Roadblocking Development

One year after contracting to pay Chicago-based real estate firm Jones Lang LaSalle $375,000 to market five publicly owned properties, the lots continue to sit vacant, a condition officials attribute largely to the nationwide credit crisis.

Only two of the properties -- a 1.27-acre, L-shaped lot at W. Third Street and S. Denver Avenue and a 22.3-acre property on N. Lansing Avenue -- have been offered for sale so far. The city is not yet accepting bids for the 2.58-acre site that holds Tulsa's former city hall, a 41.95-acre site on the west bank of the Arkansas River or a 10.73-acre site in Tulsa's East Village.

Tulsa Chief Economic Development Officer G.M. "Mike" Bunney said the former city hall site is ideal for a hotel because of its proximity to the Tulsa Convention Center, but financing for hotels is extremely tight because of the nationwide financial downturn. It could therefore make sense to hold that site off the market until the capital market improves, but Bunney said he expects it will reach the market soon. The Arkansas River site is being held off the market until environmental analyses are completed and until the city further develops its plans for the area, which could include a light rail system. The East Village property will be put on the market after construction begins on the Tulsa Drillers' downtown stadium in the hopes that the stadium development will generate interest in the nearby land.

A Web site advertising all five properties, tulsalandopportunities.com, has been established, and Jones Lang LaSalle has also put out brochures, advertised in the Tulsa World, The Wall Street Journal and national commercial real estate publications, sent out email blasts, presented the properties at conventions and directly contacted developers nationwide, Bunney said. The marketing materials for the five properties were completed this summer, and Jones Lang LaSalle's marketing contract extends for one year beyond completion of those materials. Bunney said all five properties will reach the market before Jones Lang LaSalle's contract expires. Upon sale of the properties, the Chicago-based firm would receive a commission.

"[The properties] haven't generated much interest. We had great expectations for a national firm, and they haven't delivered," said John Clayman, a member of the four-person Tulsa Development Authority. The authority normally has five members, but George Shahadi stepped down in October. "The economic situation has not helped anything. That's primarily the biggest impediment to them doing anything is the overall financial situation affecting so many real estate developers throughout this country."

City Councilor Eric Gomez, who is also a realtor, said very few capital projects are moving forward nationwide, but Tulsa has reason to be optimistic that it can find a buyer for its properties.

"We are looking better than most other municipalities in that we still have a stronger banking system than people across the rest of the nation have to offer. It was a very telling point when none of our local banks opted into the federal assistance," he said. "One of the other things is that because our real estate values are holding, Oklahoma looks very attractive over other areas of the country for capital investments and real estate investments."

Gomez added that he has met with several developers planning major construction projects who have not yet found sites for their developments but are focusing on Tulsa or other areas of Oklahoma.

Tulsa has received several offers for the site at Third Street and Denver Avenue, but no deal has come to fruition. Bunney said there is strong interest in the property and developers are seeking financing, but no prospects are currently in contract negotiations.

Earlier this year, Fort Smith, Ark-based CSK Hotels offered $1.75 million for the site, with plans to build a Hampton Inn & Suites with 140 guest rooms, 6,000 square feet of meeting space and 106 parking spaces. The Tulsa Development Authority was seeking $2.41 million for the property.

One year after contracting to pay Chicago-based real estate firm Jones Lang LaSalle $375,000 to market five publicly owned properties, the lots continue to sit vacant, a condition officials attribute largely to the nationwide credit crisis.

Only two of the properties -- a 1.27-acre, L-shaped lot at W. Third Street and S. Denver Avenue and a 22.3-acre property on N. Lansing Avenue -- have been offered for sale so far. The city is not yet accepting bids for the 2.58-acre site that holds Tulsa's former city hall, a 41.95-acre site on the west bank of the Arkansas River or a 10.73-acre site in Tulsa's East Village.

Tulsa Chief Economic Development Officer G.M. "Mike" Bunney said the former city hall site is ideal for a hotel because of its proximity to the Tulsa Convention Center, but financing for hotels is extremely tight because of the nationwide financial downturn. It could therefore make sense to hold that site off the market until the capital market improves, but Bunney said he expects it will reach the market soon. The Arkansas River site is being held off the market until environmental analyses are completed and until the city further develops its plans for the area, which could include a light rail system. The East Village property will be put on the market after construction begins on the Tulsa Drillers' downtown stadium in the hopes that the stadium development will generate interest in the nearby land.

A Web site advertising all five properties, tulsalandopportunities.com, has been established, and Jones Lang LaSalle has also put out brochures, advertised in the Tulsa World, The Wall Street Journal and national commercial real estate publications, sent out email blasts, presented the properties at conventions and directly contacted developers nationwide, Bunney said. The marketing materials for the five properties were completed this summer, and Jones Lang LaSalle's marketing contract extends for one year beyond completion of those materials. Bunney said all five properties will reach the market before Jones Lang LaSalle's contract expires. Upon sale of the properties, the Chicago-based firm would receive a commission.

"[The properties] haven't generated much interest. ... We had great expectations for a national firm, and they haven't delivered," said John Clayman, a member of the four-person Tulsa Development Authority. The authority normally has five members, but George Shahadi stepped down in October. "The economic situation has not helped anything. That's primarily the biggest impediment to them doing anything is the overall financial situation affecting so many real estate developers throughout this country."

City Councilor Eric Gomez, who is also a realtor, said very few capital projects are moving forward nationwide, but Tulsa has reason to be optimistic that it can find a buyer for its properties.

"We are looking better than most other municipalities in that we still have a stronger banking system than people across the rest of the nation have to offer. It was a very telling point when none of our local banks opted into the federal assistance," he said. "One of the other things is that because our real estate values are holding, Oklahoma looks very attractive over other areas of the country for capital investments and real estate investments."

Gomez added that he has met with several developers planning major construction projects who have not yet found sites for their developments but are focusing on Tulsa or other areas of Oklahoma.

Tulsa has received several offers for the site at Third Street and Denver Avenue, but no deal has come to fruition. Bunney said there is strong interest in the property and developers are seeking financing, but no prospects are currently in contract negotiations.

Earlier this year, Fort Smith, Ark-based CSK Hotels offered $1.75 million for the site, with plans to build a Hampton Inn & Suites with 140 guest rooms, 6,000 square feet of meeting space and 106 parking spaces. The Tulsa Development Authority was seeking $2.41 million for the property. Aside from the disparity in the proposed purchase price, CSK was seeking relief from city property taxes for six years, which Tulsa said it was unable to offer.

"That offer was very clearly conditioned on having tax abatement along the same lines as was given to the Ambassador Hotel, but that [Third Street and Denver Avenue] site is in a [tax increment financing] district, and tax abatements are not allowed in a TIF district," Bunney said. "That's something we just could not do."

One of the stumbling blocks developers have faced when trying to put together a deal for that site is the L-shaped property's small size, Bunney said. Because it is near the Tulsa Convention Center, the Third Street and Denver Avenue location is a good site for a large hotel with conference rooms that could be "an accoutrement to the Convention Center." Bunney said he has introduced developers to the owners of the other two properties on that block to try to facilitate a deal that would put all three properties in one developer's hands. The other property owners are receptive to the idea of a sale, he said, but no deal has been reached.

Local developer Howard Raskin is one who has considered acquiring the full city block. His proposal calls for a 200-room hotel, a parking structure and restaurant and retail space with an estimated total value of $38.8 million. Jones Lang LaSalle said in September that Raskin's proposal lacked elements necessary to determine if the project was feasible, but Raskin continues to explore the possibility of acquiring that site, according to Larry Gordon Wilson of Tanner Consulting, which worked with Raskin on the proposal.

No offers have yet been received for the 22.3 acres on N. Lansing Avenue known as the Evans Fintube property because that property was only recently put on the market. Bunney said proposals for that site are due to the city Dec. 15.