Freymiller’s property buy bodes well
By: Sarah Terry-Cobo//The Journal Record//October 13, 2016
Freymiller purchased this property along Interstate 40 from Seventy Seven Energy for $2.95 million. (Photo by Brent Fuchs)
OKLAHOMA CITY – A September transaction shows that both the industrial real estate sector and oil and gas industry are doing well, said two analysts.
Freymiller Inc. purchased prime property from Seventy Seven Energy LLC along Interstate 40 for $2.95 million, according to county assessor records. That shows the transportation and distribution segment is expanding, said University of Central Oklahoma real estate professor J. David Chapman.
Kris Davis said the 5-acre property sale is a significant transaction. The lot includes two buildings: one 34,357-square-foot space built as an automotive repair center, and a 1,680-square-foot vehicle wash.
“Access to the highway is a big deal for a trucking company,” he said. “And you’ll get big exposure as people drive by and see it.”
Davis, senior vice president of Newmark Grubb Levy Beffort Strange’s industrial group, said property like that doesn’t change hands often, and the sale shows how industrial sectors are shifting in the Oklahoma City market. He was not involved in the transaction.
Because the buildings are large, Freymiller would be able to put more than one logistics division in the new space, providing plenty of options for the company.
The property is likely to be in good condition, because of its former owner. Seventy Seven Energy provides drilling and hydraulic fracturing services for oil and gas companies. It was formerly two Chesapeake Energy Corp. subsidiaries, Nomac Drilling and Chesapeake Oilfield Services. Those subsidiaries were spun off from Chesapeake in 2014, and later became Seventy Seven Energy.
“Chesapeake takes really good care of their properties, so when they take something to market, it is in better shape than when they got it,” Davis said.
All the industrial properties in Newmark Grubb’s portfolio are doing well and selling faster than many brokers had anticipated, Davis said. A Schlumberger subsidiary, Cameron, put its 33rd Street building on the market and it was leased within three weeks, he said. A wire cable company at 6700 S. Sooner Rd. became available and was placed under contract within 30 days.
As drillers and oil-field service companies consolidate, it creates redundancies and more industrial properties are put on the market. Chapman said he’s also seeing a shift.
Lower commodity prices in the last two years reduced demand for oil-field service companies. Those companies downsized and don’t need the extra industrial space, he said. It’s a logical progression for oil-field service businesses to sell property to trucking companies, because the transportation industry has a similar need to maintain and overhaul vehicles and to store equipment.
“Trucking and distribution will be hot in the future, especially if oil-field services can transfer those large assets,” Chapman said.
He agreed that the industrial property at 5701 SW Fifth St. provides Freymiller an opportunity to expand. The property provides everything a trucking company would need: It’s close to a major interstate exchange and near other industrial businesses, Chapman said.
Davis said Newmark Grubb handles most of the energy sector’s real estate transactions, so he sees business owners buying, selling, leasing and offering properties. While many companies have entered and left Oklahoma City in the last three years, he’s seeing something different now. Executives are acting on their optimism by buying and selling.
“The energy industry suffered, but it’s not dead,” Davis said. “It’s still vibrant and a lot of companies are still profitable.”
Representatives for Freymiller and Seventy Seven Energy could not be reached for comment.