Housing, commercial markets near capacity around state


The largest real estate markets in the state remained strong in 2013, largely due to lean inventory.

Brandon Walker with Pacific Tower Properties told members of the Building Owners and Managers Association Anchorage Jan. 10 that the commercial real estate market in Anchorage is “extremely healthy” across its subsets.

Class A office space was running at about 4.3 percent vacancy in the city at the end of 2013, and 5.7 percent of Class B offices were empty, according to Walker. Both office class vacancy rates dropped about 0.9 percent over the year, he said, after a fairly flat 2012.

“The drop in vacancy seems to be kind of a byproduct of growth in certain industries like oil and gas and legal services,” Walker said.

He added that Anchorage office tenants are hesitant to move right now — choosing to stay put and renew their leases unless they’re displaced.

“There was a little bit of a pause in new Class A deliveries in 2013 and I think this allowed for some absorption,” of vacant properties, Walker said.

When a couple new major office complexes open late this year or early in 2015, Walker predicted the Class A market could see a 2 percent upswing in vacancy. He said that even if his forecast is correct the office market would still be on solid footing.

The 100,000 square-foot JL Properties office building under construction at the intersection of C Street and International Airport Road in Midtown Anchorage is about 20 percent pre-leased and available space in the future 110,000 square-foot, eight-story Cook Inlet Region Inc. headquarter complex is about 40 percent early-occupied, according to Walker.

CIRI has said corporate operations would take up slightly more than half of the building space at Fireweed Lane and the Seward Highway, leaving the remaining space to be leased out.

Overall retail vacancy in the Anchorage Bowl is at 4 percent, Walker said, near half the national average of 7.7 percent. Enclosed, or mall space ended 2013 at 3.9 percent vacancy, down from 4.2 percent at the beginning of last year. Simon Property Group officials at the Fifth Avenue Mall have said their space is almost completely occupied.

Available power center space disappeared quickly in 2013, from 4.6 percent at the start of the year to 2.7 percent vacancy now as remaining spaces filled in the Tikahtnu Commons shopping center.

Inline, or general retail vacancy increased somewhat to 5.7 percent in 2013 due to “attrition” to power centers, Walker said.

Roughly 300,000 square feet of new retail space is on its way to South Anchorage in the next few years. The Gallo Center near C Street and Dimond Boulevard will open late this year with 40,000 square feet of available shop space. Renovations to the Dimond Center Mall and a new traffic pattern inside the mall will add another 40,000 square feet of retail space to the existing structure.

“I think the key word at the Dimond Center right now is experience,” Walker said. “They really want to generate a new shopping experience, so look for some new concepts and merchandising strategies.”

JL Properties is developing the 220,000 square-foot Outlets of Alaska on 27 acres south of Dimond Boulevard on C Street. That mall is currently about 65 percent pre-leased, Walker said.

Industrial vacancy in Anchorage is very low, at 1.7 percent. Walker said industrial space rent stayed in the $1.10 per square-foot range in 2013 and didn’t correspond with the tight market. He suggested there might be some vacant properties not on the market that are skewing those figures.


The home market in Southcentral grew slower in 2013, while the length of time single-family homes remained on the market continued to shrink.

In Anchorage, the average residential sale price for the year was $346,000, up 2.6 percent from 2012, when sale prices increased 4.7 percent, according to Alaska Multiple Listing Service Inc. data. The average property was on the market a mere 47 days, down from 71 days in 2011, which was the last of five years that saw houses for sale for more than two months, on average. The market time was a return to peak the market years of 2004-06.

In the Matanuska-Susitna Valley, average home prices rose 2.6 percent to $238,000 in 2013. In 2012, prices rose 2.9 percent. Mat-Su home prices are up 27 percent since 2004, when the average sale price was $187,000.

Listings in the area were on the market for an average of 73 days, down from recent 80-plus day highs from 2008-2011, but not yet back to the 60-day average listings of 2004.

Statewide, home sales averaged $304,000 through the second quarter of 2013 — up 2.3 percent year-over-year, according to the most recent Alaska Housing Finance Corp. data available.

Year-to-date loan activity in the state for single-family purchases was up 1.2 percent over the first half of 2012.

In Fairbanks, loan activity was down 15 percent year-to-date for the first half of the year and the average sale price was $252,000.

There was a modest relaxation of rental vacancy rates across much of the state, as rental prices increased slightly.

In Anchorage, the tightest rental market in the state, overall vacancies increased from 2.6 percent in 2012 to 3.3 percent last year, according to AHFC. The average rental price per month across all subsets rose 3.9 percent to $1,119 in the city.

The Kodiak Island Borough had the highest average monthly rental prices at $1,230 with 4.5 percent vacancy, up from $1,193 per month and 2.3 percent vacancy in 2012.

Residential vacancy rates increased from 8.3 in 2012 percent to 9.2 percent last year in the Fairbanks North Star Borough. Prices rose from $1,013 to $1,036 per month.

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com

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