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OKLAHOMA CITY-With the area’s steady job and population growth, office vacancies are tightening while rents remain stable. Though interest in the office market is picking up, especially in the northwest submarket, experts tell GlobeSt.com that developers aren’t planning a lot of new projects; a trend that’s likely to last for the next 12 to 18 months.

According to a research report prepared by Marcus & Millichap Real Estate Investment Services, vacancy in the market declined 180 basis points to 16.8% during the past year, with 20,000 sf of new space anticipated to come online, though 460,000 sf of office space is in various stages of planning. Asking rents, in the meantime, are up 3.5% from a year ago at $14.28 per sf.

Grubb & Ellis Co.’s Office Market Trends Report in Oklahoma City points to a 17.5% overall vacancy. When it comes to hard numbers, 2.5 million sf is vacant out of a total inventory of 14.3 million sf. Asking rents for class A buildings are at $18.04 per sf, while class B is fetching $14.13 per sf. There is 81,520 sf under construction, primarily in the northwest submarket.

Mark Beffort, principal with Grubb & Ellis’ Oklahoma City office, points out that the market has experienced steady growth, with the oil and gas industries being an important stimulus, especially northwest to Memorial Road and John Kilpatrick Turnpike.

“That northwest quadrant is the one seeing the most growth,” Beffort says. “The expansion of Lake Heffner Parkway has brought that quadrant of Oklahoma City into the fold, and over time, we’ll see more going on there.” The G&E report confirms the trend, pointing out vacancies in the northwest submarket are at 7.8%, or 425,973 sf vacant out of a total 5.4-million-sf inventory.

David Bohanon, senior associate and operations director with Marcus & Millichap Real Estate Investment Services’ Oklahoma City office agrees, adding that the northwest corridor is likely to be impacted by Oklahoma ProCure Treatment Center, the 55,000-sf cancer treatment center being developed by ProCure Treatment Centers Inc. Bonahan predicts that once the area’s first proton therapy cancer center is completed in 2009, additional high-end office, residential and retail development will be attracted to the area.

Both brokers expect further tightening vacancy rates in the coming months with little new inventory coming on line. Beffort points out that future office construction will involve developments ranging from 40,000 sf to 60,000 sf, excluding potential corporate campuses. “This isn’t a market where a developer will come in and build a spec 300,000-sf to 400,000-sf facility,” he observes. “With slow, steady growth, our space is staying in line with demand and we won’t see overbuilding here.”

Bohanon says that overbuilding during the mid-1980s still makes everyone cautious. As a result, most developers are leery about putting up buildings without assurance of tenants. “Mostly everyone is waiting and doing prelease types of construction,” he says.

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