Public Construction Leads Anchorage into the New Year.

• Author: McCRACKEN, JON

For the 11th consecutive year, Anchorage residents and businesses are enjoying positive employment growth. In 1999, Anchorage added another 2,500 new jobs to the economy-a 2.0 percent increase over 1998, despite a downturn in the oil patch. Contributing to the 11-year growth streak has been consistent, though modest, expansion in the construction industry. In Anchorage, construction employment grew by 180 new jobs during 1999--a 2.6 percent increase over 1998. As of October 1999, construction valuation reported by the Municipality of Anchorage was $429 million. Compared to the same time in 1998, construction activity is off by only $39 million--an 8.9 percent reduction. This is the second-strongest showing since 1984.

What's in store for 2000? More of the same. Anchorage Economic Development Corp. forecasts construction activity to slow slightly compared to 1999. For 2000, look for total valuation of construction to finish at or near $456 million--a 4.2 percent decline from 1999. Nonetheless, AEDC anticipates construction employment will grow by another 220 jobs--a 3.0 percent increase over 1999. Under normal circumstances, the two estimates would correspond, but several projects are not included in the permit values recorded by the municipality, or were recorded in 1999 and are planned for construction in 2000. For example, the new Anchorage jail was permitted in September of 1999 for $36 million, but the jail will be built in 2000. The activity report also does not capture construction of the Northstar oil modules built at the Northstar Stevedore Terminal. Combined, both projects are likely to employ approximately 450 construction workers.

Residential Construction

Residential construction for 1999 is likely to finish out the year at a respectable $225 million, the third strongest since 1985. The downturn in residential construction was due in part to higher interest rates and a slower Anchorage economy. The Federal Reserve raised interest rates three times in 1999, causing the 30-year mortgage rate to climb above 7 percent and, occasionally, 8 percent. The Anchorage economy grew at a slower rate in 1999 compared to 1998, largely due to the downturn in the state oil patch. Anchorage suffered from layoffs by both Arco Alaska Inc. and BP Exploration (Alaska) Inc., along with oil service companies such as Natchiq and Alaska Petroleum Services. As of October 1999, Anchorage had 734 new single family homes, compared to 1,068 built during the same period in 1998. Overall, residential construction activity totaled $211 million as of October, a decline of $60 million from the same time in 1998. For 2000, AEDC estimates the residential construction will continue to decrease due to rising...