City of Tulsa - Market

The Tulsa hotel market currently consists of approximately 10,428 rooms in nearly 96 properties, with 12 full-service hotels comprising approximately 35% of the room total. Tulsa’s lodging inventory is fairly well distributed throughout the metro area, with a higher concentration of properties located along Interstate 44 and areas within the mid to southern portion of the metropolitan area. The largest properties are generally located within the CBD and at the southern end of the metro area. No full-service hotels have been developed in the Tulsa market since 2003, when the Renaissance Hotel and Conference Center delivered 300 rooms to the far south market. Only four full-service hotels are located downtown: the Doubletree Hotel Tulsa Downtown, the Crowne Plaza (presently undergoing substantial renovation), and the Great Western Downtown Plaza and the Hotel Ambassador.

There is little limited-service hotel supply in the downtown Tulsa market and the majority of the limited-service supply is located in the suburban areas outside of the CBD. The Tulsa lodging market has experienced recovery since 2004 has shown continued strength through 2007, as evidenced by the recent investment to renovate and adapt the historic Atlas Life Building as a Courtyard by Marriott. The Vision 2025 metropolitan revitalization projects are expected to stimulate strong future growth potential in the Tulsa lodging market as the number of visitors to Tulsa is expected to create 300,000 additional room nights by 2012.

During the past few years, the Tulsa housing market has remained stable amid volatility in residential markets across the country. Economic expansion through strong job and income growth has attracted new residents and pushed population growth above the state and national averages. The Tulsa housing market has experienced moderate growth in housing prices and is expected to experience a measured rise of approximately 2.5% in 2008. The median price of a home in the Tulsa MSA is $121,000.

The Tulsa apartment market is forecasted to experience continued positive metrics in 2008 such as lower overall vacancy rates and growing average rental rates. The overall vacancy rate in the Tulsa market was 9% as of the end of 2007. Overall rental rates in the Tulsa market increased by 6.5% in 2007, one of the highest growth rates experienced in the past 20 years. Rental rates within the Central Business District range from $0.83/square foot/month to $1.83/square foot/month for one to three bedroom units. The introduction of new luxury apartments to the market has pushed the average asking rate for all apartments higher than $1 per square foot. The average occupancy rate within the Central Business District is 94%.

Several of the Properties are ideal candidates for the redevelopment of existing buildings for the construction of retail projects. Retailers seeking tracts on which to build modern retail space and locations with the potential for high traffic volumes will benefit from the strategic positioning of the Properties.

There is approximately 59.5 million square feet of retail space in the Tulsa market with approximately 1.4 million square feet in the Central Business District. 1.36 million square feet of retail space has been delivered since 2006 in Tulsa; an additional 1.34 million square feet are currently under construction.

The overall Tulsa retail market vacancy rate is 8.3% while the vacancy rate in the Central Business District sits at 2.6%, well below the market average. The average asking rental rate in the overall market is $9.28 per square foot and has trended positively, rising approximately 10% from 2006 to 2007. In the Central Business District, the average asking rental rate is $15.00 per square foot as of year end 2007.

The Tulsa office market has experienced steady improvement since 2004 as overall market vacancy rates have remained relatively stable, the absorption of new Class A office space has been strong, and Class A rents rose 8% from the first quarter of 2006 to the year end of 2007. Strength in the office market has been caused by the economic expansion experienced in the Tulsa market since 2004. The downtown office market has historically lagged behind the suburban markets although mixed-use projects have become the latest downtown redevelopment solution for older office towers. Improvement in the office market is expected to continue into 2008 as vacancy rates are forecasted to fall in the anticipation of sustained economic growth within the Tulsa market.