Alaskans are doing their best to navigate the uncertainties of weaknesses in the state economy, and the potential impacts of the Covid 19 virus which are arriving simultaneously on our doorsteps.  An unfortunate double whammy for Alaska.

Since we weathered the dramatic downturn in the State’s economy in the mid-eighties, and then again with the financial crisis in 2008, we are often asked of late:  “what is your crystal ball now for commercial real estate?”  The answer to this question of course varies from market to market.  In the eighties downturn, we saw the greatest resilience—and quickest return of values here in Juneau.  Anchorage was to recover next, and last was Fairbanks.

Rather than speculate on answers to these questions now, we’d rather emphasize what we know now about the current market conditions that impact Commercial Real Estate values.

In Juneau, with the exception of Retail, nearly all categories of Commercial property are in scarce supply.  Industrial, Commercial, light commercial land and multi-family property are in short supply and in some cases, non-existant.

There is pent-up demand for Industrially zoned land, because larger parcels of an acre or more have not been available for nearly two decades.  Smaller industrial parcels in areas like the rock dump have been recently trading at price levels of $20 psf and higher. 

Recently developer Bicknell obtained approval on a 15 lot industrial subdivision at the Airport with more than one larger parcel committed already to an investor.  Remaining parcels are expected to be purchased by regional credit tenant/ owners, local investors,  and airport  support  related service companies.   Watch for details on this new development in the next 30 days.

Commercial and Light Commercial parcels are nearly non-existant and often sell “off market” between private parties.

In the last 24 months, multi-family inventory has virtually dried up to a point where only an occasional duplex or four-plex unit comes to market.  Assuming that the residential market will begin experiencing higher vacancy rates, the current lack of inventory may begin to change by the end of this summer.

Interest rates are at historic lows, led by AIDEA rates, AHFC, and other conventional lenders. 

Commercial appraisers and lenders are busy with refinancing existing debt, and to underwrite new loans.

Sourcing commercial real estate in Juneau has always been challenging, and locating affordable commercial land has required the skill and tenacity of talented and patient developers to gain the necessary approvals from local government We see the present economic conditions in Juneau presenting even more challenges for new development projects to be spawned and to grow.  Exceptions to this are the long term investors and corporations with vested financial interests in Southeast Alaska.  These are the investors who have no plans to leave the region.