COVID-19 Market Insights for Tulsa

Tulsa – Large Oil Mining, Manufacturing and Transportation Sectors will Suffer in the Downtown

With its heavy reliance on the oil mining and heavy manufacturing industries, Tulsa has long trailed the rest of the U.S. on job growth. The pandemic downturn will hurt Tulsa more so than most metros as oil prices have plummeted. Although it has seen growth in some industries including transportation and warehousing, Tulsa employs fewer than most metros in more stable sectors such as government, education, health, finance and professional services that should see fewer job losses than most sectors. Without a large base in these more stable sectors, Tulsa will likely see greater job losses than the U.S. average.

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Looking for additional insights? Explore our interactive COVID-19 map to analyze the potential impact on commercial real estate markets.

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Recent Growth – Tulsa had added 5,400 jobs in 2019, a growth of 1.2%, just below the U.S. growth rate of 1.4%. Its five-year growth of 4.8%, however, was well below the U.S. five-year growth rate of 8.6%. Moreover, most of the growth over the last five years was in leisure and hospitality that added 6,100 jobs or 29% of all the added jobs. These are all at risk in the wake of the pandemic shutdown. Many will come back once the economy re-opens, but Tulsa will see less of a bounce than many metros given its large manufacturing sector that employs 12% of its workforce, much higher than the U.S. share of 8.5%. Many of these manufacturing jobs are in machinery and equipment and parts that serve the oil mining and drilling sector. Another large employer in Tulsa is American Airlines that operates its global maintenance hub in the city. Although in February American had announced that it would invest $550 million at its maintenance facility, the recent pandemic could thwart this effort as travel has ground to a halt. According to the company, American employs 5,500 in Tulsa and had added 900 in 2019.

Industrial Market – On a positive note, Amazon opened a 60,000-square foot delivery center in late 2019 as part of its larger 600,000-square-foot fulfillment center that is expected to open in late 2020 with 1,500 added employees. Tulsa’s transportation and warehouse sector added 3,100 jobs or 21% over the last five years, but some of these may be at American Airline’s hub. Warehouse and distribution occupancy expanded 3% over the last two years, while rent growth averaged 0.4% per year since 2017.

Office Market – Tulsa incurred negative net absorption in each of the last four years of as office employment increased by just 800 jobs (+0.9%) in that timeframe. Yet office rent growth averaged 1.5% over the same period. Recognizing that it needed to diversify its economy, in 2018 Tulsa offered to pay freelance workers $10,000 to move to Tulsa as part of its Tulsa Remote program that also provides local co-working space, support in identifying housing, and regular community-building opportunities. (Source: tulsaremote.com).

Apartment Market – Tulsa’s apartment market is relatively large. Its 71,270 units works out to approximately 72 units per 1,000 residents, higher than the U.S. metro average of 58 units. Apartment occupancy expanded 5.8% over the last five years, below the U.S. metro rate of 10.5%. Likewise, its five-year average annual rent growth of 2.4% was below the U.S. growth of 5.1%. Of the 3,915 units added in the last five years, 29% were added in the East/Broken Arrow submarket.

Outlook – Tulsa lacks a significant office employer, large university or much government employment that would otherwise provide stability against job losses in travel, trade and tourism in the next few months. Already Spirit AeroSystems has announced temporary layoffs of “employees associated with the company’s Boeing commercial program.” (Source: AP news). Thus, with so many employed in at-risk sectors, Tulsa will see disproportionately more losses than most metros.

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You may also find our website dedicated to COVID-19 to be helpful during this time. Visit moodys.com/coronavirus for our latest research and views on the credit and economic impact of COVID-19. This site brings together insights from across Moody’s to help you better understand the financial implications of the outbreak.