Overall, the real estate market in Anchorage will remain relatively healthy, said Theodore Jensen, a managing member with Reliant LLC Advisory Services. Jensen presented his findings at the Building Owners and Managers Association of Anchorage's April luncheon.

"We're in a very enviable forecast," Jensen said.

The overall vacancy rate for office real estate in Anchorage reached 7.4 percent this year, he said. Class A vacancy reached a rate of 7 percent, and class B property reached 8.7 percent, he said.

He said vacancy rates will rise incrementally throughout the year.

His survey used a representative sample of Class B properties versus Class A properties. He did not include office space in industrial buildings.

Nationally, the picture is far bleaker, he said.

Right now, the national vacancy rate rests at a 15-year high of 17 percent, just 2.3 percentage points below the historic high of 19.3 percent in 1990, Jensen said. Jensen said that based on reports he had read, the national rate may reach 20 percent this year.

Part of the reason vacancy rates are as high as they are is because there is less competition in the market, which would normally lower vacancy rates, he said.

Jensen said that although demand for new property in Alaska rose in 2007 and 2008, supply eventually outpaced it, and demand did not continue on that upward trend into 2010.

This year, absorption of property has slowed, but little new property is available anyway, mitigating the damage somewhat, he said.

In midtown Anchorage, there has been a concentration of new construction, and property owners are scrambling to attract new tenants.

Surveyed property owners are charging an average of $2.55 per square foot for Class A property that existed prior to 2000, a figure that rests in the middle of the range of $2.20 to $3.05 per square foot.

For newer Class A property, surveyed owners said they were charging an average of $3.30 per square foot, with answers ranging from $3.00 to $3.65.

Class B property tended to carry rent rates within the $1.55 to $2.25 range, with the average rent rate resting at $1.90.

Jensen said that while rents for new leases will likely remain flat, rates for renewals will likely go up slightly. Most tenants aren't interested in moving into a new building, preferring instead to stay put and ride out the downturn without having to spend the money to relocate, he said.

To get new tenants to move in, property owners are offering inducements that range from free rent for a few months at the beginning of a lease term to additional allowances for businesses that need to set up computer networks or expand their offices.

Sean Manget can be reached at

sean.manget@alaskajournal.com.