Anchorage is on track to enjoy one of its biggest growth spurts in history, thanks to the legacy of huge capital budgets, increased investor confidence, and an end to the uncertainty that surrounded the rewrite of the municipal land-use code, market observers say.
Site work has begun on a number of projects from the Anchorage Bowl to Eklutna, including a valet parking lot for airport travelers that will look like a giant airplane, a 114-room Marriot Hotel in midtown, and a four-story office building off C Street.
And other efforts are on the drawing board that could sustain the "mini-boom" beyond 2013, including an eight-story tower planned by Cook Inlet Regional Inc. and a master-planned community in Eklutna consisting of some 1,500 homes, officials said.
The growth will help ease pent-up demand for quality office space and housing that has forced up the cost of mortgages and rents, said Bill Popp, chief executive of the Anchorage Economic Development Commission.
"It's been a very strong year thanks to an amazing alignment of factors," he said, noting that four new restaurants are planned for downtown, including a Hard Rock Café on E Street.
The increased activity has led to a noticeable jump in the estimated value of projects permitted by the municipality this year, an economic gauge that could exceed $600 million for the first time in six years. If the projects move forward as planned, 2013 could turn out to be one of the city's biggest years ever.
Permitted valuations reached $800 million in 2006. That was the second biggest year in history. In 1983, the 13-story BP building in midtown got the green light, boosting that year's permitted valuations to $1 billion.
Another good year was 2007 with at $625 million. But then the recession struck and investors in Anchorage clamped down, even as the economy continued to hum, what with increased oil taxes and the rising price of crude flushing billions of extra dollars into the state treasury.
In the five-year stretch between 2008 and 2012, the municipality permitted $437 million worth of projects a year, on average. The low point was $395 million in 2010.
But things slowly began improving – and this year, it's going gangbusters. With three months left in 2013, projects permitted and waiting to be permitted stand at $502 million and growing.
"We are far ahead of where we've been the last several years," said Sharen Walsh, building official for the municipality.
The growth has put stress on the planning, permitting and inspection groups, which shrunk from more than 60 employees before the recession to a little more than 30 today, she said. "We've had a lot of overtime and people are working really hard," she said.
Buildings on the rise include:
• A parking garage and office building that will look like a giant DC-6, the World War II era transport plane. With the plane's tail reaching 80 feet off the ground, it will provide the first valet parking for those using the Ted Stevens Anchorage International Airport, said architect Mark Ivy. The estimated $20 million project, under construction at the corner of Spenard and International Airport roads, will sport office space in the fuselage. Meanwhile, attendants will park cars on the wings and below the wings, starting by year's end, according to plans. With a wingspan one-and-a-half football fields long, it will be an iconic building, Ivy said. Three of the plane's four propellers will spin to generate wind power and small planes from the Alaska Aviation Heritage Museum will be located on the grounds around the mother ship. The project is spearheaded by landowner TDX, the Alaska Native village corporation for the Bering Sea Island of St. Paul, where TDX has built a power plant that relies partly on wind turbines.
• A four-story, 114-room Marriot hotel on East 32nd Avenue, not far from the Sears Mall, a building permitted for $11 million. Foundation work has begun on the site, which will be called Marriot Town Place Suites, said an official with the general contractor, Richardson Van Leeuwen Construction in Utah.
• JL Properties of Anchorage is building a $19 million, four-story office building at the corner of C Street and International Airport Road. Foundation work is underway, and the building will ultimately be 98,000 square feet.
• Cook Inlet Housing Corp.'s Coronado Park Senior Village, a 56-unit, four-story building offering rental units for those 55 or older in Eagle River. The facility was permitted for $11 million this year.
• Natural Pantry organic food store is moving from its spot at University Center to snazzy new digs at the corner of 36th Avenue and A Street. At 45,000 square feet, the $22 million building, which was permitted in 2012, will boast a juice and smoothie bar, a self-serve café, a free-range meat deli, a pizza oven and a gluten-free kitchen where salads, scones and other goodies will be made, said co-owner Vikki Solberg. The staff at the family-owned store, which has been around nearly 40 years, will increase from 30 to about 100.
• And several other big projects are underway, adding tens of millions of dollars in permitted valuations this year. They include the state's first Bass Pro Shops and Cabela's, a new building for Alaska Blood Bank, and Matanuska Electric Association's state-of-the-art $350 million power plant in Eklutna.
• Medical facilities are also expanding, with Providence Alaska planning a new transitional care facility estimated at $11 million, Alaska Native Tribal Health Consortium planning a new parking garage at $15 million, and Alaska Regional Hospital is planning upgrades permitted at $15 million. Also, the University of Alaska Anchorage has permitted an engineering building for an estimated value of $18 million. Also going up at UAA is the massive $109 million sports arena, a project permitted last year.
Key to the growth is a healthy economy with unemployment at 4.8 percent, said Popp. Increased oil field work, both for Cook Inlet and Prudhoe Bay, have helped keep the economy buzzing and created growth in the business and professional services sector. Also strong are the tourism, retail and manufacturing sectors, and an international airport that is the fourth largest cargo airport in the world, said Popp.
In addition, the large capital budgets of years past are still reverberating through the economy, helping spur government construction, said Popp.
Shaun Debenham, vice president of the Building Owners and Managers Association of Anchorage, said that during the slowdown, investors didn't want to move forward with new projects because of long-term uncertainty over possibly radical changes to the city's land-use code.
"People were waiting because no one knew what the new code would be, and we saw a backlog in projects," he said.
That concern was one reason Target in South Anchorage became isolated, even though restaurants and retail outlets had originally hoped to move in around the store. "No one else could build around them because it looked like the rewrite wouldn't allow retail or office use on Industrial-2 land," said Debenham, whose group represents businesses in the commercial and real estate sector.
But that area was ultimately exempted from the rule. And Title 21, approved in February, was not nearly as restrictive as some had feared. The results have been "fantastic," Debenham said. "More or less what got passed in Title 21 was good for Anchorage, and now we're seeing a little mini-boom in construction."
Another concern developers had with the proposed code was that buildings in midtown would be restricted to 45 feet in height, he said. But that proposal was removed for the area. The issue came into play last week, when Cook Inlet Regional Inc. announced it would build an eight-story building along the New Seward Highway on the site once occupied by the Fireweed Theater.
CIRI, the Alaska Native regional corporation for much of Southcentral, announced the project on Wednesday, and said it would be done building a year from now. The company has not yet applied for a municipal building permit, but has filled municipal officials in on its plans, said Walsh.
Growth is also strong outside Anchorage proper. Eklutna Inc., an Alaska Native village corporation and Anchorage's largest landowner with some 90,000 acres, is finishing up its Powder Ridge project, a large residential development in the community north of Eagle River.
Of 308 lots, only four have not been sold. Homes have been built on the others, said Greg McDonald, broker and general manager of Eklutna Real Estate Services, a subsidiary of Eklutna.
"It's a very active market," he said, driven by population growth and a lack of available homes throughout the Anchorage area.
Next up for Eklutna Inc., is a 405-acre development called Powder Reserve, also in Eklutna. The multiyear project will contain about 1,500 homes, with commercial space and a designated school site. The company plans to apply for permitting from the municipality later this year for the project's first phase, with 36 lots.
Eklutna also has other commercial and industrial projects in the pipeline, including a large Three Bears store in north Birchwood that will be sort of like a mini-Costco, offering a variety of products. It's set to open next June, said McDonald.
"It's an exciting time," he said.
Contact Alex DeMarban at alex(at)alaskadispatch.com