595 $1,344,967 $1,371,866 $1,514,651 $1,672,297 $1,846,351

Retail & Restaurant $694,688 $949,406 $973,141 $997,470 $1,022,407 $1,156,759 $1,308,767 $1,480,750

Residential $333,000 $475,524 $1,108,650 $1,130,823 $1,153,440 $1,273,491 $1,406,037 $1,552,378

Total Revenue $1,716,488 $2,478,794 $3,400,386 $3,473,260 $3,547,712 $3,944,901 $4,387,100 $4,879,479

Expense

Office $89,544 $137,002 $171,417 $174,846 $178,343 $196,905 $217,399 $240,026

Retail & Restaurant $199,500 $203,889 $208,375 $212,959 $217,644 $242,662 $270,555 $301,655

Residential $86,580 $123,636 $288,249 $294,014 $299,894 $331,108 $365,570 $403,618

Total Expense $375,624 $464,528 $668,041 $681,818 $695,881 $770,674 $853,523 $945,298

NOI

Office $599,256 $916,862 $1,147,177 $1,170,121 $1,193,523 $1,317,746 $1,454,898 $1,606,325

Retail & Restaurant $495,188 $745,517 $764,767 $784,511 $804,763 $914,098 $1,038,212 $1,179,095

Residential $246,420 $351,888 $820,401 $836,809 $853,545 $942,383 $1,040,467 $1,148,760

Total NOI $1,340,864 $2,014,267 $2,732,345 $2,791,441 $2,851,831 $3,174,227 $3,533,577 $3,934,180


Scenario 1Value

Using a discounted cash flow analysis, HSP calculated the value of Scenario 1. With a

terminal cap rate of 6.00% and a discount rate of 11.3%, the value of the Project comes

in at $216 per square foot, or roughly $32.4 million.

Value Analysis (000s) - Scenario 1

Calendar Year Year 1 Year 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Net Cash Flow $0 $0 $1,341 $2,014 $2,732 $2,791 $2,852 $2,914 $2,977 $3,041 $3,107 $3,174

Yr 10 Net Cash Flow $3,174

Terminal Cap Rate 6.00%

Yr 10 Residual Value $52,904

Less Closing Costs (2.5%) $1,323

Net Reversion Proceeds $51,581

Cash Flow to Investor $0 $0 $1,341 $2,014 $2,732 $2,791 $2,852 $2,914 $2,977 $3,041 $3,107 $54,755

Present Value $0 $0 $1,204 $1,625 $1,981 $1,818 $1,668 $1,531 $1,405 $1,289 $1,183 $1,086

Cash on Cash Return 0.0% 0.0% 4.1% 6.2% 8.4% 8.6% 8.8% 9.0% 9.2% 9.4% 9.6% 168.8%

Discount Rate 11.3% Yr 5 Net Cash Flow $2,852

Square Feet 150,000 Terminal Cap Rate 6.00%


Present Value Summary $000s Less Closing Costs (2.5%) $1,188

PV Residual $17,646 Net Reversion Proceeds $46,342

PV Income Stream $14,790 Per Square Foot

Present Value $32,436 $216

10-Year IRR - Unleveraged (ROA) 10.3% ($34,800) $1,341 $2,014 $2,732 $2,791 $2,852 $2,914 $2,977 $3,041 $3,107 $54,755

5-Year IRR- Unleverage (ROA) 10.0% ($34,800) $1,341 $2,014 $2,732 $2,791 $2,852 $46,342

10-Year IRR - Leveraged (ROE) 26.5% ($6,700) ($213) $461 $1,179 $1,333 $1,394 $1,455 $1,518 $1,583 $1,649 $41,322

5-Year IRR - Leveraged (ROE) 34.2% ($6,700) ($213) $461 $1,179 $1,333 $1,394 $31,521

Construction

Scenario 2Revenue & Expense

Scenario 2 does not include residential and has 100 fewer parking spaces (270) than

Scenario 1. The smaller program reduced revenue by nearly one-third due to the

elimination of 20,000 SF of space, which removed all multi-family but increased office

space by 10,000 SF. Expenses are approximately two-thirds of those in Scenario 1, as

expected.

Again, NOI is projected to be nearly two-thirds of that of Scenario 1.

Scenario 2 - Revenue & Expense

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 15 Year 20Revenue

Office $459,200 $702,576 $879,063 $896,644 $914,577 $1,009,767 $1,114,865 $1,230,901

Retail & Restaurant $694,688 $949,406 $973,141 $1,097,217 $889,494 $1,064,219 $1,204,066 $1,362,290

Total Revenue $1,153,888 $1,651,982 $1,852,204 $1,993,861 $1,804,071 $2,073,986 $2,318,930 $2,593,190

Expense

Office $59,696 $91,335 $114,278 $116,564 $118,895 $131,270 $144,932 $160,017

Retail & Restaurant $199,500 $203,889 $208,375 $212,959 $217,644 $242,662 $270,555 $301,655

Total Expense $259,196 $295,224 $322,653 $329,523 $336,539 $373,931 $415,487 $461,672

NOI

Office $399,504 $611,241 $764,785 $780,081 $795,682 $878,497 $969,932 $1,070,883

Retail & Restaurant $495,188 $745,517 $764,767 $884,258 $671,850 $821,557 $933,511 $1,060,635

Total NOI $894,692 $1,356,758 $1,529,552 $1,664,339 $1,467,532 $1,700,054 $1,903,443 $2,131,519


Scenario 2Value

Using a discounted cash flow analysis, HSP calculated the value of Scenario 2. With a

terminal cap rate of 6.00% and a discount rate of 10.5%, the value of the Project comes

in at $248 per square foot, or roughly $17.4 million.

Value Analysis (000s) - Scenario 2

Calendar Year Year 1 Year 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Net Cash Flow $0 $0 $895 $1,357 $1,530 $1,664 $1,468 $1,553 $1,589 $1,625 $1,662 $1,700

Yr 10 Net Cash Flow $1,700

Terminal Cap Rate 6.00%


Less Closing Costs (2.5%) $708

Net Reversion Proceeds $27,626

Cash Flow to Investor $0 $0 $895 $1,357 $1,530 $1,664 $1,468 $1,553 $1,589 $1,625 $1,662 $29,326

Present Value $0 $0 $664 $911 $930 $916 $731 $701 $649 $601 $556 $515

Cash on Cash Return 0.0% 0.0% 5.1% 7.8% 8.8% 9.6% 8.4% 8.9% 9.1% 9.3% 9.6% 168.7%

Discount Rate 10.5% Yr 5 Net Cash Flow $1,468

Square Feet 70,000 Terminal Cap Rate 6.00%


Present Value Summary $000s Less Closing Costs (2.5%) $611

PV Residual $10,211 Net Reversion Proceeds $23,847

PV Income Stream $7,173 Per Square Foot

Present Value $17,383 $248

10-Year IRR - Unleveraged (ROA) 13.3% ($15,600) $895 $1,357 $1,530 $1,664 $1,468 $1,553 $1,589 $1,625 $1,662 $29,326

5-Year IRR- Unleverage (ROA) 13.8% ($15,600) $895 $1,357 $1,530 $1,664 $1,468 $23,847

10-Year IRR - Leveraged (ROE) 36.6% ($2,800) ($151) $461 $1,179 $1,333 $1,394 $1,455 $1,518 $1,583 $1,649 $20,282

5-Year IRR - Leveraged (ROE) 41.9% ($2,800) ($151) $461 $1,179 $1,333 $1,394 $13,869

Construction

Chapter 10: Economic, Fiscal and Employment

Impact Analysis

139

Net New Visitors &Room Nights

140

The Project is expected to attract visitors, which

will fall into two categories: daytrippers and

overnighters. Overnighters will also generate

room nights in Tulsa.

Scenario 1 is expected to generate the most

visitation, which translates into the most room

nights, as well, with 67,000 net new visitors

per year by Year 10. The overnighters are

expected to produce nearly 94,000 room

nights during the period.

Scenarios 2 is expected to produce lower

visitation than Scenario 1, it is a decrease of

less than ten percent.

Scenario 2 - Net New Visitors and Room Nights

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Total

New Daytrippers 22,925 31,330 32,114 36,208 29,353 35,119 35,119 670,359

New Overnighters 17,367 23,735 24,329 27,430 22,237 26,605 26,605 507,848

Total New Visitors 40,292 55,066 56,442 63,639 51,591 61,725 61,725 1,178,207

New Room Nights 3,016 4,122 4,225 4,764 3,862 4,621 4,621 88,205


Scenario 1 - Net New Visitors and Room Nights


New Daytrippers 22,925 31,330 32,114 32,917 33,739 38,173 38,173 716,534

New Overnighters 17,367 23,735 24,329 24,937 25,560 28,919 28,919 542,829

Total New Visitors 40,292 55,066 56,442 57,853 59,300 67,092 67,092 1,259,363

New Room Nights 3,016 4,122 4,225 4,331 4,439 5,023 5,023 94,281


Direct Net New & Recaptured Spending

141

Again, Scenario 1 is expected to generate the

most robust direct net new spending, ranging

between $3.2 million and $7.7 million per

year during the period for a total of nearly

$121 million. Most of the direct spending is

expected to come from food and beverage

spending for each scenario shown. Spending

from residents and office employees living and

working within the Project will generate mostly

recycled spending.

Scenario 2 is expected to generate direct

spending of approximately $101 million.

Scenario 2 - Direct Net New/Recaptured Spending to Tulsa (000s)


Food & Beverage $1,691 $2,312 $2,373 $2,674 $2,171 $2,596 $3,323 $53,397

Lodging $172 $242 $256 $297 $248 $344 $427 $6,641

Retail $750 $1,025 $1,051 $1,185 $961 $1,149 $1,471 $23,643

Transportation $299 $421 $448 $510 $431 $566 $706 $11,112

Other $173 $242 $256 $293 $245 $325 $404 $6,365

Total $3,084 $4,242 $4,382 $4,959 $4,056 $4,981 $6,332 $101,159


Scenario 1 - Direct Net New/Recaptured Spending to Tulsa (000s)


Food & Beverage $1,720 $2,357 $2,469 $2,530 $2,594 $2,934 $3,756 $59,339

Lodging $172 $242 $256 $270 $285 $374 $464 $7,123

Retail $757 $1,035 $1,087 $1,114 $1,142 $1,292 $1,654 $26,128

Transportation $383 $549 $722 $750 $778 $938 $1,180 $18,205

Other $200 $283 $393 $409 $425 $516 $647 $9,956

Total $3,232 $4,466 $4,927 $5,073 $5,223 $6,054 $7,702 $120,752


Direct, Indirect & Induced

Net New Spending

142

Direct spending generates indirect

spending, which generates induced

spending, so the information shown here

represents three levels of spending impact

due to the Project.

Scenario 1 is expected to generate

between $5.6 million and $13.5 million

per year during the period, totaling $211

million.

Scenario 2 is expected to generate

approximately $177 million in direct,

indirect and induced spending during the

20 years shown.

Scenario 2 - Direct, Indirect & Induced Net New Spending to Tulsa (000s)


Total Direct Spending $3,084 $4,242 $4,382 $4,959 $4,056 $4,981 $6,332 $101,159

Total Indirect Spending $1,050 $1,445 $1,494 $1,691 $1,385 $1,703 $2,164 $34,554

Total Induced Spending $1,246 $1,714 $1,771 $2,004 $1,639 $2,012 $2,558 $40,872

Total Direct, Indirect & Induced Spending $5,381 $7,401 $7,648 $8,653 $7,079 $8,696 $11,054 $176,585


Scenario 1 - Direct, Indirect & Induced Net New Spending to Tulsa (000s)


Total Direct Spending $3,232 $4,466 $4,927 $5,073 $5,223 $6,054 $7,702 $120,752

Total Indirect Spending $1,107 $1,532 $1,700 $1,750 $1,803 $2,092 $2,660 $41,683

Total Induced Spending $1,306 $1,805 $1,994 $2,053 $2,114 $2,450 $3,117 $48,862

Total Direct, Indirect & Induced Spending $5,646 $7,803 $8,621 $8,876 $9,140 $10,595 $13,479 $211,297


Net New Earnings

143

Jobs will be created from the direct,

indirect and induced spending, which is

expected to produce net new earnings

for the citizens of Tulsa. For scenarios with

office components, the direct new

employment within the Project is also

counted.

Scenario 1 is projected to produce nearly

$188 million in net new earnings during

the period shown. Of this amount, $118

million is projected to come from net new

employees within the Project.

Scenario 2 is projected to produce $137

million in net new earnings during the

period shown. Of this amount, $79 million

is projected to come from net new

employees within the Project.

Scenario 2 - Net New Earnings from Direct, Indirect & Induced Spending (000s)


Net New Earnings

From New Employees in New Offices $1,722 $2,648 $3,329 $3,412 $3,497 $3,957 $5,065 $78,891

From Direct Project Spending $1,063 $1,462 $1,511 $1,709 $1,399 $1,718 $2,183 $34,881

From Indirect Spending $325 $447 $462 $523 $429 $528 $671 $10,707

From Induced Spending $373 $513 $530 $599 $490 $600 $764 $12,205

Total $3,483 $5,070 $5,832 $6,244 $5,815 $6,803 $8,683 $136,684


Scenario 1 - Net New Earnings from Direct, Indirect & Induced Spending (000s)


Net New Earnings

From New Employees in New Offices $2,583 $3,971 $4,993 $5,118 $5,246 $5,935 $7,598 $118,337

From Direct Project Spending $1,119 $1,547 $1,713 $1,763 $1,816 $2,104 $2,677 $41,963

From Indirect Spending $343 $474 $527 $543 $559 $650 $826 $12,942

From Induced Spending $389 $537 $590 $608 $625 $724 $921 $14,449

Total $4,434 $6,530 $7,823 $8,032 $8,247 $9,413 $12,022 $187,690


Net New Jobs

144

Net new jobs are expected to be

created directly on the Project’s site, as

well as direct, indirect and induced jobs

from earnings.

During the 20-year period, Scenario 1 is

expected to support an average of 164

full-time equivalent jobs. Again, most of

these jobs are expected to come from

the office space within the Project.

With fewer onsite jobs and less spending

and fewer earnings, Scenario 2 is

projected to support an average of 121

ongoing jobs.

Scenario 2 - Net New Full-Time Equivalent Jobs from Direct, Indirect & Induced Earnings (000s)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Average

Net New FTE Jobs

From New Employees in New Offices 29 43 53 53 53 53 53 52

From Direct 31 42 42 47 37 41 37 39

From Indirect 11 14 14 16 13 14 14 14

From Induced 13 17 17 19 15 17 15 16

Total 83 116 126 134 118 124 119 121


Scenario 1 - Net New Full-Time Equivalent Jobs from Direct, Indirect & Induced Earnings (000s)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10 Year 20 Average

Net New FTE Jobs

From New Employees in New Offices 43 65 79 79 79 79 79 78

From Direct 33 44 48 48 48 50 48 48

From Indirect 11 15 16 17 17 17 18 17

From Induced 13 18 19 19 20 20 20 20

Total 100 142 163 163 164 167 165 164


Construction ImpactBased on the estimated construction cost metrics provided by Wallace Engineering,

Scenario 1 construction impact is expected to total $30.3 million for materials spending,

$26.4 million for labor spending and support 444 job-years.

Scenario 2 is estimated to cost approximately half of Scenario 1, so impact is reduced by

approximately half for Scenario 2 compared to Scenario 1.

Impact

Direct Materials Spending 8,910,000$

Indirect Spending 2,490,000$

Induced Spending 3,970,000$

Total 15,370,000$

Direct Labor Spending 13,370,000$

Employment (Job Years) 247


Scenario 2 - Construction Impact

Impact

Direct Materials Spending 17,580,000$

Indirect Spending 4,920,000$

Induced Spending 7,840,000$

Total 30,340,000$

Direct Labor Spending 26,375,000$

Employment (Job Years) 487


Scenario 1 - Construction Impact

Scenario 1Fiscal Impact

HSP estimated the taxes that would be collected by the City of Tulsa due to the spending

related to the Project. Sales tax collections are expected to total $5 million during the

period for Scenario 1.

Property taxes collected by the City on the office component are expected to have the

largest fiscal impact during the period at $2.1 million.

Total fiscal impact on the City is projected at approximately $9.3 million between sales tax

and property tax.

Scenario 1 - Fiscal Impact (000s)


Local Sales Tax (3.65%)

From Direct Spending $63 $86 $90 $92 $95 $107 $137 $2,166

From Indirect Spending $22 $30 $32 $32 $33 $38 $48 $759

From Induced Spending $24 $33 $35 $36 $37 $41 $53 $838

From Construction $289 $0 $0 $0 $0 $0 $0 $289

Total Sales Tax $398 $149 $157 $160 $164 $186 $238 $4,051

Property Tax

From Office $90 $90 $90 $90 $92 $101 $124 $2,071

From Retail & Restaurant $45 $45 $45 $45 $46 $51 $62 $1,036

From Residential $90 $92 $94 $96 $97 $108 $131 $2,187

Total Property Tax $225 $227 $229 $231 $235 $260 $316 $5,293

Total Fiscal Impact $623 $376 $385 $391 $400 $446 $555 $9,345


Scenario 2Fiscal Impact

HSP estimated the taxes that would be collected by the City of Tulsa due to the spending

related to the Project. Sales tax collections are expected to total $3.5 million during the

period for Scenario 2.

Property taxes collected by the City are expected to total $2.4 million during the period.

Total fiscal impact on the City is projected at approximately $5.9 million between sales tax

and property tax.

Scenario 2 - Fiscal Impact (000s)


Local Sales Tax (3.65%)

From Direct Spending $62 $84 $87 $98 $79 $95 $121 $1,949

From Indirect Spending $22 $30 $30 $34 $28 $33 $43 $683

From Induced Spending $24 $33 $33 $38 $31 $37 $47 $754

From Construction $146 $0 $0 $0 $0 $0 $0 $146

Total Sales Tax $254 $147 $150 $170 $138 $165 $211 $3,532

Property Tax

From Office $60 $60 $60 $60 $61 $68 $82 $1,381

From Retail & Restaurant $45 $45 $45 $45 $46 $51 $62 $1,036

Total Property Tax $105 $105 $105 $105 $107 $118 $144 $2,416

Total Fiscal Impact $359 $252 $255 $275 $245 $283 $355 $5,948





148















From Direct 50

From Indirect 17

From Induced 20



Sales Tax (3.65%) $4.1

Property Tax $5.3






149















From Direct 41

From Indirect 14

From Induced 17



Sales Tax (3.65%) $3.5

Property Tax $2.4



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311 N Boulder Ave Highest & Best Use and Feasibility Analysis

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