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TULSA-Oneok Inc.’s recent buy of the 517,235-sf class A office building underlines growing interest in the CBD. Area experts point out that the $48-million transaction puts the energy company in possession of its headquarters building while adding to other activity in the market.

Oneok, which has been in the building at 100 W. 5th St. since it opened in 1984, acquired the asset from Blacksburg, VA-based Southwestern Associates Inc. and RMZ Corp. of Bangalore, India through a direct deal. The price included about $17 million for an existing lease that will expire in September 2009. Oneok occupies more than 50% of the structure. The remainder is leased by smaller tenants, including several law firms.

Steven Baker, senior associate in the Tulsa office of CB Richard Ellis, says Oneok has owned the adjacent parking lot and plaza for awhile. “The building itself has been well cared for,” he says. “Since Oneok occupies 50% of it, they’ve made a point to take care of it.”

Baker says Oneok Plaza is one of four major office trades that have taken place in Tulsa during the past year, all of which sold in the $61 per sf to $71 per sf range. He points out that Oneok Plaza’s price breaks down to $93 per sf, but once the lease payoff is deducted “it leaves you with about $61 per sf,” he explains.

Baker and Howard Wolf, adviser for Sperry Van Ness in Tulsa, concur that the transaction was an outstanding one for the buyer. “One you take the $17 million lease, back it out and put it as an expense along with other charges, this ends up with a two-digit cap rate,” Wolf tells GlobeSt.com. “This was definitely a strong buy at a good price.”

The brokers say the buy comes at a time during which the CBD has some interesting development projects under way. One is BOK Center, a regional event center at 200 S. Denver St., an 18,000-seat, 550,000-sf facility designed by Cesar Pelli & Associates from Chicago. It is scheduled to open in the fall. In early March, SJS Hospitality of Missouri acquired the Atlas Life Building at 415 S. Boston Ave. The company is redeveloping the historic office building into a 120-room Courtyard by Marriot hotel.

The city of Tulsa is doing its part to clean up its Downtown area, Wolff says. Streets are being widened and streetscapes put into place.

Added to the entire scenario is Tulsa’s class A office market is particularly tight. “Maybe this was the perfect storm for Oneok,” Wolf says. “This is a strong utility company that’s making money and management thought it was a good time to move in and control the asset.”

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