Tulsa Market Analysis
We have been looking at deals in the Tulsa market for some time but have yet to buy anything. With its proximity to Oklahoma City, it's inevitable that we eventually will, especially as our manager is headquartered in Tulsa and would be a great partner for anything we find out there.
In this article, we'll dig into why Tulsa is a good market and why we will eventually buy in Tulsa.
The JB2 Investments Five Factors Test
Kansas City passed the first "five factors" test we look for when selecting a market. Those five factors are:
Population growth
Income growth
Crime
Job Growth
JB2 Investments "gut check"
The total population of the whole metro is over one million, with a growth rate of around 1% a year. Since 2019, however, the growth rate has been increasing with COVID migration to more affordable places. On top of that, we're seeing the following:
Wage growth has risen about 2.6% a year since 2016, from $48,941to $56,556, above our 2% threshold
The FBI violent crime rating is 528 per 100,000 people, a little higher than what we like to see, as our target is 500. However, we are always sticking to better areas that will be well below this threshold. Also, our management company has the most prominent presence in Tulsa and will help direct us to the right spots.
Job growth is 4.2 %, which is double our 2% threshold for that as well.
The Gathering Place
And as for a gut check, the area is laden with cool coffee shops, restaurants, and shopping, which make it a great place to live and work.
It's remarkable to see projects like the Gathering Place. It’s a 70-acre hybrid park created by the George Kaiser Family Foundation, which cost 465 million, making it the most significant private gift to a community park in U.S. history.
Rent and Vacancy Stats
"In 2021, a surge in apartment demand catalyzed rent growth, ending the year at 11%. That result was above neighboring Oklahoma City and the best performance on record. The outlook for rent growth calls for rents to stabilize, coming closer to pre-crisis norms between 2-3%." -Costar
The Tulsa market will continue to have healthy rent growth for years to come. The average rent for the market is $917. Meaning it's still very affordable and has room to go up.
Vacancy rates are forecasted to remain well below the 10% or less mark, which is a must for us. Our properties run around 5% vacancy on average, thus beating the average.
Major Employers in Tulsa
Not only is T-Town well-known as a relatively safe and affordable place to live, but it's also a great place to work.
5-10k Employees
American Airlines - American Airlines recently announced it would invest $550 million at its Base Maintenance facility in Tulsa (Tech Ops – Tulsa). It is the largest Base Maintenance facility in the world and is an integral part of operating the carrier’s fleet of nearly 1,000 mainline aircraft safely and reliably. Contributes greatly to the other existing aeronautics companies.
Ascension St. John - The largest hospital network in Tulsa, encompassing six hospitals in the metro.
Macy’s Fulfillment Center - $170 million was spent to build this 2 million square foot fulfillment center.
Amazon Fulfillment Center- They employ over 1500 employees in its 640k Square foot fulfillment center with innovative technologies created by amazon robotics.
AAON Inc.- A publicly traded HVAC company for residential/commercial headquartered in Tulsa which reached $535 million in sales in 2021.
As you can see, Tulsa has diverse employers that will support the Tulsa economy for years to come.
Tech Scene
Tulsa has a rapidly growing tech ecosystem, which has only been accelerated in these last few years because of COVID. There are numerous venture capital firms already active in Tulsa. One of these venture funds is Atento Capital.
Another great initiative is Tulsa Remote, which pays remote workers $10,000 to relocate to the city. This program has welcomed over 2,000 people into Tulsa and surrounding communities. The George Kaiser Family Foundation supports the initiative.
Green Space
Parks and green spaces provide numerous benefits to the community at large, allowing people to gather and interact to build social cohesion and foster social capital. Tulsa offers 22,071 square feet of green space per capita, serving a population of 1,000,000.
“The Gathering Place, Tulsa’s riverfront playground, is designed by Michael Valkenburgh Associates and was named America’s Best New Attraction by USA Today. Though not all of Tulsa’s green space is as grand, it still offers up to 8,652 acres of lush lawn and trees in its 135 parks. Within the parks, residents enjoy up to 57 miles of trails, 103 tennis courts, 185 sports fields, 15 water playgrounds, and more.” -stacker.com
It's a Wrap
Everything that we highlighted illustrates that Tulsa is a great place to live and work based on its affordability and nearby activities and things to do. The city's healthy economic factor and population growth will make it a great place to invest for years to come. We hope to close a deal in Tulsa soon, which will work symbiotically with assets we already have in the OKC metro.