TOURISM RETAIL VACANCIES DOWN—AS TOURSHIP PASSENGER VOLUME INCREASES IN 2019
A noticeable trend is apparent along South Franklin Street—The number of retail vacancies is down considerably over last year, which is reflective of higher passenger volume which will approach 1,200 visitors in 2019. One exception, however are the large first floor vacancies in the Triangle Building, once home to the Jewel Box Jewelry outlet, and Annie Kails fine gifts. The Jewel Box space has been vacant for nearly a year, and Kaills has found a new home up Seward Street in the Goldstein Building, the former location of Capital Office Supply. Lease rates remain stable, and are anticipated to see increases again, if passenger projections are accurate for 2020.
OFFICE SPACE SHORTAGES LOOMING?
The supply of contiguous spaces over 5,000 square feet has left several potential tenants with fewer and fewer choices as they look at relocate their offices. This is primarily due to the fact that in the past decade, no larger office spaces have come on the market or been repurposed to address the need for newer, well located space. This lack of new inventory is evident at the same time that the State of Alaska attempted to re-position and downsize many of its lease spaces with private owners in Juneau. Unless we see a new project on the horizon that can accommodate these tenants, some users will have to downsize existing spaces and possibly consider relocating to space in the malls, which is still plentiful.
FURTHER BAD NEWS FOR AREA RETAILERS?
Just when we thought that the impact of internet sales would abate, and our two malls would stabilize, the State Budget proposal before the legislature has chilled an already uncertain economic outlook for the State. And its being felt in Juneau. Small businesses are taking notice, and retailers continue to evaluate their locations. Meanwhile, vacancies in both of the Malls in Juneau continue at record levels with little pressure from tenants wanting new space. And little pressure from new retailers locating in the Capital City. In addition to those pressures, there is concern that with looming cuts to the ferry system, freight costs have the potential to increase the cost of all goods destined to Juneau, and outbound shipments to some of the smaller communities in Northern Southeast Alaska as well.
SHORTAGE OF COMMERCIAL LAND CONTINUES IN ALL LOCATIONS
For businesses seeking to expand on their sites or to build anew, there remains an acute shortage of “Commercially zoned land,” for the classifications of Light commercial, Commercial, and Industrial parcels. And that’s areawide—from downtown to Lemon Creek—to the Airport area– and the Valley. This situation remains a concern for two reasons—First, when a developer can find a site, the costs of building are extremely high as a function of freight, the cost of materials and the ever-increasing cost of construction labor. Second, since the 2008 Financial downturn, banks have implemented new lending standards which are far more stringent than before. The solution to this could take place with the following events: More commercial ground can be subdivided and made available by private owners, and the City and Borough has a limited ability to dispose of some parcels provided that access is not limited by wetlands or steep contours.