ANNUAL SURVEY OF TOURISM RETAIL VACANCIES SIGNALS CONTINUED WEAKNESS IN DOWNTOWN TOURISM RETAIL.  While major tour companies announce record bookings that could see the 2022 season the best to date, we’ve completed our annual survey of retail spaces downtown, which signals continued weakness in this sector.  From Third Street to the north, at Seward south to the tram, there are 17 spaces that are vacant, for lease and for sale.  This number is up 25% from a year ago.  These walk-up storefront spaces range in size from 450 square feet to nearly 10,000 sf.  Smaller retailers, which typically occupy less than 1200 square feet of space, report that it is getting difficult to predict how much inventory to stock for this season, with the lingering impact of Covid 19 and continued supply chain issues.  As landlords try to find new tenants to fill those spaces,  retailers depending on cruise ship traffic are likely to want shorter lease terms without annual increases.

RESIDENTIAL INVENTORY CONTINUES TO SHRINK WHILE INCOME PROPERTY LISTINGS VIRTUALLY DISAPPEAR.  Residential brokers and agents will continue to compete for fewer and fewer listings to sell as inventory continues to dwindle.  While some hope for the annual “bump” in listings that typically come on the market by June, one broker remarked: “this year is different as we start the new year with fewer than 50 listings and more than 90 agents competing for those listings.”  We’ve noted that income properties larger than duplexes are now rare to come to market if at all.  This trend began in 2016 and speeded up during COVID as less new construction of multi-family units was being added to the market.  This is causing stress for residential agents and their clients who continue to compete for properties.

MULTIPLE OFFERS AND ESCALATOR CLAUSES ARE NOW SHOWING UP IN COMMERCIAL TRANSACTIONS.  Six years ago, we observed our first commercial transaction that contained an escalator clause.  The transaction, involving a prized downtown lot off Skagway’s Broadway, sold to an agent representing himself in the transaction.  The lot sold to that Broker for a sale price just $1,000 higher than the offer of a competing buyer who was not represented.  That same year, another vacant lot in Skagway sold through a residential brokerage in Juneau—that broker was also familiar with the effectiveness of escalator clauses.  Today, we’re seeing multiple offers on many listings in the up to $4,000,000 price range.  Just as with residential contracts, proof of funds, and an ability to secure commercial financing are often the conditions of a sale that make sellers comfortable in this market.

OPTIONS FOR RELOCATING CITY HALL PROVE EXPENSIVE AND REQUIRE ACCESS TO PARKING.  Four options for locating City Hall have been vetted by staff and the results appear to be inconclusive.  So far, the public comments on a new location seem to have favored the old Walmart location in lemon creek, although that property is hampered by an expensive land lease, and the costs to convert the building to office may translate to higher costs than anticipated.  The other two locations– one in the Willoughby District, and the other, a plan to build on top of the Transit Center Parking garage — will both require expensive addition of structured parking—either below grade at the Whittier Street location, or above the current transit center garage.  A fourth option could leave City Hall where it is, which would require expensive renovation without addressing the need for more parking or to improve its poor access by the public.

Meanwhile, on February 10  Bicknell Inc. made a presentation to the Public Works and Engineering Committee, reminding them of a 4.2 acre site adjacent to the airport which has just been rezoned by the planning commission and assembly to General commercial.  The site can accommodate construction of a 40,000 square foot building, leaving ample land area for over an acre of parking.   It faces east adjacent to protected wetlands, and south with views of Gastineau Channel and Douglas Island.