Midtown Anchorage faces challenges to remaining a major retail center. It's seeing competition from retail development in South and north Anchorage, and has strong impediments to attracting new development.
At the same time, Midtown has a big advantage over its competition: Midtown's central location in the Anchorage Bowl. Major roadways provide excellent access and high-volume traffic; Northern Lights and Benson boulevards, Tudor Road, the Seward Highway, A and C streets and Minnesota Drive all crisscross Midtown.
Anchorage is Balkanized as far as shopping goes. Folks will not drive across town to shop. Those in the north do not drive to the south and visa versa. But Midtown is easily accessible to both.
Yet when retailers look for sites in Midtown, they find the two major retail roadways, Tudor Road and the Northern Lights/Benson corridor, problematic. On Tudor Road, only a few large sites are available and the highway median hinders access. And although Tudor Road has high volume with some great locations at lighted intersections, the traffic flow between those intersections is like that of a race track. Traffic passing through to get somewhere else is less likely to turn off. Plus, the corners are already developed.
The Northern Lights/Benson corridor has few undeveloped lots and the lots are small, generally 7,500 square feet, and generally with different ownership of adjacent lots. So several lots would have to be combined to construct a retail building. Existing buildings are often small, old and antiquated and not workable for today's retailers.
This means, for instance, that to develop a 10,000-square-foot store on Northern Lights or Benson, the retailer would have to assemble four or five lots, get the necessary municipal approvals to create one lot from the assemblage, buy out the existing leases and tear down the existing buildings. Or significantly remodel an existing building and, again, buy out existing leases.
In either case, that would result in a new, high-quality building in the midst of old buildings instead of other higher quality stores -- something known as co-tenancy -- to help draw customer traffic to their store.
It used to be that if a retailer was going to have one store in Anchorage, the best location to serve the entire market was Midtown. But as Anchorage has grown, the population has increased enough in north and South Anchorage to support retail development in those areas -- Tikahtnu Commons and Glenn Square in north Anchorage and the continued development in South Anchorage, most recently with Target and now Cabela's.
So now retailers, instead of planning only one store in Anchorage, see opportunities for multiple stores. Walgreen's is a good example. And if the Anchorage market can support only two stores for a particular company, and it appears that is the case for many retailers, then stores are opened in South and north Anchorage. This is why we first saw retailers going to South Anchorage and then opening an additional store in north Anchorage as retail centers were developed.
We will see continued growth in those markets and particularly so in South Anchorage, with more development coming because of strong demographics and available land.
Midtown will continue to be a strong retail presence because of its existing retail and central location. Over time, new development will gradually replace the old buildings. But Midtown is not the dominant retail area it once was.
Chris Stephens, CCIM, is a local associate broker specializing in commercial and investment real estate. His column appears every month in the Daily News.
Chris Stephens
Real Estate