Commercial real estate: no boom, no bust.

• Author: Gerhart, Clifford
• Position: Alaska - Industry Overview

Although different segments of the market vary, the Last Frontier's commercial real estate market is adjusting to a new condition - stability.

Alaska's commercial real estate market seems to have taken a breather this year. The big-box retail invasion is over, and most observers don't see a lot of activity in office space. The market chugs along on smaller deals. Developers seem to be waiting for more demand pressure before they build.

Ken Kincaid, owner of the Anchorage-based real estate appraisal firm Kincaid & Reily, says the state's real estate market has been uncharacteristically stable for three years, without its trademark booms and busts. "There's not going to be a lot of change in the next 12 months. Alaska is so used to moving at 80 miles an hour, that it's strange to be moving at the city speed limit," he says.

"Think about it. The population of Anchorage is at an all-time high. You'd think everybody would be ecstatic."

Kincaid says different segments of the economy affect different parts of the state. "Gold mining means a lot to Fairbanks and Juneau, but not to the rest of the state. Oil is the only thing that touches the whole economy."

Kincaid says that although the big-box retail invasion seems to be past (Office Max was the only 1995 entry), he's still waiting for the fallout. Some observers had predicted that Alaska in general and Anchorage in particular, were "overstored," and feared a long list of bankruptcies. "Where's the big shakeout we were supposed to have? At first they said everybody was waiting to see how Christmas went, then the summer season, now I guess we're waiting for Christmas again."

Tom Roberts, a broker with Tom Roberts Realty, reports a similar situation in Fairbanks. "There hasn't been a huge shakeout, and it hasn't killed too many of the local guys. Sav-U-More recently closed; they were trying to do the same kind of thing as Sam's Club."

Chris Stephens, an owner and partner at Bond, Stephens & Johnson in Anchorage, predicts a shakeout is coming, but that it will be more gradual, with businesses leaving as their leases expire.

Active Anchorage

Stephens says 1996 started slow, but picked up in March and April. "It looks active," he says.

According to Stephens, there's been an increase in the vacancy rate for office space, but that's leveled off and some of the space has been absorbed. Premium or Class A office space in Anchorage costs from $1.55 to $1.85 per square foot, with other space (Class B)...