Business/Economy

Supply chain hang-ups are stalling construction projects across Anchorage

601 West 5th Avenue, construction, office building, downtown

The skeletal frame of the former Key Bank Plaza has loomed in downtown Anchorage for months, a more than $40 million remodel on hold. Shipments of the glass curtains to cover the nine-story building have long been delayed.

In Girdwood, the large Nordic spa at the Alyeska Resort is finally close to opening, months after originally planned because it couldn’t get doors and other materials in time.

They’re among the projects across the Anchorage area that have been beset by snarls in the global supply chain, leading to delays in many cases and creative workarounds that have boosted construction costs.

Smaller projects have fared better because they require fewer specialized materials, said Todd Madison, the Seattle developer behind the newly opened Starbucks near the intersection of DeBarr and Muldoon roads.

They also can get more of their windows and other parts from the U.S., avoiding Asian manufacturers where the global supply chain woes have often started during the pandemic.

The Starbucks was completed on time, Madison said. But it required special steps and higher costs to keep it on track, such as ordering extra-large steel beams because the smaller, more affordable sizes were not available on time.

“The key is to think outside the box and be flexible,” Madison said. “That holds true for projects of any size. But the ability to be flexible is probably not as great with larger projects.”

601 West 5th Avenue, construction, office building, downtown

The remodel of the former Key Bank Plaza along Fifth Avenue, one of the biggest construction projects in Anchorage, is awaiting the “unitized curtain-wall system” of exterior glass, said Neil Bhargava, senior project manager with Neeser Construction.

The glass originates in China, he said. It’s shipped to Bangkok to be converted into panels, pre-fabricated for installation.

From there, they cross the Pacific Ocean to the port in Tacoma, Washington. Before heading to Alaska, they need to be transferred from international to domestic operations, Bhargava said.

The production of the panels was delayed due to complications from the pandemic, he said. Next, the containers to house the panels on ships were not available.

“It’s about 550 pieces” to ship, he said.

To top it off, the cost of containers has tripled, to about $14,000 a container, he said.

Much of the glass is sitting in Bangkok. But the first of about 25 containers has made it to Tacoma. Others are scheduled to arrive there soon, he said.

“I hope most of the material will be here by the end of January,” he said.

Exactly when everything will reach Alaska is unclear. The project still awaits the last containers and bookings.

The building remodel was originally set for completion by year’s end.

It’s now set for July, Bhargava said.

[Supply shortages in Alaska continue, forcing retailers to stock up on goods and hope for the best]

The delays are hobbling economic activity across Alaska, driving up project costs and keeping crews waiting in some cases, said Bill Popp, president of the Anchorage Economic Development Corp.

“I don’t think there’s a construction project or remodel of any kind right now that’s not dealing with some kind of supply chain issue,” Popp said. “It’s a real challenge for businesses across the board to find the things they need.”

Another major project, the $15 million Nordic spa at Alyeska, was expected to open in summer.

It hasn’t opened yet. Officials say that will happen soon, perhaps early next year.

The project has faced a variety of challenges getting materials, but it has what it needs now, said Larry Daniels, the resort’s senior project manager.

Numerous interior doors and frames have arrived after long delays, he said. Finding spray-foam insulation in Alaska was another complication.

“Doors weren’t the only thing that made it difficult,” he said. “Getting many things here was a challenge.”

[Strained supply chains squeezing Alaska business owners]

Vitus Energy is trying to open two new gas stations, replacing old Shell stations, said Justin Charon, chief executive of the Anchorage-based company.

It had trouble getting refrigeration systems for the convenience stores on time, stalling plans about two months, he said.

The systems are made of parts from multiple locations, creating numerous opportunities for delays, Charon said.

All kinds of materials have been snagged in the disrupted supply chain.

“Getting things here has been excruciatingly painful,” he said. “Everything is more expensive and it’s taking longer to get.”

Charon expects at least one of the gas stations to open sometime this month, probably the one at the Tudor Road and Arctic Boulevard intersection.

[Anchorage airport pitches a new shipping option through Alaska to help ease West Coast bottlenecks]

Aloft Hotel, James Gephardt, construction, hotel
Aloft Hotel, Marc Villegas, construction, hotel

The $37 million construction of the four-story Aloft Hotel at the corner of West 36th Avenue and C Street has stayed on schedule, after an initial decision to temporarily halt development last year when cruise ships to Alaska first canceled, said Anton Villacorta, project manager with JL Properties.

Staying on track this year has taken a mix of innovation and, at times, higher shipping costs, Villacorta said. The construction team has worked closely with vendors to keep track of orders and find alternatives if needed.

“It’s super challenging, but it keeps thing interesting,” he said. “I think you have to be an optimist nowadays. I guess the alternative is to hide under a blanket.”

Windows that were delayed have recently arrived, and most are installed. Without the windows, the recent cold snap made things difficult for craftsmen working inside the building, he said.

Villacorta has paid more to get some items, including furniture and lighting fixtures, shipped to Alaska quickly.

“You can take your pick,” he said. “At some point, I’ve had to expedite something.”

“I think we’re still tracking on budget, but I’m cautiously optimistic,” he said.

Aloft Hotel, construction, hotel, wallpaper

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or alex@adn.com.

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