The renovation of downtown Oklahoma City's First National Center is expected to be long and expensive.
Oklahoma City-based developer Gary Brooks and Texas contractor and developer Charlie Nicholas are leading a team that signed a contract on Monday to buy the one-million-square-foot building for $23 million.
They have a 90-day period to back out if they find something that troubles them, receiver Jim Parrack told The Journal Record’s Molly Fleming:
“Gary’s been in and he’s looked around,” he said. “I don’t expect to have any problems.” Brooks has considered purchasing the building previously, but he never felt he would reach an end deal with Leon Neman, one of the building’s alleged owners. Brooks said he changed his mind when the center went into receivership. “At least now, this building can be bought with a clean title,” he said. “That was the game changer.” The question of the ownership of the property has led to a long legal battle. U.S. District Court Judge Stephen P. Friot has ruled that the sale can move ahead, and the proceeds will be distributed after settling those issues.
Brooks said his plan to turn the building into a hotel and apartment structure will cost about $200 million dollars. There's also a possible tax increment financing – or TIF – agreement that could be used for building redevelopment. The city council will consider a 40 million dollar TIF district next month. State and federal historic tax credits may also come in to play.
Brooks told Fleming he wants to restore as much of the building’s interior and exterior as he feels like he can afford, calling the project “a marathon, not a sprint.” Fleming reports:
“I really believe that Gary and Charlie have the desire to do it right,” [Newmark Grubb Levy Strange Beffort vice president Mark] Beffort said. “But don’t fool yourself – this is a time-consuming and long project. This is not for the faint of heart. It’s a very financially taxing project.” Beffort knows firsthand the challenge with restoring an old office building. His firm bought City Place tower in 2008 and is only 65 percent complete with the redevelopment. However, during that time it had tenants, so there’s been a revenue stream. First National is less than 10 percent occupied, and the existing tenants are expected to move out in 90 days. “It’s a very tedious, long project,” Beffort said. “But I do believe at the end of the day, they’ll be rewarded for their efforts.”
The downtown high-rise residential concept is expected to be successful, even if it takes five years. Beffort told Fleming only 1 percent of Oklahoma City’s population lives downtown, but 5 percent have said they’re interested in the idea:
Hotel Broker One Chief Operating Officer Peter Holmes isn’t convinced the hotel component could have the same success. He said the building’s complex structure – with a second-floor lobby and no direct connection to the rooms – is something people expect in larger cities. “There will be other hotels in the market that will be easier to get in and out of,” he said. “I don’t see, with the location combined with the style of hotel, that it would be more desirable than what’s coming online.” In 2014, luxury hotels had some of the largest financial growth nationwide, according to STR data reports. But Holmes said even a luxury hotel in the center wouldn’t work, especially with competition from existing hotels such as the Hilton Skirvin, the Colcord and the Ambassador. In addition, an expensive renovation will create high room costs. He said converting office buildings into hotels is one of the most challenging projects. This one is even harder because of its size. In addition, the 1930s building has to be converted with modern hotel amenities.
KGOU relies on voluntary contributions from readers and listeners to further its mission of public service to Oklahoma and beyond. To contribute to our efforts, make your donation online, or contact our Membership department.
