Experts predict a stable commercial real estate scene

Mike Dunham

Speakers repeatedly used the word "stable" to describe their expectations for the Anchorage commercial property market in 2013 at the Annual Commercial Real Estate Forecast Luncheon at the Hilton Hotel on Friday. Speakers at the event hosted by the Building Owners and Managers Association of Anchorage predicted a year of mostly steady rents and vacancy rates but said new construction may be slower than in 2012.

Per Bjorn-Roli of Reliant LLC said the vacancy rate for class A office space remained just over 5 percent and predicted it wouldn't change much through the year. Rent increases, if any, would be moderate, he said.

But he noted that little new space would come on the market. Several projects have been proposed, "but it looks like none are going forward. This could mean we have no deliveries (opening of new buildings) for the first time since 1999."

With regard to retail space, Brandon Walker of Bond, Stephens & Johnson said, "There's a potential slowdown of new businesses opening in Anchorage in 2013," though the arrival of sporting goods giants Bass Pro Shops and Cabela's is a bright spot. The rumor mill, he said, is suggesting that Whole Foods, Hard Rock Cafe and Victoria's Secret might come to town in the near future.

Anchorage retail vacancies dropped from 5 to 4.71 percent last year, half the national rate, Walker said. Industrial vacancies are even tighter with many older industrial buildings facing obsolescence.

Brian Meissner of ECI Hyer said the value of building permits issued by the municipality remained fairly level, but a higher percentage was for remodeling and alterations rather than new buildings. The trend in commercial construction is down, he said.

Meissner said the governor's budget for state projects is weighted toward road work and maintenance, with much less for "vertical construction." The statewide military construction budget, which has run about $500 million a year recently, will be somewhere between $10 million to $15 million this year. "This is huge," he said.

A new engineering building is planned for the University of Alaska Anchorage, he said, and new buildings will go up at the Mat-Su and Kenai campuses.

Anchorage public school construction is not growing, Meissner said, though there are additions and improvements to existing buildings in the works.

"Out in the valley, it's a different story," he said. "They're growing like mad and running out of space in their schools." In response, a new junior-senior high school will be built in the Knik area.

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