Oklahoma City Apartment Market Trends

2015 Year-End Apartment Survey Summary

Download Current Market Survey


In 2015 the Multifamily Division of Price Edwards & Company surveyed 355 market rate, student and senior housing properties totaling 73,955 units in the Oklahoma City metropolitan area. Oklahoma City experienced another strong year with impressive rent growth across all asset classes and sub-markets. In terms of property sales, 2015 was a record year with the highest transaction volume in Oklahoma City’s history with only 2007 surpassing 2015’s total unit count when the market had an impressive 54 transactions totaling 9,791 units.   

In 2015 transaction activity exceeded the previous highest sales volume record in our market history which was $312 million, ending the year with $339 million in apartments changing owners. While nobody has a crystal ball saying when, or if, anything will materially change, there is an emerging consensus that Oklahoma City may see a pause in its economic success over the last 10 years due to oil and natural gas prices. Although Oklahoma City is much more diversified than it was 20 years ago, the fact still remains that Oklahoma is still a major oil and natural gas producing state with approximately 12.5% of the GDP coming from mining (mostly oil and gas). Oil and gas firms account for 3.2% of all business establishments but hire 5% of wage and salary workers and they generate 13.5% of the total earnings statewide. This is a significant factor which will determine commercial real estate investment levels in all asset classes going forward. One other significant variable is interest rates. Since the sole purpose of buying apartments is as an investment vehicle (as opposed to certain office, retail and industrial properties which are owner occupied), the cost of capital plays a large factor in determining cash-on-cash returns. Despite some hurdles, solid economic growth has forced the federal reserve’s hand to not only raise interest rates but it’s clear there is continued pressure to raise them even further. Nationally, overall economic conditions continue to improve with jobless rates decreasing and household incomes improving, both of which are contributing to a surge in virtually all residential real estate values from single family homes to large institutional grade apartment communities. Further, there continues to be a surplus of investment capital looking for a home able to generate a reasonable yield. For those investors concerned about an over-valued stock market, many have flocked to various forms of commercial real estate investment, including the multifamily sector. But if interest rates continue to increase in the coming years as many expect, commercial real estate assets will undoubtedly be required to generate higher risk-adjusted returns, thus mitigating the seemingly never ending increase in real estate values.  

Oklahoma City’s apartment market continues to see solid rent growth, with an average annual increase of 3.17% since 1989. While this is an impressive stretch of positive rent growth, 2015 was even more robust with an increase in the annual rental rate of 4.52%; the highest single year increase since 1994. The average overall monthly rental rate across all asset classes and unit types is $0.87 per square foot, up from $0.83 in 2014. The current rental rate is an impressive 32% increase over the past ten years, and has almost doubled in the past twenty years. However, unlike other large markets where rent growth experiences peaks and valleys, Oklahoma City has seemed to weather the economic storms a little better than most. The only year since our tracking the multifamily rental market with negative rent growth was in 1994, only to be followed by 4.4% the following year. This is a testament to Oklahoma City’s long term viability as a stable and somewhat predictable market when faced with national economic uncertainties. Although the long term rental growth rate may not be as appealing as the high growth rates headlining some markets, it’s still above the national long term historic average of 2.5% to 3%. So although an investor may time those larger markets right and double that rate in a short amount of time, it could also time it wrong and lose double that in the same period. Oklahoma City’s multifamily market could be viewed as a relatively conservative component of an investor’s real estate portfolio, where they may not experience large double digit rent growth, or contraction, but can significantly reduce downside risk. 

In 2015 the largest increase in rents was in the efficiency style apartments (also referred to as studio apartments), increasing 5.05% to $1.04 per square foot compared to last year’s average which was below the one-dollar threshold. One bedroom units followed just behind with a 4.71% increase bringing them to $0.89 per square foot. Both two and three bedrooms increased just over 4% to $0.78 and $0.76 respectively. The occupancy rate for the metropolitan area followed suit with an increase of 1.11% compared to the previous year, landing at an average of 91% overall, or 92% when removing non-performing (D Class) assets. A declining vacancy rate and an impressive rent growth of 4.52% further verifies that the fundamentals are generally strong when investing in Oklahoma City’s multifamily market, despite what transactional activity may occur year-in and year-out. 

All sub-markets were able to realize a positive year over year rent growth; however, one that stands out larger than the rest was the Urban Core. Although a new sub-market category in this year’s market survey, compared to the data for these properties in the previous year, the Urban Core had a staggering 17.5% annual rent growth. While increasing the rents at a substantial rate the properties also benefited from a decline in the overall vacancy rate from 8% to only 5%, which by most standards is considered full occupancy. The average rental rate in the Urban Core is an impressive $1.50 per square foot, a number that even the most optimistic professionals wouldn’t have thought possible only a short five years earlier. In 2010 developers of the Urban Core projected rents to be around $1.15 per square foot when underwriting new projects, and now are able to see significant premiums over those initial projections. The highest price paid in the entire metropolitan area is also in the Urban Core, where efficiency units bring in $1.74 per square foot, an 11.5% premium over the previous year. With scheduled new construction deliveries, rental rates for the Urban Core will likely level off a little, and then fall in line with more historical rent growth patterns. Following in a distant second was Edmond at $1.04 per square foot and the Northwest at $0.81 per square foot, increasing 6.65% and 4.55% respectively. This is the first year any sub-market outside the Urban Core broke the one dollar per square foot overall average rent barrier. The lowest rent growth, although it was still positive, was the Mustang/Yukon sub-market increasing 0.59% to an average rental rate of $0.85 per square foot. 

We surveyed a total of 35 senior properties having a total of 4,596 units. The year over year data reflects no change in the occupancy at 96%; however, the data does show an increase in overall rents by 8.65%. In 2014 only 4,141 units were surveyed, so after removing the properties that were added in 2015 the figures can provide a more accurate comparison of the market performance. Based on these adjusted numbers, the Senior market still had a very robust performance year over year averaging $1.91 per square foot, an average increase of 5.54%. Using the same adjusted figures, the occupancy increased by one percentage point to 97% at the end of 2015. Two bedroom units are the only units which had pressure to reduce their rental rates by $0.06 per foot to a new average of $1.84, 3.16% below 2014. 

Nine student properties were surveyed this year with a total of 1,852 units, or as most properties are rented, 6,043 beds. With the largest university being in Norman, the bulk of the student properties are in the Moore/Norman sub-markets which has the highest student population compared to any other sub-market in our survey. Second highest student population would be the Edmond sub-market with two universities inside its boundaries. Overall occupancy levels only changed slightly from 95% to 96%, which is getting very close to full occupancy. Rental rates came in at $1,617 when rented by the unit, and $580 when rented by the bedroom, accounting for just over a 3% increase in year over year for rents by the bedroom. There are some discussions on this niche sector softening a little with on-site staff seeing signs of slowing leasing activity. As such, they are implementing more aggressive marketing campaigns and providing incentives to lure prospective residents away from the newly constructed, more luxurious conventional developments. Between the upscale university owned housing and the private for profit developments planned or under construction, this market is one to watch for signals of any weakening. 


By any measure it’s been a good few years nationally and locally for the multifamily industry with rent growth, occupancies and values that have surpassed the highs from the last cycle, all continuing to set new records. So what happens when these type of benchmarks are made? Well builders do what they do best – they build. In 2015 more than 188,000 new apartments were delivered across the United States, the most since 1999. In the Oklahoma City MSA alone there were 2,472 units added, a staggering 122% increase over 2014’s total deliveries. As we enter 2016 the question remains do investors and builders think these good times will continue? They seem to be betting on it. Nationally there are more than 300,000 units set to come online in 2016. Oklahoma City already has 3,391 under construction followed by another 2,525 late in the planning stages. 

Is there about to be an over-supply of apartment units? It’s hard to ignore the apartment complexes sprouting up all over town and not think we are in a bubble or construction boom. Looking back, we delivered 30% above the past five-year average in 2015, but still far below historic highs of 1960’s and 70’s when 8,000 to 15,000 units were a common number to be delivered in a single year. Further justification on the increase in apartment construction can be given simply by a quick review of the numbers. In many sub-markets, the data is indicating a high level of demand for apartments, with its increasing occupancies and continued rent growth. But is there still sufficient demand to fill up the almost 6,000 units under construction or planned? The Oklahoma City MSA hasn’t experienced above five percent unemployment for two consecutive months since October 2011 and has been near or below four percent for over a year. With virtually full employment and a population growth rate that is double that of the U.S., there’s no question the demand should continue. But investors and developers should recognize that we have been experiencing a multifamily development boom the last several years. Time will tell whether it continues unabated, or slows down due to our local economic dynamics. 

In 2015 there were a significant number of deliveries worth noting. In the Urban Core developers opened what is considered to be the highest end community to date in the metro, The Edge at Midtown. Originally slated to open in 2014, due to weather delays the bulk of the leasing efforts didn’t happen until into 2015 but once it began it leased up at a record pace. The Edge consists of 250 apartments with approximately 8,000 square feet of retail space designed to service the residents. Two projects in the Urban Core that are currently under construction and should be delivered in 2016 are The Lift and The Metropolitan. The Lift is a 327-unit modern luxurious community within walking distance of St. Anthony’s hospital and most of Mid-Towns shopping and dining. The Metropolitan is well positioned directly on the exit when pulling off I-235 into the Urban Core and directly north of the Bricktown entertainment district. The Metropolitan will have 330 high end units catering to the fast paced downtown lifestyle. Near the Metropolitan is the recently opened phase 2 of the Level Apartments, 97 units named Mosaic. This podium style construction is directly across from the Level and is managed out of the same office as Level. 

In the suburban sub-markets, most of the new construction was spread out on each end of town. Far north in the Quail Springs area several properties came online this past year. The Reserve at Quail North is a 250-unit property located adjacent to another property developed only a year earlier by the same developer, Watermark Residential. Compared to its sister property, which has since been sold, Reserve at Quail North feature more of a cottage style appearance to break up the cluster of multifamily developments all in the same area. This accounts for 1,163 apartment units within a quarter mile square, with another 300-500 in the planning stages. The two properties in planning stages are largely undeveloped land just north of Quail Springs Mall which was recently purchased by multifamily developers. The question is, although this is one of the strongest retail and commercial corridors in the market, can it sustain such a large concentration of apartments without ultimately resembling neighborhoods such as Stratford Drive or Lyrewood Lane? There’s no question that the new deliveries being built are in a far superior fashion; the key will be the quality of long term ownership and whether proper repair and maintenance programs are instituted.

Further west along Memorial Road is a new 228-unit development called Springs at Memorial. This large community is being built in synch with a sister property of the same developer in South Oklahoma City called Springs at May Lakes. Springs at May Lakes is 304 units, but it sprawls across almost 40 acres with large ponds and open grounds. Directly to the east and along Interstate 35 in Moore, Oklahoma Native Case and Associates opened its Mission Pointe Apartments, a luxurious 366-unit community with excellent curb appeal from the Interstate. Almost directly across the interstate the newly opened 35 West added 314 units of luxury apartments homes to the Moore sub-market. Approximately two miles south of 35 West, Case and Associates also finished their Icon at Norman apartments consisting of 256 apartment units in what is considered Norman, although on the border of Moore and Norman. Between The Icon, 35 West and Mission Pointe the area along I-35 in Moore had an addition of 936 units in a short period of time. They were all high end, luxurious properties which unfortunately compete for the same residents as each other. This was only a short time after three other properties only a few miles to the west also opened in the Moore School District: Cross Timbers, District on 119 and Traditions at West Moore. These three, combined with those mentioned along Interstate 35, combine to provide a total of 1,526 units all added within about one year. Unfortunately, this appears to have softened the new construction in this immediate area and we will keep a close look going forward at what this does to the occupancies and rental rates.  

Further into Norman, Millennium of Norman is adding 196 units (or 698 beds) and The Avenue Norman is adding 314 units. Some nearby residents in Norman provided some negative feedback as they believed the property was slated as low income because it was utilizing HUD financing. Upon finding that was not correct a majority of those resisting the development backed down. Norman should have several properties added in the coming year with work already under construction on the Terra and University North Park, a joint effort between the University of Oklahoma and Cornerstone development to build an urban style community similar to the Edge in the University North Park redevelopment. Also scheduled to come online is the Anatole at Norman with another 230 upscale units. 

Several projects worth noting are happening as a result of Oklahoma City’s proactive urban renewal incentives and partnerships. Making projects happen that wouldn’t have normally happened has been their track record and some of the redevelopment projects attributed to them worth noting are John Marshall High School, which will be converting an old high school into 280 housing units. Similarly, another veteran developer will convert the historic Page Woodson School into 128 units (mixture of redevelopment and new construction). Because these buildings are renovating older and historic buildings, along with their complicated financing structure, they won’t be added to the inventory as quickly as new construction, but we expect to see them open in the next couple years. Some new construction projects under the realm of Urban Renewal Authority include a recent request for proposals went out and it appears 32 units will be constructed next to the new police headquarters building and across from the Civic Center, properly naming this project Civic Center Flats. Just to the north a project is in initial planning stages to add another housing project at 4th and Shartel Ave on Urban Renewal owned land, although the projected 235 units has not been confirmed. On the West end of downtown, near the end of Film Row, the 21C hotel renovation is underway, and has a planned 320 apartments and retail to accompany the hotel. There are a few other large redevelopment projects that are going to be under the headline of public private partnerships that are likely to be announced in early 2016, so it should be an exciting year for this type of product.


As previously indicated, 2015 was another very strong year with total number of units sold and total number of transactions the highest since 2007. The total sales volume reached a record high at $339 million, up 25% from the 2014 numbers, a metric that is materially impacted by the composition of which asset classes are sold each year.  With that said, the market is reaching per unit prices that have never been experienced and pushing capitalization rates to historically low levels in Oklahoma City. This year there were a total of 49 transactions of properties having 25 units or more, which is up 32% from the previous year’s 37. There were 7,205 units exchanging hands, an 18% gain over the previous year and the sixth year in a row the total number of units has increased year after year. Is this an indicator that 2016 and forward the multifamily investment market will continue to push forward as a dominate property class in commercial real estate? Based on history that doesn’t appear to be the case. Historically Oklahoma City has had stretches of 3-6 years of boom before the market tends to correct itself and level off; but that also doesn’t mean 2016 will be a bust.  One reason for these repeated record setting sales volumes are over the last four years transaction activity has significantly increased in Class A and B asset types. These tend to trade for a higher sales price, thus increasing the overall sales volume for the market; with select properties trading multiple times within this time period, increased sales prices on each transaction. The last four years the average Class A transaction volume was 30% higher than that of the previous four years, which is a main contributor to the recent run-up in total sales volume we have experienced. However, the main difference in those years and 2015’s record year was adding in the increase of Class C transactions; which was almost double that of the next best year, excluding 2007. In 2015 both Class A and Class C transactions increased over 100% from the previous year. While the large volume of Class A transactions have pushed the average price per unit up, the continued increase in C Class transactions helped keep the overall average into a reasonable increase of 6%, giving 2015 an average of $47,142 per unit. 

You can get a better indication of market health by taking a look at each specific asset class’s transactional data. There were a total of three Class A transactions in 2015 consisting of 1,024 units. Although this is an impressive 112% increase over the previous year’s total units, the even more staggering number is the $115.5 million total sales volume, accounting for a 122% increase from 2014’s Class A volume. Of the three properties that sold, the average price per unit paid by all institutional investors was $112,848, a year over year increase of 5%.   

The most active in 2015, and what has historically been the most active asset type, were the Class C properties. This year Class C stole the show with a total of 4,916 units trading hands, up a significant 84% from the previous year. This accounted for $176,312,750 million in volume and gives an average price per unit at $35,865. To provide a better indicator of where the market average actually is on Class C assets, the performing price per unit is $37,819, double that of the non-performing Class C assets price per unit. 

Class D assets came trailing in with 647 units trading for a total volume of $7,740,000 making the average price an investor paid per unit $11,963.  


On the surface all indications are that right now is a good time to own apartments given the strong rent growth and high occupancy levels. Moving forward, we are cautiously optimistic about 2016, but there are always factors that could negatively impact multifamily investment. Rent has outpaced income for the last several years (five years according to MFE) which has caused the rent to income ratio to get out of line and cause financial stress. If the Oklahoma City economy continues to generate new net jobs there could be an upward push on wages and extend this recovery period, but given the current and projected near term oil and natural gas commodity pricing this seems rather unlikely. The current recovery is more than 6.5 years old, still another 3.5 years from the nation’s longest economic expansion of 10 years, after the 1990-91 recession. It is possible to meet or exceed that previous record; however historically when unemployment reaches “full employment” of 5% or below, a recession follows within 11-61 months (average of 30). The U.S. unemployment rate just reached 5% in October of 2015, so statistically speaking the recovery could last until sometime in 2018. So we may have some momentum left, but there is a possibility of an earlier than expected recession, which if it happens changes everything. 

On a local level, construction supply in key areas will play a large factor going forward. The Urban Core has experienced unprecedented growth with new properties leasing up at record speed. However, despite these being in the headlines of numerous articles and publications, the question everyone is asking but nobody can answer is how many units can be built before the Urban Core is overbuilt. There’s no way to avoid the very real fact that just over 700 units will come online in the Urban Core alone during 2016. By the end of 2016, the Urban Core will have increased the for rent number of units by 70% since 2012. The big test will be when both The Lift and The Metropolitan come online in the same year forcing them to compete for the same residents. The Urban Core housing market is already starting to whisper the utterances of a weakened demand. Empty units are sitting vacant longer than they would only a year ago and more advertising is needed to attract new prospective residents. The key indicator to watch out for will be if any of the newer properties starts to advertise move-in concessions. In a different sub-market, a newly opened property is offering new residents a free cruise with a twelve-month lease because that specific area appears to have been overbuilt with several hundred units coming online in a very short period of time. These types of concessions will happen prior to asking rents decreasing, so it is something to closely monitor. Right now the record rents achieved are enough to justify the increased cost of land, construction and operating expenses to provide the amenities these types of properties must provide; but if the rents decrease even slightly the bottom line of these assets will be very thin; and if they are over leveraged, then they may experience some difficulties in covering the debt service. This is likely an overly negative scenario, but given the anticipated changes in our economy due to commodity prices it is an issue worth watching carefully. Recovery periods with exceptional growth and low cost financing typically leads to some level of over building. 2016 may tell us if that is occurring in this particular sub-market.

Outside the Urban Core, investors are already beginning to watch from the sidelines a little longer before making a move on acquisitions as the spreads between interest rates and capitalization rates begin to tighten. Most say they are cautiously watching prices and interest rates because if interest rates continue to increase and cap rates aren’t moving up accordingly,  investment spreads will erode to unacceptable levels. Caution can may translate into buyers offering less for a property than they would have only a few months earlier, or it may mean sitting on the sidelines all together waiting to see how things play out. In the short term we don’t expect significant, if any, cap rate movement; however, we do expect to see less transaction volume early in 2016.  Like the Urban Core supply mentioned earlier, most suburban sub-markets are seeing added supply. Currently, the market is absorbing newly constructed units at record rates, but a key factor to watch are employment and income numbers. So long as Oklahoma City doesn’t have a large increase in unemployment the units should be able to continue to lease at the current pace; however, should layoffs begin to increase at a rate exceeding jobs being added, then the momentum could change. Depressed oil prices are the big factor that could play a large role on these employment numbers, as more corporate level jobs may be lost if prices stay depressed for an extended period. If this happens, new development can quickly outpace demand, especially in the higher end products where pricing is already an affordability issue. As previously stated, this can cause owners to implement concessions and eventually reduce rents to relieve increased vacancy rates. One factor that could change the forecast is if the U.S. Government decided to assist in the single family purchase market again, causing home ownership to increase taking a larger portion of the population that would have otherwise been renters. Nationally, the home ownership rate of 63.7% is near a 30 year low. 

On the bright side, further increases in interest rates are, in theory, indicative of a strengthened economy. The return to a normal credit environment does suggest incremental increases in debt service levels going forward, but they are still far from being too high to make deals work. So while unbridled optimism is not warranted given where we are in the cycle, there is no reason yet to be overly negative. Certainly Oklahoma City is going to see a tougher year in 2016 than the previous few, but there is still reason to believe the hiring needs of Boeing, General Electric, Paycom, Tinker and others can to some degree mitigate the economic damage caused by the current downturn in the oil and gas industry. 

Properties with some type of true value-add component will continue to be the most in demand asset type, right behind the new Class A properties. With the levels of delivery in 2015 and planned for 2016, we expect to see multiple contracts, possibly even closings on newly developed and opened projects; but time will tell if they can open and actually achieve pro-forma rents, and thus make the lender comfortable enough to close at some of the record numbers. Regardless of the cautionary signals the market might be giving, Class A assets will remain in high demand by institutional investors given the amount of private equity and Wall Street capital looking for a return. Class B assets may see increased activity given the per unit pricing spread with the Class A properties. Class C will probably continue to represent the most active market segment among non-institutional investors. Given the above, another active year, but probably not a record year, should be anticipated in this market segment of Oklahoma City’s commercial real estate sector. 






Price Edwards & Company is proud to be the leader in Oklahoma commercial real estate. We are a full service firm headquartered in Oklahoma City. Formed in 1988. We employ approximately 150 professionals in Oklahoma City, Oklahoma providing a wide range of commercial real estate services.