Tulsa’s 12-million-square-foot community-neighborhood shopping center market remains weak, with good and bad quarters not substantially altering conditions. The second quarter saw 45,000 square feet of positive net absorption, and the vacancy rate fell 40 basis points to 16.7%. But the first quarter net absorption total had been minus 95,000 square feet, and the vacancy rate was up 110 basis points from a year earlier. With minus 6,000 square feet of net absorption in July and August, the rate edged up to 16.8% in the latter month.
Tulsa area retail development has slowed since the boom, around 71st Street and Memorial Drive, started in the 1970s, and unlike earlier prime locations this area has never been supplanted as the dominant retail area in the city. For the first time in a while, however, some new supply is set to come online, as the 38,500-square-foot Tuscana on Yale neighborhood center is under construction for completion in south Tulsa in October, and the 23,000-square-foot Shoppes on Peoria neighborhood center in central Tulsa is under construction as well. The community-neighborhood center vacancy rate is forecast to end 2012 at 17.0%, and then trend down toward 14.0% by 2016. The largest retail project of any kind currently under construction, meanwhile, is the 200,000-square-foot Shops at Broken Arrow in far southeast Broken Arrow.
Community-neighborhood center rents are flat, as the second quarter saw an increase of just 0.1% for both the asking and effective averages, to $11.17 psf and $9.72 psf. Another 0.1% increase by both measures had occurred by August, and Reis predicts gains of just 0.2% asking and 0.1% effective for the year. Subsequent annual increases are forecast to be progressively larger, as the vacancy rate falls.