Did the 'work from home' trend leave Oklahoma City a ghost town? Here's what the experts say

Call it remote work, telecommuting, or work-from-home − or from a beach, mountain cabin, or coffee shop − the trend away from white-collar office settings, which exploded with COVID-19, still haunts local office markets, especially downtown areas, including Oklahoma City's.

OKC started this year with 17.1 million square feet of office space for lease, equal to nearly 10 Devon Towers, and 4.3 million square feet of it empty, equal to about five Leadership Squares, for a vacancy rate of 25.2%, according to brokerage Price Edwards & Co.'s 2023 year-end office market report.

It was about the same as the year before, but OKC had more dark offices than the nation as a whole, the firm reported, with vacancy well above the national rate of 19.6%. Suburban vacancy was slightly less at 24.2%, and downtown was considerably higher at 27.2%.

"Downtown feels like it’s being hit the hardest" with increased leasing in the north part of the city "helping tosoften the blow," said Tre Dupuy, one of the firm's office specialists. "While some markets are starting to perform a bit better, it feels like the CBD (central business district) submarket is trending in a downward direction."

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The work-from-home movement didn't cause all of that vacancy, but it did some, especially large swaths of open-style office space. From the report, here are highlights of a round-table discussion with Price Edwards office specialists on remote work and other topics , led by Ford Price, managing partner.

• Tre Dupuy: "I still think we are coming to the bottom of the real estate cycle. There are tenants that have still not made an active decision on space since COVID, and they will have to eventually."

• Craig Tucker: "The problem is open space users aren’t tenants anymore. They are the type of tenant that switched to work-from-home in a big way. ... The work-from-home story is not completely written yet. An interesting thing to think about is promotions, when it’s time to promote someone, are you going to promote the employee down the hall you interact with every day, or the employee who has been working from home for months?"

• Tre Dupuy: "To me, going to work has always meant going to the office at 8, and going home at 5. I don’t know if this new generation of the work force feels the same way. I found it interesting when COVID first happened and everyone went home, it was telling how much a family can save while working from home. There is a cost to going to work, and people might be looking at this as an opportunity to save their family money, even if it means forgoing an opportunity in the workplace in some cases."

• Ford Price: "This is starting to become an industry-specific issue. The banks seem to be going back to the office, even five days per week. Looking at attorneys, it’s a bit of a hybrid as you see attorneys both in the office and at home. Looking at other industries, it is full time work from home. Especially in things like customer services, and those are some of the bigger users from an office standpoint."

• Dupuy: "I think there’s a clear tradeoff here. There are certain employers that would rather have employees in the office, but there are plenty of employers that would let an employee stay at home in lieu of a raise or promotion. It really is a tradeoff for both the employee and employer."

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• Price: "Commercial real estate will have trillions of dollars in loans maturing in the next few years with a large percentage of those loans belonging to office. This will require a reset of valuations, reset of refinancing dynamics − are you seeing any of that play out in the OKC market?"

• Tucker: "We really haven’t seen it yet and don’t know how much we will see of it. Oklahoma City is a different market from that perspective. In many cases it’s local owners with local banks with long term relationships, which will probably result in us being able to work through issues."

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• Price: "Chesapeake had a great announcement in that they are merging with Southwestern and keeping its HQ here. It’s a big block of space in a great location, beautiful campus. What are we hearing about Chesapeake and how does it potentially impact our market?"

• Tucker: "It’s been announced that Chesapeake is in the planning stages of relocating their work force into Building 15 on the east side of Classen. When looking at the Chesapeake campus, I don’t see the west side of Classen weighing on the office market too much, as I don’t think office will end up being those buildings highest and best use."

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• Price: "2023 is over but what was your sense of leasing velocity, size of transactions, nature of lease terms? What is your overall sense of the market?"

• Tom Fields: "It’s more of the same. The tsunami has started, there are big blocks of space coming available. In terms of deal activity, we’re seeing an increase in smaller deals."

• Price: "So the small building, rent ready space activity remains solid?"

• Fields: "Yes. In fact, it's probably even better. The small business owners here don’t want to be stuck in the house, they need a small office to go to in order to get their work done."

• Derek James : I think people are generally looking for more flexibility to scale up and down at this point. I see it a lot, people used to look for a five-year term, now we’re seeing a lot of two or three year terms with no improvements, or a termination option for example. You especially see this on the larger deals."

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Senior Business Writer Richard Mize has covered housing, construction, commercial real estate and related topics for the newspaper and Oklahoman.com since 1999. Contact him at rmize@oklahoman.com. Sign up for his weekly newsletter, Real Estate with Richard Mize. You can support Richard's work, and that of his colleagues, by purchasing a digital subscription to The Oklahoman. Right now, you can get 12 months of subscriber-only access for $1 a month.

This article originally appeared on Oklahoman: Work-from-home trend still leaving Oklahoma City offices empty