To no one’s surprise, the first half of 2016 was a rough period for the Oklahoma City office market. The market’s vacancy rate increased from 12.3% to 14.8% and the market suffered negative absorption of 179,000 square feet. The Mid-Year 2016 report is yet another lagging economic indicator of where the state’s economy and particularly the state of the petroleum industry currently stands.
The current market is somewhat analogous to where the market stood at the end of 2009 when we experienced negative absorption of over 200,000 square feet after a similarly sharp drop in petroleum commodity pricing. The biggest difference between now and then is the entire country isn’t mired in the Great Recession brought about by the global financial crisis and the subprime mortgage crisis. During the latter stages of this century’s first decade, companies across the local market were very reluctant to make any long-term decisions in regard to their office space. It was common for many tenants to renew leases for one to two-year terms while they waited for the economy to improve rather than committing to longer-term deals at new buildings or even their existing space. This time it seems to be very different as deal flow continues to be healthy and companies are making five and ten-year lease commitments. To a certain extent, Oklahomans are all in the oil business, but many companies are not as directly affected by the drop in the energy industry and they are taking advantage of space opportunities that didn’t exist at the height of the recent oil boom.
Log in or sign up here to download your copy of the 2016 Mid-Year Office Market Summary
