From a slew of new restaurants and outlet malls to a national beauty products retailer and an indoor artisan market, commercial real estate remains in high demand in Anchorage, according to presenters at the monthly luncheon of the Building Owners & Managers Association of Anchorage.
Overshadowing the booming retail sector, however, is the massive oil price slide. And while the nationwide economic recovery will continue to drive Anchorage's retail sector, some beleaguered box stores are looking to downsize and lease out extra space.
But the main message for more than 450 real estate, construction, architecture and building management professionals who attended the association meeting Friday at the Hilton Anchorage was that things could be worse and the effects of the oil price crash on retail might not be immediate.
According to data presented by Ted Jensen, a managing member of commercial real estate advisory group Reliant LLC, the city's commercial vacancy rates are as low as a third of the national average.
"In terms of demand and the oil price slide, businesses haven't had a chance to respond fully," Jensen said. "There is a lot of nervousness out there, but you don't just close your business down if oil prices drop."
According to Lottie Michael Sr., vice president of Commercial Real Estate Alaska, some of the new businesses expected to resize, break ground or open in 2015 are:
• An "artisan market" in the old Spenard La Mex restaurant building. It will include a restaurant, a Moose's Tooth pizza shop, Kaladi Brothers Coffee shop and a mix of specialty artist and food sales stores.
• Ulta Beauty, a new Men's Wearhouse and Pier 1 Imports are planned for Tikahtnu Commons off the Glenn Highway.
• A 35,000-square-foot H&M clothing store and collection of outlet retailers at the Dimond Center mall.
• Additional downtown locations for Flattop Pizza and Pool and Humpy's Alehouse.
• A Southwestern-style restaurant, Blue Coyote Bar & Grill, will open near Sixth Avenue and E Street downtown.
• A new South Anchorage location for Snow City Cafe.
• A new restaurant, Baked Alaska Alehouse, at the Glenn Square Mall in Mountain View.
• A new downtown location for local restaurant Tequila Kitchen.
• A new 120-room hotel near Northway Mall in East Anchorage.
• An office, residential and retail center is being considered by Neeser Construction Inc. for a site near Fourth Avenue and I Street.
• Another mixed-use center is being planned for land near Artillery Road and Mausel Street in Eagle River.
• An outlet mall being designed by Cook Inlet Region Inc. is slated for a site at 11000 C St. in South Anchorage.
• Nordstrom Rack will take over part of the current Sears store on Northern Lights Boulevard.
• At the Jan. 9 meeting of the Building Owners and Managers Association of Anchorage, Commercial Real Estate Alaska senior vice president Lottie Michael said that Home Depot was planning to downsize its stores nationally, including Alaska. Michael said that Home Depot was looking to lease out the space created by the downsizing. On Jan. 12, Home Depot said it has no plans to reduce the size of its stores, in Alaska, or anywhere else. "That is just completely false," said Home Depot Senior Specialist of Public Relations, Meghan Basinger. "There are none (plans to downsize stores) whatsoever, and I have confirmed that with our real estate team this morning. "
Michael said the Anchorage retail sector will continue to see growth, driven by a surging U.S. economy.
"Nationally, retailers are expecting expansion," Michael said. "And because they are driving our (retail economy), I think we are going to have a really big year in the retail market in 2015."
Jensen said Anchorage, with its 5 percent commercial real estate vacancy rate, and Alaska are in a better position to handle the current oil price downturn than they were in 1986 -- when both commercial and residential real estate prices crashed -- because interest rates are historically low, the state is more economically diverse and the state government has money in the bank.
Overall, the biggest factors in the availability and cost of commercial real estate in Anchorage are oil prices and government spending, both of which are declining. Neal Fried, an economist with the Alaska Department of Labor and Workforce Development, said as many as 800 Anchorage jobs could be cut by 2016.
Another concern is the lack of available housing in Anchorage.
"In 1983, that one year, Anchorage issued 9,000 residential building permits," Fried said. "It has taken the last 10 years to do another 9,000."
Lack of affordable housing is a major drain on the economy as it discourages new workers from entering the city's economy, according to Tyler Robinson, senior manager of Cook Inlet Housing Authority. Robinson cited a 2014 survey from the Anchorage Economic Development Corp. that showed half of respondents said the city's housing market was affecting their ability to attract workers.
Besides changing existing zoning regulations to allow for higher-density housing, Robinson said, Anchorage should look to other communities that are finding innovative ways to attract workers.
"Putting a brewpub is known as economic development in some communities, because it is attracting a young workforce," Robinson said.
Clarification: After publication of this story, an official with Home Depot said the company has no plans to downsize any Alaska store.