The Green Sheet Anchorage's Tight Commercial Real Estate Market.

• Author: CUTLER, DEBBIE
• Position: Brief Article

If you're looking for blocks of premium office space in downtown Anchorage, chances are you aren't going to find it. In fact, there isn't a lot of Class A office space available in most of Anchorage.

"There's hardly any office space of larger size; it's beyond tight," said Chris Stephens, CCIM, a commercial real estate broker and partner with Bond, Stephens & Johnson Commercial Real Estate Services and an Anchorage Daily News columnist. "The market, over the last several years, has slowly filled up."

Stephens said especially difficult to find are large blocks of Class A space-5,000 square feet to 10,000 square feet or more. As a result, rent increases are likely, he said.

Currently, Class A space leases for approximately $1.75 to $2.25 per square foot per month. Class A space is premium space, usually that found in a modem glass and steel high-rise, in an excellent location. All amenities, including 5-day janitorial service, are included in rent. The Frontier Building in midtown Anchorage is a Class A building.

Class B space leases for approximately $1.25 to $1.75 per square foot per month. Class B space is the type typically found in a two-to three-story, older building. It's good quality space, but may lack modern architecture and amenities. The 9-story First National Bank building on 5th Avenue and G Street, built after the '64 earthquake, is a class B building.

Class C space leases for less than $1.25 per square foot. Class C space is typically found in industrial areas or is in a building that hasn't been remodeled in years. This type of space usually does not come with five-day janitorial service or other amenities.

"There's usually not much demand for large blocks of Class C space," said Stephens. "It's generally for Class A or B space."

Ken Kincaid, owner of Kincaid & Riely LLC, said the market for office space has been tight for all classes of real estate for about four years. "It's feeling much tighter than a year ago, although numbers don't show a change," he added.

The market is perceived as being tighter because there is little going on economically to possibly open up office space. In the past, there were layoffs at BP Exploration (Alaska) Inc. and Arco Alaska Inc., which made the market feel more fluid. The opening up of space in the Frontier Building, due to the State of Alaska moving offices, also gave the sense of more space being available...