Real estate (Commercial).

• Author: Kruschwitz, Gil
• Position: 2007 Alaska Forecast

2007 is likely to become the year that office and industrial real estate lease rates in Anchorage finally recover to early 1980s level.

Property values and lease rates for office buildings and industrial facilities in Anchorage have been in steady recovery with a noticeable run-up in thelast couple of years. Prices and rates are now 50 percent and more above the pre-melt-down market--but only in absolute dollars.

The consumer price index for Anchorage has increased more than 60 percent in the same period; indicating that the market still has a bit further to go to recover to historic highs in real dollars--even further if one takes into consideration recent spikes in direct costs. Recent rate increases for gas and other utilities and increases in maintenance and remodeling costs directly impact realized-rents and property values.

In 2007, office...