2001 Commercial Real Estate Forecast.

• Author: KANE, ROGER
• Position: Statistical Data Included

Architects, attorneys, real estate agents, builders and property managers were among the 225 people in attendance for the city's 2001 Commercial Real Estate Forecast and none seemed surprised by Real Estate Broker Chad Frampton's proclamation that the already-tight office-real-estate market in Anchorage is bound to get tighter.

A partner at Schwamm & Frampton Real Estate Investment Management, Frampton was but one lecturer to speak at the luncheon on trends, redevelopment, commercial construction and the status of Anchorage's retail properties. He is also a member of the Anchorage chapter of Building Owners and Managers Association International, the group that sponsored the luncheon and whose mission it is to help its members advance the performance of commercial real estate.

In Anchorage, there is about 13 million square feet of office space. Government agencies occupy about 4 million square feet of that space. The remaining space is available for lease and is comprised of 4 million square feet of Class A office space (of which 2 percent is vacant) and 5 million square feet of Class B and Class C space (of which 4 percent is vacant).

Of the roughly 280,000 square feet of available office space in Anchorage, the widest selection is in the 1,000-square-foot to 3,000-square-foot range. Medium-size spaces, between 3,000 square feet and 7,000 square feet, are picked over and large spaces, between 7,000 square feet and 15,000 square feet, are very limited. Extra-large blocks of office space (15,000 square feet and larger) are even harder to come by, although there is less competition for these spaces, Frampton said.

Lease rates vary depending on amenities, classification, lease terms and location, Frampton said. While nothing is carved in stone, Frampton said lessees can expect to pay $1.80 per square foot to $2.50 per square foot for Class A space; $1.35 per square foot to $1.75 per square foot for Class B space; and $.90 per square foot to $1.35 per square foot for Class C space.

These rates may seem costly, but they pale in comparison to the cost of purchasing or constructing office buildings. Existing buildings cost $70 per square foot to $135 per square foot, while construction costs start at $160 per square foot and climb to $225 per square foot.

Construction costs, lease rates and purchase prices of offices depend on external economic factors which are difficult to predict, Frampton said. Some external elements that might cause...