Why we love Tulsa
Suzy and I are often asked why we love Tulsa and why we chose to invest in real estate there. Well, there are several reasons why we are excited to be part of the Tulsa community - allow me to share a few with you below!
A Brief Background of Tulsa
First settled by the Creek Indians in the 1800s, Tulsa became incorporated in 1836 by ranchers, farmers, traders, and Native Americans. With the discovery of oil in the Red Fork area in 1901, the city grew quickly. By the time Oklahoma became a state in 1907, Tulsa already had a population of over 7,000. By 1920, the population had reached 72,075 and Tulsa soon earned the title, “Oil Capital of the World.” Today, the Tulsa metro boasts approximately 25 percent of Oklahoma’s entire population.
The Tulsa MSA is comprised of seven counties: Creek, Okmulgee, Osage, Pawnee, Rogers, Tulsa, and Wagoner. The gross product or value of all goods and services produced in the seven-county MSA is estimated to be $50.9 billion (2010 dollars), or 30.7 percent of the Oklahoma economy.
Although oil-related businesses remain an important part of the area’s economy, Tulsa has developed a widely diversified business base, which includes nationally prominent companies in aviation, aerospace, telecommunications, data processing, manufacturing and distribution. The community’s employment base is diverse and balanced among several job sectors, including manufacturing, construction, services, high technology, healthcare, education, and transportation. I’ll touch on this later as I explain Tulsa’s recession-resistant economy.
Our Top 5 reasons why we love Tulsa
Population that skews younger: More than a quarter of the residents are in the 25-44 age group, the best cohort for apartment renters. (Moody’s)
Strong pickup in net migration: New residents fuel the ability to grow the labor force and create job gains. In Tulsa, net migration is projected to increase steadily until 2023. (Moody’s)
Increase in high wage jobs: Recent industry growth has been powered by high-wage professional, scientific, and technical services. (Moody’s)
Diverse sources for employment: Numerous fortune 500 and large companies are headquartered or have opened new facilities. There are also city initiatives to incentivize remote workers to move to Tulsa.
Lower multifamily deliveries: From 2011 to 2018, multifamily permits averaged 884 per year. Midway through 2019, only 137 permits had been issued. The number will stay down with a projected average of 241 between now and 2023. (Moody’s)
Tulsa Multifamily Trends
4.6% - Effective Annual Rent Growth for 2020
95.7% - Current Occupancy Rate as of October 2020
1.1% - Annual Occupancy Increase
#8 of 150 Top Markets in Annual Effective Rent Growth
#7 of 150 Top Markets in Annual Occupancy Change
4%+ Projected Annual Rent Growth Over Next Several Years
Data obtained from CBRE
#4 Hottest Real Estate Market in 2020
Forbes analyzed over 100 metro areas and determined that Tulsa’s housing market has experienced the greatest increase in home prices over the last two years. Since 2018, home prices have grown by 33%. Additionally, Tulsa’s inventory has shrunk to around 1,800 homes and homes are only on the market for an average of 11 days. (Forbes)
Yes, this Forbes article is referring to residential real estate; however, data show that multifamily real estate lags behind residential trends by about two years. Which is why we are excited to acquire multifamily assets in the area now!
Oklahoma Ranked #14 in Migration Growth
According to Uhaul’s migration trend data, Oklahoma ranks in the top third of states people are moving to. Yes, this is not Tulsa specific but rather a positive data point for population growth trends for Oklahoma as a whole. (Uhaul)
Drivers of Economic & Population Growth in Tulsa
“Tulsa’s Future”
Tulsa’s Future is an economic development public-private partnership headed by the Tulsa Regional Chamber. The partnership works with the city of Tulsa, more than 200 private investors and numerous regional and tribal partners to further economic prosperity in the Tulsa region.
This initiative has resulted in the investment of over $3.8 billion leading to the creation of more than 69,000 jobs since its inception 15 years ago. However, it has really gained momentum since 2016 with more than $1.9 billion of capital investment resulting in 16,704 jobs created.
2016 marked the beginning of the third five-year phase. During this time, Tulsa’s Future supported a number of major economic development projects, including Greenheck Group’s multi-phase manufacturing campus, Sofidel’s $360 million plant in Inola, Amazon’s 2.5 million-square-foot fulfillment center and Milo’s Tea Company’s expansion to Tulsa.
“Tulsa’s Future is a proven model of collaboration that has put the Tulsa region on the map as an ideal place for companies to grow.”
“Through business retention and expansion efforts, we’ve supported new job growth in the region while also attracting world-class companies to locate here, further positioning Tulsa as a nationally competitive city.” Said Justin McLaughlin, the executive vice president, chief operating officer and interim senior vice president of economic development for the Chamber. (Tulsa World)
“Tulsa Remote”
Tulsa Remote is a unique recruitment initiative aimed at attracting talented individuals to Tulsa. The program brings remote workers and digital nomads to the community by providing $10,000 grants and numerous community-building opportunities. Each grant is distributed over the course of a year to eligible remote workers or entrepreneurs living outside of Oklahoma. Funding is currently provided by George Kaiser Family Foundation. The City of Tulsa and other community organizations lend their support to ensure program participants are fully immersed and engaged in the community. (Tulsa Remote)
In 2020, about 300 people from across the U.S. moved to Tulsa through the program. HOWEVER, since the pandemic started, applications to the Tulsa Remote program have increased by almost 300%. About 30,000 people have already applied for the 2021 intake, according to Ben Stewart, Tulsa Remote’s executive director. (Fort Worth Business)
Additionally, the pandemic resulted in the exodus of highly skilled professionals from densely populated urban areas such as New York and the Bay Area. These trends, coupled with the Tulsa Remote program, has captured the attention of several venture capital firms and Israeli tech companies and they have set their sights on Tulsa. (Israel21c)
“Vision 2025”
Tulsans are committed to seeing the Tulsa metro area prosper. In 2003, Tulsans approved a sales tax for regional economic development and capital improvements, named Vision 2025. In addition to corporate business incentives and other investments to ensure the commitment to Tulsa’s largest employers, Vision 2025 pumped nearly $500 million in public money into 1.4 square miles of downtown. The downtown Tulsa skyline was already adorned with many opulent Art Deco towers built by oil barons in the ‘20s, and now, downtown is experiencing a renaissance as the newest developments are being built by 21st century visionaries. A new arena and renovated convention center, retail, ballpark, art center, as well as new and improved office towers, hotels, lofts, parks, bars, restaurants, parking areas, entertainment venues and more are found in downtown Tulsa.
The revived downtown continues to blossom from the foundation of the Vision 2025 investment. The BOK Center arena draws in more than 550,000 visitors annually for concerts and performances and continues to spur additional economic development downtown and in the surrounding entertainment and art districts. Adjacent to the downtown entertainment district are the Blue Dome District and the Brady Arts District. All areas boast a variety of bars, restaurants, clubs and museums. The First Friday Art Crawl has become a favorite for young adults as well as families. Many also take advantage of the revamped trolley system, which offers free transportation throughout the area during peak hours. (Vision 2025; Tulsa Future)
BOK Center Arena
#6 Most Recession-Proof City in the U.S. - Economic Diversity
As I mentioned in the beginning of this article, Tulsa has a very diverse industry base, making it a recession-resistant city (note: I prefer “recession-resistant” because no city is completely recession-proof). Below is an excerpt from livability.com highlighting why they chose Tulsa as the 6th most recession-proof city in the U.S.
“While other metropolitan areas struggled in 2008 and 2009, Tulsa weathered the economic storm like a champ. Like some other cities on the list, Tulsa didn’t experience a housing boom, so there was no bust to be had. Compared to tight urban areas on the coasts, land in Oklahoma is relatively inexpensive and extremely plentiful. The state’s agriculture and energy industries kept it afloat as long as it could, and once the recession hit, it didn't linger as long or have as big of an impact. In fact, even during the peak of the recession, Tulsa was growing. In 2008 it opened up its huge BOK Center arena, part of the city’s enterprising Vision 2025 project.
To top it all off, Tulsa is a city with rich history and culture. It’s part of America’s old frontier and is steeped in Native American history. It boasts a highly-rated opera company and two symphonies, among other big-city amenities that might surprise you. It's no coincidence that Livability called Tulsa "an underrated gem" last year.” (Livability)
I also would like to point out that there is not a single industry in Tulsa that makes up more than 20% which showcases the diversity of employment and the city’s ability to withstand an economic downturn. Cities that have industries that make up 20% or more have a hard time absorbing the blow if that industry was to collapse.
Finally, as of November 2020, the unemployment rate is 6.2% compared to the national average of 6.7%. Again demonstrating Tulsa’s recession-resistance as they faced the economic hardships caused by COVID-19. (BLS)
Even More Reasons To Love Tulsa
Transportation Infrastructure
Tulsa’s transportation infrastructure includes the Port of Catoosa, an inland port that makes bulk shipping to and from coastal ports accessible and economical. Tulsa is investing its transportation system—the Tulsa International Airport is undergoing a five- year capital improvement plan for 22 projects to rehabilitate existing infrastructure and add new infrastructure for a total of $150 million. The airport serves five million annually from the four-state region of northeast Oklahoma, Kansas, Missouri and Arkansas.
Outdoor Living
Tulsa offers many outdoor activities, including 180 miles of bicycle and pedestrian trails, featuring 40 miles on the shoreline of the Arkansas River and over 8,200 acres of park land. With the addition of The Gathering Place, Tulsa’s waterfront has been turned into a force for improving the city’s social, economic and environmental sustainability. Given Tulsa’s rich architectural history and cultural institutions, this diverse and highly active waterfront park complements existing urban amenities and strengthens the connections between the city and its natural environment.
A Gathering Place for Tulsa
Tulsa is continuing to expand its outdoor hubs with the development of The Gathering Place, a park that was completed at the end of 2018. The Gathering Place was named America’s Best New Attraction by USA TODAY in 2019. Spanning over 100 acres, the park was made possible by a $350 million private donation from the George Kaiser Family Foundation, which broke the record for the largest public parks donation in the history of the U.S. It was designed by renowned architect Michael Van Valkenburgh, who also designed the Brooklyn Bridge Park, Pennsylvania Avenue in front of the White House, and the grounds for the George W. Bush Presidential Library and Museum. The interactive and family-friendly park draws a million visitors annually.
Attractions
Blue Dome District - Featuring eight buildings with a high level of architectural or historical significance.
Brady Arts District - Home to retail and service shops, restaurants, bars, clubs, galleries, museums, parks and historic music venues.
The Pearl District - Offering a radical and attractive alternative to suburban living; where it is possible to work, play and shop without recourse to a car.
Cherry Street - A hot spot for decades, it features the highest number of locally owned businesses in town, including great shopping, particularly antiques and collectibles, and a variety of local eateries.
Utica Square - An upscale outdoor shopping center.
Brookside - Experience fine dining, fun nightlife, unique shopping, art galleries and exceptional services.
12+ Museums - Tulsa is proud to have many museums through the city to showcase the beauty, success, and history of Oklahoma and the nation.
Philbrook Museum of Art
All in all, the data show that Tulsa is poised for strong growth over the coming years. Although Tulsa is not YET a booming city like Austin, TX or Charlotte, NC, it is a recession-resistant city with a solid population growth and extremely positive outlook for multifamily investments. The best part is this gem of a city boasts lower investor competition, ultimately allowing us to provide higher yield returns for our investors.
Until next time…
Explore more. Adventure awaits!
References
https://www.moodys.com/credit-ratings/Tulsa-City-of-OK-credit-rating-600026028
https://fortworthbusiness.com/business/tulsa-remote-relocation/
https://www.israel21c.org/the-surprising-us-city-where-israeli-tech-is-heading-next/
https://livability.com/top-10/culture/7-most-recession-proof-cities-in-the-us/2019/ok/tulsa
