The Kenai Penisula Borough: optimism high for region.

• Author: Barbour, Tracy
• Position: Regional Focus

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The Kenai Peninsula extends geographically from Southcentral Alaska between Cook Inlet and Prince William Sound; the Kenai Peninsula Borough stretches across Cook Inlet to the west from Beluga and Tyonek to Katmai and beyond. With its breathtaking glaciers, expansive parks, mountains, volcanoes and rivers, residents and visitors enjoy some of the best sightseeing, sport fishing and recreational activities in the state, which compliment the region's abundant natural resources. Although this article details business aspects of the four largest communities--Kenai, Soldotna, Homer and Seward--every community in the region helps make it another one of Alaska's best places to be.

Mixed Economy

The region has a mixed economy dominated by government, oil and gas, leisure and hospitality, health care, retail, fishing and construction. "We have a very diverse economy that helps us ride out the ups and downs," Kenai Peninsula Borough Mayor Mike Navarre says. Lately, there have been more ups than downs. The borough is seeing positive trends, such as a strong commercial fishing season last year, a steady flow of visitors, and increasing oil and gas exploration.

"We're seeing a lot more activity with the resurgence of oil and gas exploration in Cook Inlet," Navarre says. "There's another rig that's on its way here. For the first time in a long time, we will have two rigs that will be drilling in Cook Inlet."

There's a great deal of support service stimulated by oil and gas exploration. The borough is also seeing more seismic work that will hopefully lead to further expansion of exploration and development. Navarre says he feels the borough has the industries in place to support the increased activity in oil and gas exploration, and he welcomes the growth. "We have a mature economy and a stable population base," he says. "If we have additional oil and gas development, we'll see an expanding economy and lots of opportunities."

Robert Favretto, president of the Alaska Industry Support Alliance Kenai Chapter, is equally optimistic. The high price of oil, the big push for finding natural gas in Cook Inlet, and other resource development activities are having a significant impact on the region's labor force, service companies, hotels and food service businesses. "I don't think I've seen a brighter future because of oil, gas and mining," says Favretto, who has lived in Kenai for 16 years.

Diverse Industries

A diversity of industries helps to enhance the overall health of the region, according to Alaska Department of Labor Economist Alyssa Shanks. She characterizes the economy of the borough as stable, saying, "Things look pretty good when you compare the borough to Alaska and the rest of the nation."

Health care has been leading economic growth on the peninsula for years--a trend that's happening throughout the state and nation. Kenai is looking to build a surgery center that would compete with Soldotna's Central Peninsula Hospital. "The older population is a contributing factor in the continued growth of health care industry," Shanks says.

The peninsula has also experienced significant growth in education, retail, financial services, government and manufacturing. Seafood manufacturing, in particular, was a place of big growth last year, gaining about 300 jobs in the third quarter, according to Shanks.

The commercial real estate market is gaining strength as well. Thanks to the increasing oil exploration activity, the market's been stronger than it's been in several years, according to Fred Braun of Freedom Realty. There's plenty of commercial lease space, but things are getting tighter.

"It's the best thing I've seen here in years, and I've lived here 47 years," Braun says. "It's certainly a very strong outlook for 2012. What we are seeing is a lot of activity for upgrade and remodeling going on for commercial buildings."

In Kenai and Soldotna, it's becoming a challenge for businesses to find available warehouse and shop space. While there is some professional office space available, many companies prefer to...