By Lanie Beck, director of corporate research, marketing & communications, Stan Johnson Co.
Situated on the banks of the Arkansas River in northeast Oklahoma’s Green Country, Tulsa is a hidden gem for residents, employers and commercial real estate investors.
Once recognized 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. Attractions and features of the city include the historic Route 66, the Philbrook and Gilcrease Museums, an Art Deco-inspired downtown, the award-winning Gathering Place Park and a vibrant resurgence of intown neighborhoods.
Business, Population Boom
Tulsa’s central U.S. location and operating costs that run below the national average, as well as a cost of living that is one of the lowest in the country for metro areas, make it incredibly desirable for businesses of all sizes.
To help drive awareness during the pandemic, the city launched a rejuvenation project called “Tulsa Remote” that provided financial bonuses to attract more affluent remote workers and enhance the city’s diversity and community.
Tulsa’s attractive characteristics, combined with the metro’s active efforts, have contributed to a boost in population growth over the last few years. In 2021, the U.S. Census Bureau revealed that the greater Tulsa metro now exceeds 1 million residents for the first time, with 400,000 living in Tulsa proper. This reflects an influx of more than 7,000 people between 2019 and 2020.
Not only does this growth secure Tulsa’s position as the second-largest city in Oklahoma, but also, with 25 percent of the state’s population in residence, the 1 million-plus designation opens the door even wider for the state to compete with larger cities on economic development projects. With a strong base of small businesses in place, along with corporate residents of all sizes — Google, Amazon, QuikTrip, Bank of Oklahoma, Mazzio’s, RibCrib — the local employment landscape is rich.
Growth Draws Retail
Brick-and-mortar retail has suffered during the pandemic, with consumers relying heavily on online shopping. As a Tulsa resident during the pandemic and one of those 7,000 people who moved to Tulsa starting in 2019, I can personally attest to the hardships faced by many local retailers and national chains alike.
In the early days of the pandemic, Tulsa’s retail corridors felt like ghost towns. Essential retailers remained open but were no longer driving foot traffic to inline shops, and many independent businesses had a difficult time reopening once shelter-in-place mandates were lifted.
Fast-forward two years from the beginning of the pandemic, and these same retail corridors are seeing a resurgence of consumer activity, along with new construction. Retail developers are capitalizing on the city’s recent growth, and new retail establishments are opening doors across the metro area.
This is happening everywhere, from downtown to south Tulsa’s established neighborhoods to the growing suburbs of Jenks, Bixby, Broken Arrow, Sapulpa, Sand Springs and beyond.
To assist with 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 experienced excellent growth in single-tenant net lease (STNL) retail and new unanchored strip centers leading to a true renaissance in many neighborhoods.
In the retail sector, Oklahoma-based grocer Reasor’s has been investing in renovating its stores in an effort to compete with higher-end concepts like Whole Foods Market and The Fresh Market. The 66,455-square-foot store at Summit Square underwent a $3 million interior and exterior renovation project in 2021, further demonstrating the grocer’s commitment to the site and consumers in the surrounding area. This was part of a larger facelift at Summit Square that included a new roof, updated signage and parking lot upgrades, helping the center sell for $17 million.
Another revitalization project is occurring with the infrastructure around the Woodland Hills Mall, which is a significant retail corridor in the south Tulsa area. The mall boasts over 140 retailers, including Rue21, IKIGAIDO Umami Fries and OFFLINE by Aerie, all of which opened in December 2021.
In recent months, we’ve seen retail centers in the immediate area command the attention of national investors, including a California-based investor who acquired a two-tenant big box center adjacent to the mall for $9.1 million.
What This Means for Investors
Infrastructure improvements and the construction of new STNL retail spaces across the metro are opening the doors for incredible investment opportunities, but not just for retail investors or local real estate owners.
In addition to the growth seen across 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 independent medical office buildings, many of which are newly built. Dialysis centers, dental providers and emergency rooms have also grown across the city.
Although Tulsa is not seeing strong levels of new industrial development, the inventory of existing properties is high. When these second-generation assets come to market, they can offer stabilized — as well as value-add — opportunities for investors.
The same is true of office properties. While the on-market supply of single-tenant office buildings is incredibly low across the metro, investors focused on multi-tenant assets have a larger selection to choose from, including the nearly 1 million-square-foot Warren Place complex where Stan Johnson Co. is headquartered.
Overall, the residential boom experienced in recent years, along with Tulsa hitting 1 million residents, has converted the city into a highly desirable market for both small and large employers. The city is attracting talent as well as new residents who are contributing to economic growth and diversity, and the commercial real estate investors who have Tulsa on their radar will be among the ones to benefit.
— This article originally appeared in the February 2022 issue of Texas Real Estate Business magazine.