Downtown Arena
Shows Tulsa's Faith

Tulsa's commercial real-estate market faced plummeting demand in the wake of the telecom sector crash and slumps in the energy-trading business and airline industry. In 2003, county voters agreed to pony up more than $500 million in new taxes to jump-start the region's economy.

A central piece of the economic development initiative known as Vision 2025 is moving ahead with groundbreaking today for a $141 million downtown arena designed by architect Cesar Pelli. The still-unnamed center will host sports and other entertainment events. "We are placing a lot of faith and hope in it," said Richard Monaghan, a broker associate and principal with CB Richard Ellis/Oklahoma in Tulsa.

The Tulsa region is familiar with booms and busts. It emerged from the oil depression of the 1980s with a diversified economy, though it stung last year when Citgo Petroleum Corp., a unit of Petroleos de Venezuela SA, moved its headquarters and about 700 jobs to Houston. The region appears to be on the upswing again as unemployment levels settle in the 4% range, down from a peak of 7.4% in June 2003, according to the Bureau of Labor Statistics.

There have been signs of improvement but the real-estate market hasn't made a full recovery. While vacancies fell across the office, retail, industrial and apartment sectors at the end of the second quarter from a year earlier, rental rates have continued to bounce along near lows, though they are forecast to rise, according to CB Richard Ellis/Oklahoma. "As landlords struggle to maintain occupancy, maybe they've had to take a hiccup in the rent," Mr. Monaghan said.

The Jenks RiverWalk Crossing retail development has jogging trails and outdoor fireplaces.

Investor interest in Tulsa property is up this year. From January through July, the volume of property deals over $5 million was $208 million, already outpacing the $198 million volume for all of 2004, according to Real Capital Analytics, a research firm based in New York.

Parmenter Realty Partners, a private real-estate investment trust based in Miami, paid $75.1 million in June for Warren Place, according to Real Capital. Parmenter declined to confirm the price but says the deal included a two-building, one-million-square-foot office complex, part of which housed Citgo's former headquarters, as well as additional land.

The purchase was an opportunity to stabilize one of Tulsa's premier properties, said Andrew Weiss, Parmenter's chief operating officer. "I don't think our buying this was a reflection on what may or may not happen downtown." Parmenter has leased some of the office space vacated by Citgo, which retained about 300 workers in the Warren Place One building.

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