Once a symbol of ‘growth and prosperity,’ the mostly empty former BP building in Anchorage remains in limbo

A 14-floor building that was once the heart of the oil industry in Anchorage now sits largely empty, two years after oil giant BP sold its assets to Hilcorp Alaska and left the state.

For some, the former BP headquarters’ many unlit floors and partly barricaded parking lot highlight the decline in the state’s oil industry and the impact the COVID-19 pandemic had on commercial property.

What the future holds for the tower at 900 E. Benson Blvd. could be anyone’s guess.

It was built in 1985 to accommodate 800 employees. Today, less than 200 people work there. Just three floors are occupied.

Oil Search, a subsidiary of Australian energy company Santos, has about 150 people working on two floors, a spokeswoman said. The company is pursuing development of a promising oil field on Alaska’s North Slope.

Habitat for Humanity is just below on the fourth floor, with a small number of employees, said executive director Peter Taylor. The organization’s rent is inexpensive, under generous lease terms that began with BP and continue with Hilcorp, he said.

Taylor began working at Habitat for Humanity in February 2020, shortly before Hilcorp said it would not move into the building.

“I arrived when the building was a bumping, happening place,” Taylor said. “There was a big restaurant operating, a gym you could go to, and a whole buzzing atmosphere.”

But the COVID-19 pandemic’s onset in March 2020 shut everything down. The restaurant and gym soon closed and did not reopen, and the building largely emptied out, he said.

“It’s still very pleasant here, as much as any ghost town can be,” Taylor said.

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An engineering and environmental consulting firm called ERM Alaska also occupies the fourth floor. About 18 employees have worked from home during the pandemic, said Jeff Leety, an ERM partner. He said the workers will return in early May.

The tower, with a stepped roofline and partially granite facade, is described as the “most elegant of the oil-era” office buildings in Anchorage in the book “Buildings of Alaska” by historian Alison K. Hoagland.

Before BP sold its oil fields to Hilcorp, it sold the building to a giant asset management firm. It’s owned by Oak Street Real Estate Capital of Chicago, which was recently acquired by Blue Owl in New York City. Representatives for Blue Owl did not return emails and phone calls seeking comment.

When Hilcorp took over BP’s Alaska oil operations in 2020, it reduced the workforce by hundreds of employees. It also acquired the building’s lease from BP, but chose not to occupy it.

Hilcorp, known as a thrifty oil producer, kept its employee offices housed at the JL Tower building at 3800 Centerpoint Drive in Midtown.

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Last week, a security guard buzzed a reporter into the former BP building to explore the brightly lit atrium but nowhere else. It was mostly noiseless, except for the steps of a few people leaving the elevator. Cherry-panel walls gleamed in the sunlight. Ornamental plants and trees surrounded the centerpiece, a large black couch sunken into the floor, encircling an Alaska Native carving.

Hilcorp did not answer questions for this story, including regarding future plans at the building, such as whether it’s looking to sublease to new tenants.

However, the Houston, Texas-based company managed to get a steep reduction in the building’s value starting in 2021, lowering the property taxes.

Hilcorp, on behalf of the building owner, appealed the valuation set by the Municipality of Anchorage, said Ben Morookian with the property appraisal office.

The appraisal office reviewed a variety of factors, including market rents and vacancy rates, and determined that the building warranted a lower value, Morookian said. Hilcorp also hired a company to measure the building with laser technology, which led to a smaller size for the building of 265,000 square feet, another factor supporting a lower value, he said.

The city lowered the value significantly, from $63 million to about $35 million. That lowered the overall property value, which includes the land, from $78 million to $50 million.

The tax bill was reduced by $400,000, to about $900,000 last year.

The size of the reduction was unusual for this type of building, Morookian said. The assessed value might have been a bit high when BP occupied it, he said.

Apartments or a hotel?

When the tower was built in the mid-1980s, oil production in Alaska was growing and would soon peak at 2 million barrels daily, about four times today’s levels, said Frank Baker, a former spokesman for Sohio Alaska Petroleum. Sohio built the tower and later became BP Exploration.

It cost $50 million to build — $144 million in today’s dollars. That’s more than major Anchorage construction projects proposed today, including the $65 million, 12-story hotel and apartment complex downtown.

The new building symbolized the oil company’s commitment to Alaska, Baker said.

It represented “growth and prosperity and optimism for the future,” he said.

Like many other office buildings in Alaska and the U.S., the former BP tower has been hurt by the pandemic, said Bill Popp, president of the Anchorage Economic Development Corp.

Hilcorp took over the lease just as the pandemic was keeping more people home, reducing the demand for office space, he said.

The tower remains a promising asset, he said.

“It’s obviously suffered from the rollback in the oil patch we’ve seen since 2016,” he said.

But if Oil Search decides to aggressively develop its North Slope project, the building could spring back to life with a new era of oil company executives and support staff.

“If that project happens, I expect to see that building to fill up with companies working with Oil Search on that project,” he said.

Observers often suggest that the building could be renovated into a hotel, meeting future demand in Alaska’s growing tourism industry. Others suggest it could become apartments, helping to address the city’s limited housing.

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Such an overhaul — creating individual units with their own plumbing, heating and cooling systems — could be too expensive, Popp and others said, though they said it’s possible the building’s original design could lower that cost.

Ric Marko, a hotel developer who owns Affinity Hospitality in Alaska, said the location is terrific for a hotel. But he’s looked at converting office buildings into hotels multiple times. It hasn’t penciled out. He doesn’t know the possibilities with the former BP building.

“If it sold at the right price, conversion could be sensible,” he said. “But my guess is it’s valued so high as office space that it wouldn’t be sensible.”

Some community leaders like Midtown Anchorage Assembly members Meg Zaletel and Felix Rivera said they’d like to see the building play a larger role in Anchorage.

Zaletel said apartments would help relieve the city’s housing crunch, if such a conversion is economical.

“It seems like a waste when we have real needs for housing in town, but I don’t know, the list price would be very high,” she said. “But it would have an amazing view, it’s well-situated, and it’s on those grounds, which are really quite nice.”

Signs of life

Though the spacious campus is largely dormant, there are new signs of life there.

The two-story former BP Energy Center was donated to the Alaska Community Foundation as a meeting space for community and educational groups. It will open on June 1 after a two-year closure due to the pandemic, said Nina Kemppel, president of the foundation.

And last May, Early Learning Center, a child care provider with two other Anchorage locations, purchased the colorful house-like structure near the tower.

It had been a child care center for BP employees.

After BP sold its assets, co-owner Brian Collier said he was hearing from parents that the program was shutting down.

“I called a real estate agent to see if she could poke around, since it’s so hard to find child care in Anchorage,” Collier said.

It turned out Hilcorp had acquired the structure, and the oil company sold it. The Early Learning Center now serves about 60 children from the broader Anchorage community.

Janet Weiss, the former head of BP in Alaska when the company sold to Hilcorp, said the building has many good memories for her.

She said it had little damage in Alaska’s 7.1 earthquake in November 2018, although it swayed a lot, as designed.

Weiss said she respects Hilcorp’s business decisions in Alaska, including its choice to have employees work elsewhere.

“It doesn’t mean it won’t be occupied again,” said Weiss, who still lives in Anchorage. “It’s well-built and it will be interesting to see what place it takes in our city in the future.”