By Lanie Beck, ddirector of corporate research, marketing and communications, Stan Johnson Co.
Located on the banks of the Arkansas River in the green country of Northeast Oklahoma, Tulsa is a hidden gem for residents, employers and commercial real estate investors.
Once known as the oil capital of the world, Tulsa has become a growing economic base for a variety of industries, including energy, finance, aviation, telecommunications and technology. City attractions and features include historic Route 66, the Philbrook and Gilcrease museums, an Art Deco-inspired downtown, award-winning Gathering Place Park, and a vibrant resurgence of intown neighborhoods.
Business, population boom
Tulsa’s central U.S. location and operating costs below the national average, along with one of the nation’s lowest costs of living for metropolitan areas, make it incredibly attractive for businesses of all sizes.
To help raise awareness during the pandemic, the city launched a rejuvenation project called “Tulsa Remote” which provided financial incentives to attract more affluent remote workers and improve the city’s diversity and community.
Tulsa’s attractive features, combined with active metro efforts, have contributed to accelerating population growth in recent years. In 2021, the U.S. Census Bureau revealed that Greater Tulsa Metro now exceeds 1 million residents for the first time, 400,000 of whom live in Tulsa proper. This reflects an influx of over 7,000 people between 2019 and 2020.
Not only does this growth secure Tulsa’s position as Oklahoma’s second largest city, but also, with 25% of the state’s population residing, the designation of over one million opens the door even further. wide so that the state can compete with the big cities on economic development projects. With a solid base of small businesses in place, as well as resident businesses of all sizes – Google, Amazon, QuikTrip, Bank of Oklahoma, Mazzio’s, RibCrib – the local employment landscape is rich.
Growth attracts retail
Physical retail has suffered during the pandemic, with consumers relying heavily on online shopping. As a resident of Tulsa during the pandemic and one of those 7,000 people who moved to Tulsa beginning in 2019, I can personally attest to the struggles faced by many local retailers and national chains.
At the start of the pandemic, Tulsa’s retail hallways looked like ghost towns. Essential retailers remained open but were no longer driving foot traffic to online stores, and many independent businesses struggled to reopen once shelter-in-place mandates were lifted.
Fast forward two years since the start of the pandemic, and those same retail corridors are seeing a resurgence in consumer activity, as well as new construction. Retail developers are capitalizing on the city’s recent growth and new retail establishments are opening in the metro area.
It’s happening everywhere, from downtown to established neighborhoods in south Tulsa to the growing suburbs of Jenks, Bixby, Broken Arrow, Sapulpa, Sand Springs and beyond.
To aid in these growth efforts, the City of Tulsa has contributed nearly $885 million and multiple assets to promote economic development and other capital improvements. The city has seen excellent growth in Single Tenant Net Lease (STNL) retail and new unanchored strip malls, leading to a true renaissance in many neighborhoods.
In the retail sector, Oklahoma-based grocer Reasor’s has invested in store renovations to compete with high-end concepts such as Whole Foods Market and The Fresh Market. The 66,455-square-foot Summit Square store underwent a $3 million interior and exterior renovation project in 2021, further demonstrating the grocer’s commitment to the site and surrounding consumers. It was part of a bigger facelift at Summit Square that included a new roof, updated signage and parking lot improvements, helping the center sell for $17 million.
Another revitalization project is underway with the infrastructure around the Woodland Hills Mall, which is a major retail corridor in the south Tulsa area. The mall has over 140 retailers, including Rue21, IKIGAIDO Umami Fries and OFFLINE by Aerie, all of which opened in December 2021.
Over the past few months, we’ve seen malls in the immediate area attract the attention of domestic investors, including a California-based investor who acquired a two-tenant big box mall adjacent to the mall for $9, $1 million.
What this means for investors
Improved infrastructure and the construction of new STNL commercial spaces in the metro open the doors to incredible investment opportunities, but not just for commercial investors or local property owners.
In addition to the growth seen in the retail sector, growing populations require increased medical/healthcare support. There are 29 hospitals in and around Tulsa that are supported by urgent care clinics, surgical centers, and freestanding medical office buildings, many of which are newly constructed. Dialysis centers, dental providers, and emergency rooms also sprang up throughout the city.
Although Tulsa is not experiencing high levels of new industrial development, the inventory of existing properties is high. When these second-generation assets come to market, they can offer stabilized opportunities – as well as added value – to investors.
The same is true for office buildings. While market supply of single-tenant office properties is incredibly low in the Metro, investors focused on multi-tenant assets have more choice, including the nearly million-dollar Warren Place complex of square feet where Stan Johnson Co . at its head office.
Overall, the residential boom experienced in recent years, along with Tulsa reaching 1 million residents, has transformed the city into a highly desirable market for small and large employers. The city is attracting talent as well as new residents who contribute to economic growth and diversity, and commercial real estate investors who have Tulsa on their radar will be among those who will benefit.
— This article originally appeared in the February 2022 issue of Texas real estate business magazine.