Developers have already invested $3 billion across OKC. What else do they have in mind?

Story by Jessie Christopher Smith, The Oklahoman

Key investors are optimistic about the next decade for downtown Oklahoma City as they revealed development plans for three more office-to-housing conversions, more downtown retail, major investment into a Bricktown-adjacent stadium district and an ambitious goal to bring vacant office space down to 12% by next year.

But one potential stumbling block is education. Developers agree that a stronger, more educated workforce is needed to continue boosting the local economy and to capitalize off burgeoning industry opportunities.

“Education, education, education — we are dead in the water without the workforce,” said Richard Tanenbaum, CEO of Gardner Tanenbaum Holdings, an OKC-based real estate developer responsible for renovating multiple historic buildings. A crowd of 250 gathered Tuesday night applauded when Tanenbaum, a self-described “super conservative,” called for removal of Ryan Walters as state schools superintendent.

Tanenbaum was one of three guests, including developers Mark Beffort and Christian Kanady, at a panel hosted by The Oklahoman inside the Oklahoma City Museum of Art. Moderator Steve Lackmeyer, a longtime business reporter at The Oklahoman, said the three panelists are central to nearly $3 billion in development deals throughout OKC.

Gardner Tanenbaum Holdings has developed more than $500 million in residential and industrial properties. Beffort, a veteran real estate broker and CEO of Newmark Robinson Park, also has teamed up with Tanenbaum for the OKC 577 development, a $1 billion industrial park being built in south Oklahoma City.

The total budget for the upcoming industrial park, Lackmeyer noted, is triple the combined total for the first MAPS program, a sales tax initiative that funded $350 million worth of projects into revitalizing downtown three decades ago.

“One development now, today, is the size of a community project,” Beffort said. “That’s where we’ve come, and that’s why you’re talking about billion-dollar developments now, not hundred-million-dollar developments.”

Kanady, who called himself the “new kid” on a “really nice block,” is the chief investor in Prairie Surf Studios and has teamed up with Beffort for plans to build a mixed-use development district around the upcoming MAPS 4 soccer stadium south of Bricktown. Those plans also include NBA star Russell Westbrook, who rose to prominence as a former member of the Oklahoma City Thunder team and is investing an eight-figure dollar amount into the soccer stadium district.

“I grew up in a city where we went to Bricktown to get in trouble, and now you go to Bricktown to live, and that’s a very different paradigm shift,” Kanady added.

The three developers also have collaborated to help create the Convergence project, a biotech development east of downtown, which celebrated a ribbon-cutting ceremony in mid-January. The $195 million high-tech development includes an office tower, lab space, restaurants, bars, shops and a boutique hotel (to start construction later this year) near the entry point to the city’s Innovation District. Kanady’s pharmaceutical start-up, Wheeler Bio, is set to be an anchor tenant.

“This is a picks-and-shovels business that makes 25 to 30% margins irrespective of the drug’s success,” Kanady said. “What we’re doing is, we’re really standing up to people in Boston and San Francisco saying, ‘Hey, you’ve got this wonderful molecule and you’re largely sending it to China. I have a question: Would you rather go to Beijing or come sit courtside at a Thunder game?’ Pretty easy pitch.”

The developers said that it isn’t just biotech companies from coastline metropolitan areas that are considering expanding into Oklahoma City, but that international cities are also engaging in conversations.

Beffort and Tanenbaum credited multiple different funding sources for helping make Convergence a reality: equity, primary lending, PACE financing, federal American Rescue Plan Act funding, tax increment financing district proposals, and further city assistance through historic tax credit incentives and MAPS 4 program allocations.

“The ease of doing business in Oklahoma City allows you the dynamic to make a project successful,” Tanenbaum said. “Everyone’s on the same page. I’ve got friendly competitors, (and) we help each other.”

Beffort co-developed the mixed-use West Village along Film Row in west downtown and leads a team that owns several landmark office towers in downtown. He acknowledged that the COVID-19 pandemic drastically impacted office real estate in the area: 20% of downtown office space, Beffort said, still sits empty, five years after policies to mitigate the spread of the virus drastically shifted workplace practices.

“I will tell you my goal, and I think I’ve got a plan to get there, would be less than 12%, either by the end of this year or mid-2026,” Beffort said. Much of the plan he proposes involves converting the empty space into residential use, including the historic Cotton-Exchange building now called Court Plaza and two other buildings not yet announced. “We have secured over 3 million square feet of space in our downtown market,” he said.

“We’ve had four buildings developed in downtown Oklahoma City, including our building with Convergence. Those buildings today sit on a combination of over 75% occupied, and the rents in those buildings are $40 a square foot. We have not seen those types of rents in this market, and what we’re seeing across the country and we’re actually seeing it in Oklahoma City, is people are willing to pay for the right type of space.”

Tanenbaum believes that, within the next 10 years, real estate value downtown will triple due to rising replacement and construction costs. Beffort also added that, due to the new upcoming NBA arena for the Thunder downtown, “we’re going to have significant development that you can’t even think about.”

“We’re going to have a couple of thousand new people in five to 10 years living downtown,” Beffort said. “It’s going to be truly amazing.”

To further the excitement of developing destinations for the city’s growing population, Tanenbaum is proposing a strategy he has often used for renovating historic buildings into apartment and restaurant space. His idea includes hosting an annual festival in OKC Underground, a system of downtown tunnels he says feature beautiful art and connectivity potential but often go underutilized.

Beffort also said Robinson Park is working on creating a storefront retail zone in the heart of downtown using a majority of properties they now own in the area. He said that success with projects downtown was only possible if developers “logically” thought about connectivity with other city districts, including pedestrian walkability, bikes and streetcars.

“We are very cognizant to ensure that we take this entertainment district and it work close with the new (arena) for the Thunder, because if not, we both will fail,” Beffort said. “We have to work together.”