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Lot Lines: South side validation October 26, 2007 The $40 million purchase price paid by Inland Capital for the 240 Penn Plaza power center in south Oklahoma City raised some eyebrows last week. At a price of over $165 per square foot, the sale not only served as another testament to the strength of south Oklahoma City’s retail market, but also served as validation to the emerging strength of south Oklahoma City’s resurging retail market. Prior to 2001, the Interstate 240 corridor and south Oklahoma City retail market could be best described as stagnant. Overall occupancy was falling while rental rates were seeing little growth. The root of the problem came from the fact there had been little new development or redevelopment of existing shopping centers. Furthermore, south Oklahoma City was also fighting a perception problem. The dilapidating nature of some of the properties gave some residents a negative opinion of the area. However, proponents of the area such as the South Oklahoma City Chamber Commerce and south side developers like Paul Odom were diligent in spreading the word that the area had tremendous upside potential and strong demographics to support new retail development. Odom was always quick to point out that some of the subdivisions located in far southwest Oklahoma City boasted some of the highest per capita incomes in the entire city. National retailers began listening around the turn of the century and realized the strength of the demographics of the area coupled with the fact that more residents were seeking homes in this area to take advantage of the superior Moore school district. As a result, in 2001 and 2002 the Interstate 240 corridor began to see some significant single-tenant development in the form of Ultimate Electronics and Wal-Mart. These build-to-suit projects proved an initial success and served as a spark that has spurred on a plethora of new construction that continues this day. Since that time, a number of existing shopping center owners have decided to reinvest in their properties such as the South Shields Plaza and the Towne South Center, which is undergoing a complete rebuilding. Several new properties have also been built including Odom’s Chatenay Square and Palagio Shops on Western. However, the centerpiece of the new development was most definitely the 240 Penn Plaza power center. Built in 2005, the Burk Collins development managed to become 100-percent occupied in less than two years, which proved one of the primary factors in earning such a high purchase price for the 241,900-square-foot property. Now that the 240 Penn Plaza has proven the potential worth of well-performing properties, the area is truly reinvigorated with a 15-percent vacancy and rates in some newly built properties averaging around $20.00 per square foot. Moreover, the Interstate 240 corridor is enjoying synergy with the substantial amount of new retail construction transpiring along Interstate 35 in Moore. This appears to be resulting in the south Oklahoma City and Moore areas becoming a regional retail destination that should sustain vitality in these retail markets for years to come. Darren Currin is the vice president and research director for OKC Property Research LLC, an independent research and consulting firm specializing in Oklahoma City commercial real estate. He may be reached at (405) 606-6050, or at dcurrin@cox.net. Copyright © 2007 The Journal Record All Rights Reserved |
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