Anchorage Daily News

I am not sure which property in Anchorage's history ranks as the most successful commercial real estate development, but the Calais Office Center in Midtown has to be near the top of the list, if not at the very top.

The Calais, located across A Street from the Midtown Wal-Mart, was a pioneering effort that has been a mainstay of the Midtown office market for several decades.

These two class A office buildings, similar in appearance, were constructed in the mid-1970s. They have weathered the ups and downs of Anchorage's economy, starting in the early years of oil pipeline construction and are still going strong today.

The term Midtown to describe this area of the city was actually developed as part of the marketing of these buildings. The name Calais is the subdivision name chosen by the land owners after a vacation in the Calais area of France.

The developer, Howard S. Wright Development Co. in Seattle, saw an opportunity for more office space in Anchorage in 1973, when Congress approved legislation allowing construction of the oil pipeline from Prudhoe Bay to Valdez. Calais I, the northern building at 3201 C St., was constructed in 1974 with eight floors of about 15,000 square feet each for a total gross area of 120,000 square feet.

Calais I was the city's newest and fanciest class A office building, and it bucked the trend by being in Midtown. At the time, downtown was the office market. Midtown had no class A buildings other than the Sohio building, (now the Northrim Bank building).

According to Norman Rokeberg, former legislator and leasing agent for the buildings, Midtown was picked because the zoning allowed parking on site and the land was priced low enough that the developer could afford to acquire enough land for parking. The Midtown lots were large, unlike downtown where smaller lots had to be assembled into one larger lot for development. The city was growing to the south and Midtown was centrally located to the entire Anchorage Bowl. Those reasons continue to be Midtown advantages today.

Only two floors in Calais I were preleased, and the rest of the building was speculative construction. It turned out to be a booming success. Pipeline construction began, and the building was soon fully leased at the top of the market, commanding rates in the range of $1.25 a square foot, surpassing projections. Calais II, the south building at 3301 C St., was constructed in 1976 with five floors of 17,000 square feet for a total gross area of 85,000 square feet; it, too, leased rapidly.

Other office buildings in Midtown soon followed, including the Frontier Building, BP Building, Denali Tower, CIRI Building, 101 Benson (Key Bank), 3000 A S. and the Alaska Energy Building at Tudor Road and C Street. Of huge significance at the time was a decision by the largest bank in the state, National Bank of Alaska, now Wells Fargo, to move its headquarters out of downtown into a new Midtown building at C Street and Northern Lights. All the city's banks and financial institutions are now in Midtown.

The Calais buildings have changed ownership several times. They were sold by the developer as part of a package of buildings to a national real estate investment trust, which later sold them to an Anchorage investment group, which continues to manage the buildings, although there have been changes to the investment group members.

The Calais Office Center is still considered class A space, even though the buildings are into their mid-30s and outclassed by the new generation of recently built class A buildings. The Calais buildings continue to enjoy low vacancies and are very successful with competitive rates. The lease rate for this space is about $2.65 per square foot, below the rates for new buildings of more than $3 per square foot.

While new office buildings feature the latest architecture and amenities, the Calais Office Center will continue to be successful because their excellent location between A and C streets makes them very accessible and convenient. The building layouts are practical and efficient, which contributes to competitive operations.

They fill an important market segment by providing good-quality office space that is not as expensive as the newer class A. This makes the buildings acceptable to national and local companies.

Chris Stephens, CCIM, is a local associate broker specializing in commercial and investment real estate. His opinion column appears every fourth Friday.

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