Retail Market Forecasts Continued Growth
Retail is never boring. In the age of click-bait, the headlines would have you believe retail is dying or at least mortally wounded. Over 8,000 stores closed this year, over 300 firms declared bankruptcy. Millennials aren’t spending money on ‘things’; everyone is shopping online, Amazon is unstoppable. Retail as we know it is over. A little perspective is in order. Retail is still growing; the final numbers will most likely put 2017 growth at close to 4 percent. And, while online sales continue to grow faster (12 percent), keep in mind that brick and mortar store sales continue to grow as well.
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Office Market Sees Vacancy Rates Rise Slightly
2017 proved to be another tough year for landlords in the Oklahoma City Office market. The market had negative absorption in 2017 of 166,000 square feet; coming on the heels of historically bad negative absorption of approximately 520,000 square feet in 2016. Overall, the local market’s vacancy rate increased from 15.5% to 18.0%.
The biggest hits were once again felt in the Northwest submarket which has historically been the area of choice for energy companies. Since the peak oil price in June 2014, this submarket has experienced negative absorption of 460,000 square feet. In the past three years, this submarket alone contributed 62% of the market’s overall negative absorption. The vacancy rate in the Northwest rose from 17.2% to 19.1%. The good news for the Northwest submarket is that the worst seems behind it as even most sublease opportunities have been fully absorbed into primary vacancy, eliminating the shadow of an additional three to four percentage points of vacancy that was not included in our reports. This is still a very popular area of the city and leasing activity appears to be on an uptick, so this submarket should bounce back in the next couple of years.
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Multifamily Market Closes 2017 on a High Note
At the beginning of 2017 most said it was the beginning of the inevitable slowdown; however, as we roll into a new year and look back at our forecast, the market ended up right where we expected. 2017 was not only a solid year in terms of investment activity, but it was also a strong year from the owner/investor side. We experienced positive sales volume growth, positive rental growth and even managed to push the occupancy a little higher, a multifamily trifecta. Although the year started off a little shaky with many reports citing pressure on rents and occupancies, the rebound in Oklahoma’s economy was a welcome boost pressing the multifamily market forward.
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