Industry Titans Lay Out Case For Continued Optimism In Platinum Corridor
During the third panel at Bisnow's Platinum Corridor event last week, there was almost unbounded optimism for the busy submarket. Major developers have no plans to slow down and the high absorption rate signals they don’t need to.
Tenants are looking for room to grow smartly, Billingsley Co SVP Marijke Lantz said. She’s seeing lots of demand for efficient floor plans and collaborative open spaces that have smaller footprints.
Cawley Partners CEO Bill Cawley (shown left, with Servant Energy Partners’ Ruben Duron) stressed that location and amenities are major drivers to attract high-quality talent. Companies want to keep their employees at work longer, so they need to provide health clubs, good food options, and an overall better quality of life at work.
The talk turned to rent, and Heady Investments' Randy Heady said people will pay what they need to pay to be where they want to be. The monthly rent is important—but there are other things that are much more so.
Marijke saw that too. She said the rent component of a company’s overhead is so tiny that it hardly makes a difference. People cost 82% of a company’s budget. The rest is taken up by overhead, including rent. Tenants don’t care if the cost of land and concrete are higher; rent is driven purely by supply and demand, and that is driven by job growth.
The consensus was that the overall health of The Platinum Corridor is outstanding. Randy Garrett said eight multi-tenant office buildings are under construction—seven in the north corridor and one in the south corridor (that would be Bill’s building, Tollway Center). Of the last fourteen multi-tenant buildings most recently completed (which is about 2.5M SF), 63% of it was pre- is leased in an average of 16 – 21 months.
According the statistics Transwestern has been collecting on The Platinum Corridor since 1997, the North Platinum Corridor had a positive net space absorption total in multi-tenant buildings of 700,000 r.s.f. for 2015. That is incredible net space absorption, for any part of the country and in any economic environment.
That is incredible net space absorption, for any part of the country and in any economic environment. All our panelists agreed that supply and demand are in equilibrium. Rents have plateaued, around $34/SF.
With growth like that, where will the Platinum Corridor expand next? Bill predicted east and west movement instead of north of 380. His basis was that Legacy exists for the community around it–specifically the labor force. It allows for great schools, housing and entertainment, so there’s no great push for growth north of State Hwy. 380.
Randy Garrett, however, disagreed. He believes The Platinum Corridor will continue to grow past State Hwy. 380–there is no limit. (Nope, not even Oklahoma.)
Many thanks to our all-star panelists: Marijke, Randy, Bill, Heady Investments founder Randy Heady, Stream regional managing partner Chris Jackson and Madison Title Agency director Samuel Herskovitz.