The Tulsa City Council asked for a financial report on the new city hall after the facility’s leasing agent said only one new tenant has agreed to move into the former telecommunications company headquarters.
The city will eventually occupy 300,000 square feet of the 630,000 square feet in the glass office tower, with existing tenants occupying some 173,000 square feet. Officials hoped to lower the city’s cost by leasing the remaining space but that activity has been slow.
Angel West of CB Richard Ellis, the real estate firm that is marketing the building for the city, told the council that the new city hall has a vacancy rate of 20%, the third-highest vacancy rate of five comparable downtown buildings that can provide more than 20,000 contiguous square feet of space.
Space in the new city hall leases for $19 per square foot, the highest rate in the downtown area. Leasing costs at the other comparable buildings range from $16.50 to $14.
The city purchased the 15-story One Technology Center with proceeds from $76.2 million of lease revenue bonds issued in November 2007 by the Tulsa Public Facilities Authority. The debt includes $37.5 million of tax-exempt bonds and $36.7 million of taxable debt.
The authority’s bonds are rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s.