Downtown Tulsa development ahead of OKC?

[Spartan]

I just did an exhaustive post detailing all of DT Tulsa's development from an OKC perspective..it's pretty amazing. It kept me up all night tracking down, too.

Here's the link:
A Downtown ontheRange: Downtown development: OKC v. Tulsa

Because it's written from an OKC perspective, it's intended to give you an idea of what it's like. I just think it's ironic how the development lull has been so convincingly attributed to the economy. Well, here's a city that's subject to the exact same economic conditions as us, that's got tons, and tons of active development right now.

I don't think it's an "OKC problem" -- I just think it has more to do with the fact that Tulsa is in the middle of their first wave, and their second wave isn't going to be separated by a year or two--whereas OKC is just in between the first and second waves of downtown development and a lot of people are waiting to see what happens with some things.

But it should be obvious that financing/economic concerns shouldn't still be holding back development and hindering progress and much as it seemingly is.

Check out the Mayo Hotel renovation, my favorite DT Tulsa project:

[BDP]

Ahead? Ummmm, this is largely in the "catching up" column if you ask me.

I'm not sure what we have to do to convince some people that OKC has done a lot more and will do a lot more downtown than Tulsa has done or has planned. The Skirvin, Ford Center (on phase 2 of renovations), several bricktown projects, triangle developments, Devon tower, total overhaul of downtown streetscape, revamping of myriad gardens, core to shore park, street car, new convention center, OKCMOA, automobile alley, bricktown ballpark, various midtown projects, and the list goes on and on.

I'm not saying OKC hasn't made mistakes or that what Tulsa is doing isn't exciting. It's great and that city really needs to make more out of its assets in the core and it is great to see them starting to do this. But Oklahoma City is a generation ahead in this respect. Now, it may have been farther behind when it started, but it's not even close right now. Oklahoma City has already made significant improvements and has had a more vibrant downtown for at least ten years and it's about to get started on projects that are even more significant in some ways. I'm rooting for Tulsa and love what they are doing, but it seems that when people get into these petty comparisons, they always seem to lack real perspective and things happening locally are discounted just because of familiarity.

But, I guess if building the largest building in the state, redoing the whole of street scapes downtown, and revamping our center most park is what is considered a development lull as people wait "to see what is happening", then I guess that really does show how far the city has come in 20 years.

[Spartan]

BDP, you're right about discounting things due to familiarity, and I'm guilty of that--especially when I ask people to look beyond our big projects. The point I'm trying to make is that downtown OKC is shockingly lacking in the infill department at the moment, and the economy as culprit argument is bunk. OKC's actually has more economic growth than Tulsa and we haven't lost near the jobs that Tulsa has over the last few years with Whirlpool, Citgo, IBM, SemGroup, and others. OKC has done the opposite, adding jobs and major employers, such as AAA, Dell, SandRidge, among others and outstanding growth at Devon, CHK, Paycom, and many others. Not to mention that the OHC has grown by 50% recently. What we're seeing with all of this growth in OKC is that Downtown OKC, despite the huge buzz, reality is not living up to the fantasy because downtown growth has not kept up with metro growth..in fact in the last two years it's lost ground it seems. Interesting enough.

Now I'm not dissing on OKC for no reason, I don't do that..I usually have a point I'm getting at about something OKC could do a lot better. The Tulsa developments aren't catching up in my opinion because DT Tulsa still has more residents than DT OKC--and the 2000s did see some development in downtown, such as the Philtower Lofts, just a TON of new loft buildings between Cherry Street and the BA Expwy, the initial conversions that made the Brady Arts District appear on the map..and don't forget that the original, even cooler McNellie's is in Tulsa's Blue Dome District. It's not like on Friday and Saturday nights people in Tulsa just go out to Applebee's and then go home, wishing they had something like Bricktown. The truth is that they don't let not having a Bricktown Canal with yellow watertaxis and boarded up buildings come in the way of having a really cool scene that's just as vibrant and resurgent as OKC's.

What Tulsa has done in order to keep the economy from stifling their momentum is simple..the city of Tulsa has been fronting developers the loans that they need to secure other financing. The developers are doing a service to the city and the public by developing downtown, and Tulsa gets the money back after a 10 year repayment schedule and no interest which will allow them to turn around and reinvest the money again in more developments 10 years from now. It's an ingenious plan. If OKC had a program like that, there's no telling what we could do. The Skirvin wouldn't have had to be nearly as complicated of a deal, Bricktown would be easier to develop and the city could chose preference over Bricktown projects with retail, we'd be able to control projects like SandRidge by offering loans if they be pro-urban and not anti-urban, and projects such as The Flatiron and the Cotton Exchange would have been able to go forward with city assistance.

[soonerguru]

Tulsa's east end (Blue Dome) is in a way much cooler than anything OKC has downtown. That said, OKC has more life downtown than Tulsa, and for now at least, more happening with downtown housing (though Tulsa has several projects in that regard in the works).

[Rover]

First, these are always silly types of threads. The two really aren't in competition.

That said, there is plenty of vacant property and undeveloped sites in and around downtown Tulsa. Retail has failed over and over in downtown Tulsa. In the core of Tulsa there is little apartment/condo existing. And, outside of a couple of hotels, there isn't much hotel life there either. So I wonder what leads anyone to believe Tulsa is ahead of OKC. Tulsa hurt themselves for years by voting down initiative after initiative while OKC citizens invested in growth. Tulsa finally has been trying to take OKC's example and create a little life in their downtown.

[Spartan]

That's a very self-congratulatory version of events, wouldn't you say? Of course the two aren't in competition, there is an unlimited supply of 2x4s and other building materials for urban development in both cities. But we're not above looking at the examples and developments in other cities, even in *gasp* Tulsa..Realism will get us a lot further than inflated ego.

As for vacant property, undeveloped sites, failed retail, little existing condo options, not much hotel life.. I'm confused, you pretty much described both of Oklahoma's cities.

[Architect2010]

I really don't see a comparison either. You even said it yourself. Tulsa is just in the middle of their first wave of projects and OKC is in between it's first and second waves. So according to that logic. Isn't OKC ahead? :P

But really. What Tulsa is doing is great and I actually follow their developments on Tulsanow, but it's still not on the level of OKC. And that's not ego talking. It's truth. Who knows how the situation might be flipped in ten years. However, right now if you do want to compare the two cities, Downtown OKC has more momentum than Tulsa. But it's not a bad thing.

[Spartan]

Architect, I'm glad you also follow their development.

Maybe this is a failure to communicate. I'm not looking at this in the context of which city is "better." I'm looking at this in the context of Sunday, March 28, 2010--why the downtown Tulsa is expanding and OKC isn't. I admitted it has something to do with OKC just finishing its first wave, but I'm arguing that it has more to do with the City of Tulsa's ability to front developers the financing they need to pull their projects off. This is a solution instead of hearing the same tired excuse that's driven me crazy about our development, "it's the 'economic 'times.'" (what are "economic times" anyway?)

[HOT ROD]

I actually think OKC is in the middle of the third round of downtown investment with the start of the fourth round.

the first round was back in the middle/early 1990s, with Maps 1. There we saw the rise of Bricktown and initial investment of Deep Deuce. We also saw plans for the other downtown districts; AAlley, Flatiron, and Arts District.

the second round was in the early 2000's with the spin-offs from private investment that occurred because of earlier Maps 1. We have seen the rise of Automobile Alley, Midtown, and lower bricktown; and the maturation if you will of Bricktown and Arts District. Also we saw the OKC national memorial mature and the new Federal Building.

this third round had started in mid 2007ish, and is really in 'preparation'/anticipation if you will of MAPS III, mostly with plans for Core to Shore being finally began to materialize and the maturation of other downtown districts (deep deuce, flatiron, aalley, arts district, cbd, lower bricktown) and Midtown. We also saw the rise of the boundary area of downtown to Oklahoma Health Center, we've also seen the rise of Film Row and 'plans' for Bricktown two. So far, Bricktown has more or less been in a lul as has the boundary between BT and DD and along the canal.

Really, I think we're in the beginning fourth phase of downtown development - with Devon Tower/Myriad Gardens, Project 180, Maps III, SandRidge, OCU Law and other projects being started. To me, Bricktown did not get the huge injection that was planned in the 3rd phase; but I think that is over now as we have moved on.

And not to start a fight or anything, but I think Tulsa is probably beginning their 2nd phase of downtown development, with the first being BOK and the new ballpark.

Again, when you consider OKC's investment and addition of amenities - it blows away anything else in the region save Dallas. As others have said, I dont think Tulsa can match it given their political and economic climate but then again - why do they NEED to try? They can just be themselves and OKC can be who it is.

Why does it need to be a competition?

[Larry OKC]

Hot Rod

Think you are missing Spartan's point which was: "but I'm arguing that it has more to do with the City of Tulsa's ability to front developers the financing they need to pull their projects off. This is a solution instead of hearing the same tired excuse that's driven me crazy about our development, "it's the 'economic 'times.'" (what are "economic times" anyway?)"

It is a valid point. The economy has been cited for many of the announced/planned OKC development to, at best, be put on hold, if not canceled completely. My only question might be how is Tulsa "fronting" the money to the developers? Is it through long term bond debt (which by my understanding ends up at least doubling the cost of anything using this method).

[metro]

The claims made in this thread by Spartan sure are a stretch, and besides even if Tulsa is "loaning out money", Spartan doesn't mention at what price? Look at cities who do this, they are bonded out to the max right now, and levereged their futures. Many of the rust belt cities are maxed out with bonds and can't invest during downtimes like this. I see OKC ahead of the game in so many ways. We haven't gone into debt and we have the ability to do so if we absolutely wanted to. Furthermore, who is the ultimate authority on deciding if the City "loaning out money for private development" is a good thing? Isn't it KC that is struggling with debt on the Power and Light district?

[adaniel]

Hot Rod

Think you are missing Spartan's point which was: "but I'm arguing that it has more to do with the City of Tulsa's ability to front developers the financing they need to pull their projects off. This is a solution instead of hearing the same tired excuse that's driven me crazy about our development, "it's the 'economic 'times.'" (what are "economic times" anyway?)"

It is a valid point. The economy has been cited for many of the announced/planned OKC development to, at best, be put on hold, if not canceled completely. My only question might be how is Tulsa "fronting" the money to the developers? Is it through long term bond debt (which by my understanding ends up at least doubling the cost of anything using this method).

Maybe I am misssing the point as well, but I don't know anywhere in this country right now where projects are being put on hold or cancelled, and that includes Tulsa. Its not a "tired" excuse, its the cold hard reality. For 30 years in this country, we've had a building boom that was fueld by cheap money. Now all of a sudden developers actually have to show a viable business model on which their plans actually generate some revenue. And the sad truth is that despite all of the progress we've made here in OKC over the past decade, somewhat weak demographics and and a lack of a "track history" here makes banks very skittish. Yes I'm sure there are other factors at play as well, many of which have been explained very well here. I just don't think some of you know how hard it is to line up adequate financing these days.

Also, to respond to Spartan's post about Tulsa loaning money out to developers, I'm not entirely sure about that, but I have a feeling that a city that is in such dire financial straights that it had to lay off 1/3 of its police force simply does not have the kind of money to be cutting checks to developers. It may help with infrastructure improvements and tax breaks like those you see under the TIF program. I know that the city did give some money and grants to the people behind the Mayo, but that was in much more prosperous times. Again, I could be wrong, but Tulsa city government simply does not have the financial capacity to be supporting any substantial development. Remember, the city has a huge future obligation in the road program they passed a few years back. And ONEOK Field was financed by some really shady tax deals that could easily be ruled down if someone made a legal challenge that was strong enough. Then what will the city do?

I read the blog post and while I appreciate the time it took to compose, I think it really glossed over a lot of points. Devon Tower it not a small deal. It is probably the biggest single privately funded constuction project to be done in this state since the oil boom days of the 70's. It is probably keeping this area's construction industry afloat in a time when many cities are seeing general contractors filing for Chapter 7 left and right. And Project 180, MAPS 3, and Sandridge are not as big, but not small either. Tulsa has lots of small projects going on, but based on dollar amount, anything going on in OKC blows them away. Its not like there's anything wrong with that. Tulsa does lots of small projects, OKC does a few big ones. And so far it works well for each respective city.

[Rover]

I would be curious to see what the total $ of development in downtown of both cities is. I have seen that there is about $3.4-4 BILLION of investment going on in OKC. That includes OMRF tower, completion of the hospitals at OU center, Proton Cancer center at OU, Eye Institute expansion, Blood Institute, etc., etc., the TIF street and infrastructure development, Devon, Ford Center, Maps, two Bricktown hotels, School of Music growth, OCU move to downtown and expansion, Native American Heritage Center, 4 boathouses, and many smaller private projects still on the board and awaiting the up-tic in the economy. Of the total, its seems a great deal of investment is private money. OKC has reached a great balance of investing public money for creating areas where private money wants to invest in.

What $ total is going on in Tulsa now?

[soonerguru]

Maybe I am misssing the point as well, but I don't know anywhere in this country right now where projects are being put on hold or cancelled, and that includes Tulsa. Its not a "tired" excuse, its the cold hard reality. For 30 years in this country, we've had a building boom that was fueld by cheap money. Now all of a sudden developers actually have to show a viable business model on which their plans actually generate some revenue. And the sad truth is that despite all of the progress we've made here in OKC over the past decade, somewhat weak demographics and and a lack of a "track history" here makes banks very skittish. Yes I'm sure there are other factors at play as well, many of which have been explained very well here. I just don't think some of you know how hard it is to line up adequate financing these days.

Also, to respond to Spartan's post about Tulsa loaning money out to developers, I'm not entirely sure about that, but I have a feeling that a city that is in such dire financial straights that it had to lay off 1/3 of its police force simply does not have the kind of money to be cutting checks to developers. It may help with infrastructure improvements and tax breaks like those you see under the TIF program. I know that the city did give some money and grants to the people behind the Mayo, but that was in much more prosperous times. Again, I could be wrong, but Tulsa city government simply does not have the financial capacity to be supporting any substantial development. Remember, the city has a huge future obligation in the road program they passed a few years back. And ONEOK Field was financed by some really shady tax deals that could easily be ruled down if someone made a legal challenge that was strong enough. Then what will the city do?

I read the blog post and while I appreciate the time it took to compose, I think it really glossed over a lot of points. Devon Tower it not a small deal. It is probably the biggest single privately funded constuction project to be done in this state since the oil boom days of the 70's. It is probably keeping this area's construction industry afloat in a time when many cities are seeing general contractors filing for Chapter 7 left and right. And Project 180, MAPS 3, and Sandridge are not as big, but not small either. Tulsa has lots of small projects going on, but based on dollar amount, anything going on in OKC blows them away. Its not like there's anything wrong with that. Tulsa does lots of small projects, OKC does a few big ones. And so far it works well for each respective city.

Outstanding post.

[onthestrip]

It basically sounds as if Spartans blog post should have been just about downtown housing becuase it does sound like Tulsa has some good housing projects in the works while OKC has but a few small projects going on.

[Pete]

It also should be noted that the existing, recently-completed housing projects in and around downtown OKC are not fairing well at all -- with the exception of the Centennial.

Lots of unsold units in projects that were started just the last couple of years.

So, how the heck to you finance a new condo development? There are plenty on the drawing board with money already invested in land but the developers simply can't get them funded.

I still believe the right project could sell units, but even in that case, how do you convince a lender YOUR project is different than several others that are languishing??

It's a combination of having some over-priced projects coming on line just as times got tough (and hence a bad recent local track record) and lenders getting very, very convsevative. The latter is not unique to OKC but the former definitely is.

[bluedogok]

None of the planned residential projects in Downtown Austin that were not financed prior to the bust are being built. The only projects being constructed at the moment had significant financing (many steps into their step financing) already in place. There are a bunch of the "on hold" and many more that have been canceled entirely and Austin is still considered one of the "economic wonders" of the current economic crisis like OKC has been called.

I also wonder how much of Tulsa's development is financed by home grown banks like BOK? The only development stuff moving here is small projects mostly funded by local/regional banks.

[BDP]

I'm looking at this in the context of Sunday, March 28, 2010--why the downtown Tulsa is expanding and OKC isn't.

But I don't think a case has been made that this is even true. Oklahoma City has many developments going on that aren't being built with city debt. In fact, the construction of the Devon tower is actually giving BACK to the city and paying for a complete revamping of the downtown street scapes. So, you could argue, that not only is it advancing further, Oklahoma City is actually getting paid for it with immediate reinvestment.

If anything, it just seems to be different strategies. Instead or borrowing against future revenue to invest directly into projects for private sale that may or may not be in demand, Oklahoma City is using its public resources to build public assets debt free. As for Oklahoma City using public funds to issue debt to private developers, I'm not completely opposed, but I would much rather see them effectively enforce development design codes and proposals through OCURA before I trust them to actually invest in these developments. Oklahoma City's problems have been more of a result of poor oversight rather than lack of funding, imo. I'd much rather build public assets with public money that entice private development rather than use public money to build private developments that need public money to be built.

[G.Walker]

It also should be noted that the existing, recently-completed housing projects in and around downtown OKC are not fairing well at all -- with the exception of the Centennial.

Lots of unsold units in projects that were started just the last couple of years.

So, how the heck to you finance a new condo development? There are plenty on the drawing board with money already invested in land but the developers simply can't get them funded.

I still believe the right project could sell units, but even in that case, how do you convince a lender YOUR project is different than several others that are languishing??

It's a combination of having some over-priced projects coming on line just as times got tough (and hence a bad recent local track record) and lenders getting very, very convsevative. The latter is not unique to OKC but the former definitely is.

I know this might sound cliche, but "If You Build It, They Will Come". Have any you played any of the old Sim City games? It is a game, in which you actually design your own city from the ground up, making residential and commercial areas, transportation routes, malls, businesses and so on, and how you build it determines if you attract population growth. What people have to understand is that jobs come first, there has to be a substantial amount of a workforce in the downtown area to drive dense residential construction. We won't see mass downtown residential construction, or those empty spaces being filled until downtown okc brings more high paying jobs to that area. There has to be a demand for these types of residential areas, and at this time there is not a demand because downtown OKC is not an attractable place to live. However, after Project 180 is completed in a few years, around the time the Devon Tower is completed, the downtown area will be more attractive, and people will want to live downtown, henceforth, the demand for new residential construction will go up.

[G.Walker]

What people have to understand that the new Tulsa developments, have been on the drawing board for years, and they have recently just now got around to starting those developments, and this was before the recession. Now Oklahoma City has a great number of projects going on right now, during the recession, but can you just imagine the developments we will see in the downtown area, once the recession is over? In the end Tulsa will always being playing catch up to Oklahoma City, sorry.

[Spartan]

I meant for that post to say "why the Downtown Tulsa HOUSING MARKET is expanding..." And hopefully no one is under the sheer delusion that the Downtown OKC housing market is expanding. It's not. It's frozen at the moment. Face the facts, stop drinking the koolaid. And yes, it's a temporary condition, and yes--things will almost certainly heat up again, but not tomorrow and not next week.

I think you all missed my point. The Downtown Tulsa housing loans are LOANS. The city is not handing out grants. The terms are that they are are repaid after 10 years, and interest-free. The goal is that they are loans that can be secured and used towards the singular purpose of getting downtown housing going.

Some of you made a point about the dire straights Tulsa is in financially. Their city coffers were leveraged more on energy prices than ours were, and their citizens' livelihoods are more dependent on them as well, affecting sales tax revenues. The housing loans however came from Vision 2025, passed in like..2002, and a 1996 bond issue that was passed a long time ago. Supposedly the TDA is holding onto lots of other loan money that they're gonna sit on until one of their cronies has a development proposal. Still, it benefits downtown, and if it could be done more transparently, OKC should definitely look at it.

[BDP]

"why the Downtown Tulsa HOUSING MARKET is expanding..."

That would have helped.

Face the facts, stop drinking the koolaid.

I don't think anyone has misrepresented any facts or shown any bias actually. I think you have a case that downtown OKC is stalled if you just want to talk housing. I think your blog post addressed more than just housing, so that was not clear.

I think you all missed my point. The Downtown Tulsa housing loans are LOANS. The city is not handing out grants. The terms are that they are are repaid after 10 years, and interest-free.

I think we know what a loan is, but it's still public funds at issue, especially when you're talking interest free. Do they start collecting interest after 10 years or does it effectively become a grant at that point?

Again, Tulsa has some nice projects going and we could probably debate the funding issue. OKC's new housing development in the core has slowed, but there is still some mid town developments and I personally feel that our downtown housing issues have been caused more by poor oversight by OCURA and the lack of a good mix of housing. Most of it has unfortunately been future priced. Hopefully, Tulsa can look at that a take a different approach (do we know what their pricing structure will be?). I still don't know if we should subsidize new projects with interest free loans (unless of course the funds are used to tear down The Hill and start over ; ) ).

[Spartan]

Yeah sorry about that..sometimes I think of something else to say and don't completely round out my last thought. The Tulsa loans are 10-year loans, so it's not as convenient as a 30-year commercial loan for development purposes, but it's something you can use to build a total equity package on.

As for the Tulsa pricing.. I would say that almost 2/3 of the new Tulsa units are rent, so right off the bat, you have something that the market will realistically absorb. The average price range for the projects is probably $800/mo to $1,200..about $1/sf is what seems pretty typical across the board when I looked at their projects.

There's also a new rent controlled project overlooking the south leg of the IDL that I forgot to mention in the blog post. That'll be accessible for artists and people just out of college who can't afford $800/mo but want to be downtown/uptown. The only major new supply of upscale condos hitting the Tulsa market at the moment is that absolute boom in small infill lofts being seen north of Cherry Street and in the East Village. The area north of Cherry Street, several blocks..virtually every lot in the neighborhood is being razed and built over with contemporary 2-4 unit lofts. There's also some in the East Village of downtown.. those start around $200,000 or so for 1,000 sf, with more features than the loft apartments in the CBD/Brady/Greenwood/Blue Dome/Uptown hoods.

Tulsa didn't fall for the fallacy that we did, in that you have to develop a new market "from the top down" in order to maximize demand at all price levels, because the rich won't come in to the same extent as they would if there is a glut of starter pricepoints in the area. I even used to believe that, we all did. That was the only thing that made the initial wave of mass residential infill less than extremely positive. It still went over pretty well, all things considered.

[bluedogok]

Tulsa didn't fall for the fallacy that we did, in that you have to develop a new market "from the top down" in order to maximize demand at all price levels, because the rich won't come in to the same extent as they would if there is a glut of starter pricepoints in the area. I even used to believe that, we all did. That was the only thing that made the initial wave of mass residential infill less than extremely positive. It still went over pretty well, all things considered.

That works in certain markets...so it was taken to be "the gospel" in that type of development but the main reason why that kind of development is popular with developers is there is more potential margin in those so it can be more profitable for them.

It (kinda) worked here in Austin because of all the California tech transplants and thinking those were "bargain prices" compared to what they were used to paying in Silicon Valley.

[Jesseda]

hope tulsa does something to attract people off the main interstates and take that toll road up to that city, to bad for a city tulsas size there is not direct interstate thats does not have a toll to it.