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Thread: Devon Tower real possibility

  1. #1

    Default Devon Tower real possibility

    Who will take over Kerr-McGee office space?

    By Steve Lackmeyer
    Business Writer

    One year after Kerr-McGee Corp. was acquired by Houston-based Anadarko Petroleum, its downtown Oklahoma City campus is empty, its fate still unknown.

    But a deal could be announced soon that is expected to trigger the potential development of three new downtown headquarters for SandRidge Energy, Devon Energy Corp. and American Fidelity Assurance Co.

    The official stance from Anadarko Petroleum is that there are no pending buyers for the now-empty, former Kerr-McGee headquarters at 123 Robert S Kerr Ave. and that the property remains for sale.

    But multiple sources confirm a deal is imminent that would allow SandRidge Energy to move from its temporary digs at 1601 Northwest Expressway into the 30-story McGee Tower.

    From the moment Tom Ward bought Riata Energy and moved it from Amarillo to Oklahoma City, the renamed company has made its intentions clear to grow and find a permanent home either downtown or in a suburban campus setting.

    In March, the company reported employing 1,600, including more than 200 at its headquarters. A move by SandRidge to McGee Tower would be a welcome relief among downtowners who still are struggling with an office vacancy rate that hasn't dipped below 25 percent in almost two decades.

    But the stakes on this deal go beyond McGee Tower.

    With the sale of Kerr-McGee last year, Devon Energy became downtown's undisputed leading corporate resident. The company is spread out among four downtown buildings, including Mid-America Tower and Chase Tower, and rumors have persisted for the past few years that the company might build a new downtown office tower to consolidate its operations.

    Human relations consultant Jim Farris said a company can benefit from having a highly visible headquarters. He recalled his days at Wachovia Financial when the company's 30-story tower in Winston-Salem, N.C., became the tallest in that city when it opened in 1995.

    "You could see that building for miles,” Farris said. "And that helped in recruiting employees, especially in a smaller town like that. It's always nice when you drive into major cities, and you see ‘XYZ Company' on it, and you know that's their building.”

    Office vacancy
    Devon Chief Executive Officer Larry Nichols has been tight-lipped about any possible move, but when Kerr-McGee's fate became known last year, Nichols dismissed a move to McGee Tower saying it's too small to be considered for a new Devon headquarters.

    Some who know Nichols privately say he is reluctant to build a new headquarters if it would further weaken the downtown office market.

    The loss of Devon from its existing space would be noticeable.

    The company employs 1,200 people spread out in three buildings: 14 floors of Mid-America Tower, 16 floors of the 34-story Chase Tower and five floors at the 14-story Corporate Tower. The company also leases two floors at First National Center that are used for files and storage.

    But the market has improved in recent months, and Brett Hamm, president of Downtown Oklahoma City Inc., said 60 percent of downtown's 25 percent vacancy consists of Class C space that needs to either be renovated or converted into housing or other uses.

    Hamm concludes the downtown Class A and Class B office spaces are in good shape compared to the rest of the city.

    A source involved in a potential Devon Tower project has told The Oklahoman that Nichols is preparing to move ahead with construction but is awaiting a resolution to McGee Tower.

    "That's crucial,” said Tim Strange, a commercial real estate agent with Sperry Van Ness, who is among those keeping a close eye on the market. "We need to fill up that building, and we need to fill up First National. You've got 450,000 square feet empty at Kerr-McGee, and 350,000 square feet at First National.”

    Strange said even with a potential move by SandRidge into McGee Tower, a new Devon Tower would leave downtown with one block of empty space replacing another.

    "The chamber (of commerce) says large prospects are out there,” Strange said. "They've shown us the numbers, and I agree they are out there. But the challenge has been for us to provide large blocks of continuous space.”

    American Fidelity
    A more immediate prospect may be the final key.

    Nichols, whose commitment to downtown includes serving as chairman of the Greater Oklahoma City Chamber and as an Urban Renewal commissioner, and who is involved in numerous civic sponsorships, may be further reassured about maintaining a stable office market by the prospect of American Fidelity Assurance Co. being the third domino to fall in this scenario.

    American Fidelity employs 1,500, including 1,000 at its Oklahoma City headquarters at NW 20 and Classen Boulevard. The company previously acknowledged an interest in buying McGee Tower. Or it could consider moving into Devon's current space, or build a downtown headquarters, as well.

    Strange points out a Devon Tower, once announced, would take at least two years to come to fruition. A scenario that brings both SandRidge and American Fidelity to downtown, with Devon building a new tower, has Strange wondering whether such momentum could attract other companies downtown to take up any remaining space.

    "That will have people talking,” Strange said. "But in the overall scheme, if they do it, if Devon builds a new tower, are we better off? I don't know. But if SandRidge comes in, yes, absolutely, we're better off.”

    City hall
    Add one more element into this entire scenario: city hall in recent months has been very aggressive in promoting downtown office space, agreeing to parking subsidies to convince two companies to move into downtown office space. Its most recent deal resulted in Simons Petroleum moving its 150-employees from suburban offices to space last occupied by the NBA Hornets at downtown's Oklahoma Tower.

    Pending lawsuit
    So what's the hold-up on all these deals?

    Part of the former Kerr-McGee downtown campus is clouded by a lawsuit that has waged this past year between Anadarko Petroleum and partners in the failed Braniff Towers development. The project, which Kerr-McGee announced two years ago, called for renovation of three empty buildings on the campus, including the former headquarters of Braniff Airlines, into housing.

    The trial was to begin in April but was pushed back to Sept. 11 following the case's reassignment to a new judge.

    The lawsuit, filed last July by Corporate Redevelopment Group LLC, seeks $8 million in damages alleging Kerr-McGee and Anadarko violated terms of the development deal.

    Those watching the case closely include Hamm, who previously urged both sides to settle the case quickly to avoid adding about 500,000 square feet to downtown's vacancy rate.

    "I am very disappointed as it's important to resolve this case in the most expeditious manner as possible,” Hamm said. "I am hopeful that interested buyers are not dissuaded by this delay in the process and that we are able to ensure progress regarding a permanent tenant for the Kerr-McGee building.”

  2. #2

    Default Re: Devon Tower real possibility

    14 floors of Mid-America Tower, 16 floors of the 34-story Chase Tower and five floors at the 14-story Corporate Tower. The company also leases two floors at First National Center that are used for files and storage.
    Assuming a new tower would have approximately the same floorplate, they would need at 37 floors just to accommodate their current workforce and storage needs. Would love to see something at least 40 stories, and 50 would make more sense.

  3. Default Re: Devon Tower real possibility

    This article has me very encouraged. It's nice to see Sandridge and American Fidelity showing interest in moving downtown. It's also nice to see that if Devon does have reservations, it's because Nichols wants the best for downtown, not because he's uninterested in the idea or, worse yet, planning to sell out soon.

  4. #4

    Default Re: Devon Tower real possibility

    If they dangle it out there like this and make it look like it's not quite a done deal, just watch what sort of money the city'll throw their way.

    -- because big oil companies need our help.

  5. #5

    Default Re: Devon Tower real possibility

    How about something like this for Devon (this building is in Atlanta and I've always loved it):

  6. Default Re: Devon Tower real possibility

    Speaking to the comment of "leaving one empty block for another" and the KMG tower....If Devon wants to build, they will build no matter what the vacancy rate is. They wouldn't be concerned if the space they leave is left empty...that's not why they would be building. Yes it would leave a large amount of space open, but it would be good space and not the class C junk that is open all over downtown.

    People want class A space, otherwise why is it worth the move to such expensive offices downtown? If First National along with the other places fighting vacancy, would spend some time and effort into improving their spaces, they might actually attract someone. No matter how much the city tries to make it happen, they have to have a product to sell. You can't sell a Ferari if under the hood you really have a Gremlin.

  7. #7

    Default Re: Devon Tower real possibility

    Malibu, I have been in that building in Atlanta. It is magnificent both inside and out. It is 55 floors and 1,023 ft. tall. Something the equal of that would look freakin incredible in downtown OKC.

  8. #8

    Default Re: Devon Tower real possibility

    I think the type of architecture in that Atlanta building would be a nice bridge between the older masonry buildings with step-backs (FNC & City Place) and the international style of Chase Tower and Kerr McG.

    And I too really like the approach Nichols seems to be taking here, as he's obviously concerned about leaving big holes in downtown. However, lots of those buildings down there need to get competitive by upgrading. Even Chase Tower is pretty bleh these days and certainly does not compare well to new construction, which is readily available in other parts of town.

  9. Default Re: Devon Tower real possibility

    This isn't the 70s and 80s. We can do better than Atlanta.

  10. Default Re: Devon Tower real possibility

    I think pretty much all the historical buildings need to go residential--at least partially.

    First National
    City Place
    Robinson Renaissance
    Court Plaza
    Pioneer (AT&T)
    the ones over between Stage Center and the Civic Center

    They are very appealing as residential and I'm sure as office space they are mostly Class C and some B.

  11. Default Re: Devon Tower real possibility

    Here's some more pics of Time Warner Center (the second to last in Cuatro's post) that I took.

    and some other nice towers in NYC

  12. #12

    Default Re: Devon Tower real possibility

    Quote Originally Posted by MalibuSooner View Post
    How about something like this for Devon (this building is in Atlanta and I've always loved it):

    I also think the tower in Atlanta would be a nice transition. They screwed up Leadership Sq.(reflective/contemporary) by making it 14 and 12 story towers. Now we have two beautiful, but short towers that cant emerge out of the skyline. If they had gone with the original idea of 40 something stories for Leadership sq. then another reflective tower could make it into the skyline.
    If Chase tower could do something with its facade like Founders tower(360) and other buildings downtown, then something could be tied in aesthetically.

  13. #13

    Default Re: Devon Tower real possibility

    I'd guess a Devon tower would have a reflective/blue glass look to it -- to tie it into the company's color scheme and as a nod to natural gas.

  14. #14

    Default Re: Devon Tower real possibility

    I'm not a big fan of buildings that are fundamentally square or rectangular.

    I've always liked this building in Charlotte and it really makes their skyline distinct:

  15. #15

    Default Re: Devon Tower real possibility

    In the original article, the broker was quoted as saying "we really need to fill up the 350,000 square feet at First National". However that building is not configured well for larger tenants, as the floorplates are small and pretty chopped up. Same thing at City Place.

    Plus, while I hope that FNC is nicely renovated in the near future, in it's current state it's no where close to Class A and may even be Class C.

    As long as we can get Sandridge and American Fidelity to absorb the Kerr McGee and soon-to-be-vacant Devon space, we are really going to be short on quality downtown office space even if Devon does build a large tower... Especially for larger tenants.

  16. #16

    Default Re: Devon Tower real possibility

    According to the article, if you factor out the class C property, there is only a 15% vacancy rate. That is not bad. That kind of vacancy rate could spur some speculative construction.

  17. Default Re: Devon Tower real possibility

  18. #18

    Default Re: Devon Tower real possibility

    Wow. Louisville sure has been stepping up in the world lately. I think they've learned from OKC's MAPS in some regards but they sure are challenging us lately.

  19. Default Re: Devon Tower real possibility


    How come Louisville can bulid that and we can't get ANYTHING??

  20. #20

    Default Re: Devon Tower real possibility

    It's also nice to see that if Devon does have reservations, it's because Nichols wants the best for downtown, not because he's uninterested in the idea or, worse yet, planning to sell out soon.
    I agree. It does show a real commitment and consideration for the market and community. There's is no point in building buildings if the net result is more vacancy and I think Nichols seems to understand that it could hurt more than help.

    However, it does sound like they want to consolidate their operations and I think if it even looks like these deals may come to light, then I wouldn't be surprised to seem them start working. I wouldn't even be surprised if there are already preliminary designs for it. It could be that downtown is at a tipping point and if we could just get some of these other guys downtown, then we'd see some cranes in the sky, and not the little ones.

  21. #21

    Default Re: Devon Tower real possibility

    Yep, if we could get the Devon Tower plus a large (and hopefully tall) convention hotel, I think you could really see things start to snowball.

    We've had a series of important, although pretty conservative, steps in terms of development but we are still lacking the big projects.

    All this would be very key in getting more businesses to chose downtown instead of the suburbs -- to make it prestigious to be in the CBD once more. Plus, there are plenty of nice amenities that make downtown attractive to people that work down there... And certainly more are to come.

  22. Default Re: Devon Tower real possibility

    Quote Originally Posted by CuatrodeMayo View Post
    Damn, that's flat amazingly gorgeous, CuatrodeMayo. I hope that it happens for their sake ... but, even if it doesn't, it certainly serves as inspiration!

  23. Default Re: Devon Tower real possibility

    ^ Is Louisville really competition for OKC tho?

    I always thought of Louisville as Tulsa's league along with Omaha, Little Rock, and Colorado Springs; with OKC (now) in the league of Denver, Indy, Mke, and San Antonio.

    Oklahoma City, the RENAISSANCE CITY!

  24. #24

    Default Re: Devon Tower real possibility

    I wouldn't say we are in the league with Denver or Indy yet....When we finally get our nba team we will be like sacramento or salt lake city

  25. #25

    Default Re: Devon Tower real possibility

    Louisville has done some amazing work with their riverfront park.

    Louisville Waterfront Park - Great Public Spaces | Project for Public Spaces (PPS)

    Their economy, I believe, is also more diverse than ours, and they have a burgeoning arts scene. We still in many ways cling to our old licence plate mentality - Oklahoma is OK! Until we strive and envision more, we're not going to have similar buildings - or parks.

    Core to Shore is making great headway into this type of thinking. Now we've just got to find the backing to fund it all!

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