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• Author: Richardson, Jeffrey
• Position: Alaska's commercial real estate industry - Industry Overview

While retail real estate is booming statewide, office and industrial sectors, particularly in Anchorage, are less robust.

To many in Alaska's commercial real estate industry, the proverbial cup definitely looks half empty, rather than half full. Fresh memories of recession and the present reality of only modest recovery in most sectors of the economy are the leading causes of wariness among leasing agents, property managers and others who monitor the state's commercial properties.

Commercial real estate typically includes office buildings, retail space, industrial sites and multifamily residential rental properties. The primary indicators for the industry are occupancy rates, rent levels and the volume of sublease space available in the market. These numbers, which at best are usually estimates, can fluctuate several times within the space of a year, or even a few months.

There's been good news and bad news from the commercial real estate sector in Anchorage, where the market is characterized by a confusing variety of trends and new developments that make it difficult to know whether to celebrate or despair. The economy remains flat; commercial rents are not what they used to be, but they're holding fairly steady; and occupancy is high. But an explosion of construction in retail space by several major discount chains is creating uncertainties, and some observers are skeptical of new downtown developments.

In Fairbanks, which is toasting recent and upcoming economic gains related to military expansion and development of the Fort Knox gold mine, the commercial market's prospects are brighter. The same is true in Juneau, which currently boasts healthy office and retail space markets, and may even be poised for significant new construction if pending developments in the mineral industry receive go-aheads.

Problems & Promise. Despite the scarcity of reliable statistics for measuring Anchorage commercial market activity, many industry observers agree that the man with the best numbers is Ken Kincaid, a commercial appraiser and Anchorage manager for Shorett & Riely. The Seattle-based firm has been doing Alaskan appraisals since 1964.

Kincaid's best estimates put the total office building inventory in Anchorage at 8 million square feet (excluding property dedicated to military, medical and banking purposes) and the retail inventory at approximately 7 million square feet.

According to Norm Rokeberg, an associate broker with Jack White Co., the commercial real estate market in Anchorage is "surprisingly robust" considering the slowness of the recovery in Alaska, the national recession and the extent of bank failures.

Although Rokeberg is doubtful, several observers estimate office occupancy at approximately 90 percent. "Generally, the market has been improving over the last two years," notes Bernd Hoffman, owner of Hoffman Commercial Inc. "Both office and retail rents were on the upswing last year. To some extent that's leveled off. In 1992, we can definitely see a flattening of the economy."

And that's something to cheer about, points out Jeff Thon of Pacific Tower Properties. "We cry the blues...