A former U.S. senator and a former top state official are leading a group of investors backing a $70 million project to turn two buildings in downtown Anchorage into a 250-room hotel and an indoor market with a grocery store, restaurants and shops, with condominiums on top.
Former U.S. Sen. Mark Begich and Sheldon Fisher, a former state revenue commissioner under Gov. Bill Walker, say their team consists of many Alaska investors who naturally want to make a return on their investments.
But they also hope the renovation of the Aviator Hotel and the 4th Avenue Market Place helps reverse the long-running decline of downtown that worsened when the pandemic emptied out office buildings and shuttered restaurants and bars. They say they want to spark new investments in the area and change the way Anchorage residents experience downtown.
The large, three-story buildings were constructed half a century ago on opposite corners of Fourth Avenue and C Street. When they’re renovated, the hotel in the first phase and the marketplace next, the buildings will have new names, which will be announced later.
“This will change the face of Fourth Avenue,” said Begich, a two-term Anchorage mayor until 2009, when he started serving a term as a U.S. senator.
Begich said he and Fisher are “big believers” in downtown.
“If you do not have a thriving downtown, you do not have a thriving city,” Begich said.
“We think there has been lost opportunity,” he said. “There have been things that should have been happening, and we see this as one of several things we’ll be involved in to kind of revitalize downtown.”
The renovations are part of a wave of investments in downtown, some helped along by property tax incentives from the municipality, downtown advocates say. The improvements are bringing new commercial and retail space, and housing aimed at attracting residents who will support new shops and restaurants, they say.
Some of the biggest changes are happening along Fourth Avenue, near an area that’s home to many vacant storefronts and, like much of downtown, a prominent homeless population.
Christopher Constant, Anchorage Assembly chair, said adding a grocery store downtown will be a significant development that attracts new residents to live and shop in the area.
“These are the things that will make our downtown a place where people want to be,” he said. “It will take some time before these projects make a dent in people’s perception of downtown, but I’m pretty optimistic because there are pockets of growth in every direction in downtown.”
A pandemic-era purchase
Begich, who grew up helping manage his family’s real estate properties and has developed hot springs properties in Nevada and New Mexico, said he and Fisher assembled a large number of Alaska investors before buying the old hotel in 2020.
At the time, downtown felt empty, Begich said. Cruise ships had stopped coming to Alaska, so there were far fewer tourists, and rounds of business closures designed to prevent the spread of COVID-19 had emptied streets.
Some people thought they were a “little off our rocker,” Begich said.
But the developers saw an opportunity in the location. The buildings are perched above the Port of Alaska, with views of the Chugach Mountains. Guests can watch the ceremonial start of the Iditarod Trail Sled Dog Race along Fourth Avenue in March, or fireworks shows over Ship Creek. The buildings are only a couple of blocks from the Anchorage Museum, 5th Avenue Mall and other attractions.
“You’re going to be sitting right here, and you’ll see everything,” Begich said during a recent tour of the hotel’s rooms.
Renovations began last fall at the sprawling, L-shaped hotel. It will be part of a hotel franchise, but the developers aren’t yet saying which one.
The hotel had served as a shelter and transitional housing for hundreds of homeless people during the pandemic, after the city sought the housing through a bidding process.
The services were supported by millions of dollars in federal COVID-19 relief funding to provide homes, meals and other support in an environment where homeless clients could access an array of services.
About 70 rooms still serve as long-term housing in a wing of the hotel, even as construction occurs elsewhere, Fisher said. Those people will be transitioned into other long-term housing. Their stay is expected to end by February 2024.
The money for homeless services provided revenue that allowed the developers to meet their commitments to the city and the hotel’s investors, said Rachel Barinbaum, a vice president for MASH, a company formed by Begich and Fisher that co-owns the properties.
Providing housing for homeless people was unexpected and delayed the timing of the remodel, she said.
The first rooms for regular hotel guests will begin opening this fall. The hotel will be the largest of this caliber in more than 20 years, Barinbaum said, since the Marriott Anchorage Downtown was built in 2000.
The rooms will come with unique Alaska touches, like locally created art and wooden headboards featuring Denali in relief.
“The quality of the product here is much higher than you’ll see in most hotels,” Begich said.
At the hotel, outdoor seating along the street will help draw people inside to the Midnight Sun microbrewery, a restaurant and bars. Spacious decks will feature fire pits.
“We think the most vibrant cities are anchored by their downtown,” Fisher said. “A downtown that is activated, it’s vibrant, it’s where people want to go when they want to socialize and do things. And Anchorage, for whatever reason, hasn’t really developed that way. And so our investment thesis is that, you know, if you can revitalize downtown, you create value both for the community and then for our investors.”
“And so part of the story is yes, it’s a new fancy hotel,” Fisher said. “But I think to us, the bigger part of the story is, what is this going to do for downtown?”
As for the light-blue marketplace — next door to the bright-yellow Sunshine Plaza — preliminary demolition and design work is underway.
They don’t have a grocery store signed up to occupy the space yet, Barinbaum said.
That renovation should be completed within two years, or just under that, Begich said.
The marketplace building has largely been vacant for several years, and the developers plan to turn that around, Begich said. The team purchased the property this year.
The marketplace will be an open-concept floor plan, Begich said.
In addition to plans for a grocery store and other retail space, the developers plan to add a 90-seat theater — the building is home to the former Alaska Experience Theater.
On the top floor, about 20 loft-style condominiums will come with outdoor decks and large windows.
Peter Roberts, owner of a bike rental shop in the marketplace, said it’s great to see local investment in the building.
The property had previously been owned by a Lower 48 financial institution, Roberts said. Business owners weren’t sure if the building would be shut down, forcing them to close up shop or move.
“Now we have some certainty and we’re just so happy that it’s going to be fixed up and made into a marketable building,” Roberts said.
Tax exemptions a factor
Property tax incentives are helping drive much of the new investment downtown, observers say, including the Aviator renovations and potentially the marketplace.
One exemption covers deteriorated properties in certain areas. The Aviator Hotel will receive a 10-year property tax exemption under that category. The savings could amount to more than $100,000 annually, based on city records.
Begich and his partners also plan to apply for property tax incentives for the marketplace as that project advances, he said.
Constant said tax incentives help create new development.
They’re targeted, temporary, and lead to additional benefits over time, such as higher property values and taxes, Constant said. The improvements, including those by Begich and Fisher, will bring more residents downtown to help counteract Anchorage’s outmigration problem, he said.
The city’s population is dwindling as residents leave, often for cheaper housing in the Palmer and Wasilla areas.
“In the end, it’s a net positive for everyone,” Constant said of the incentives.
Big downtown investments
The renovations are part of the largest investments in downtown Anchorage in decades, observers say.
The city last year upgraded part of Fourth Avenue, redoing streets and expanding the sidewalks outside the hotel and marketplace and nearby areas. The $6.5 million project added trees in planters, street lamps and safer street crossings.
Down Fourth Avenue near the marketplace, a different developer, Peach Holdings LLC, has nearly completed a major remodel of the former nine-story Key Bank Plaza. That company is also constructing a new building near the former plaza, following last summer’s demolition of the decaying 4th Avenue Theatre. Plans for a $200 million overhaul on that block would create a new hotel, housing, office space, retail locations and entertainment venues.
Elsewhere downtown, developers are adding new housing, including at the 48-unit Block 96 Flats project at K Street and West Eighth Avenue. That will open to renters in mid-October.
Downtown hasn’t seen this much new construction for decades, said Radhika Krishna, executive director of the Anchorage Downtown Partnership.
“This has been a tough year for Anchorage, but these projects are important because they show there’s investments happening downtown,” Krishna said.
‘Development drives development’
Mike Robbins, executive director of the Anchorage Community Development Authority, said the city agency has agreed to sell the parking lot behind the Aviator Hotel to the developers for $2.2 million.
The agency also agreed to lease the parking lot at the marketplace to the developers.
“This is a phenomenal deal for us,” Robbins said of the agreements.
The improvements give other people a reason to invest, according to Robbins.
“Development drives development,” he said.
Eric Ritner, with longtime Anchorage apartment owner KRK Management, said last year his company purchased the former Cyrano’s Theatre building at 415 D St., a short walk from the Aviator Hotel and Peach Holdings’ properties.
The improvements happening in the area were a factor in KRK’s plans to start upgrading a dozen aging apartments in the building, Ritner said.
“It helps when you can visualize that area is on an upward trajectory, and it helps with your investment decision,” he said.
In the apartments, he’s adding quartz countertops, marble tile in the bathroom, Wi-Fi building-wide, and a bike repair area for tenants who might cycle to work, he said.
Ritner said the company is contemplating building additional multifamily projects downtown.
KRK currently isn’t receiving property tax abatements to renovate the apartments. But the incentives are a potential factor in the future plans, he said.
Daily News reporter Emily Goodykoontz contributed.