JUST WHEN YOU THOUGHT THAT THE HOUSING CRISIS WOULD CONTINUE INTO 2018, the City and Borough estimates that all residential vacancies total at least 5.5% of the available apartment inventory. This is in large part due to the fact that since 2014, over 1,000 housing units have been constructed including single family, duplex, multiplex properties and tax credit housing projects in the Borough.   Another reason why vacancy us up, is that with all of the new construction, older units are not able to compete with newer inventory.  What is surprising, however, is that while vacancy is up, rental asking prices still seem to be “stuck” at all time highs. If you surf the web, you’ll see that a good portion of the vacancies now appear to be older properties in less desirable locations.

WITH VACANCIES OF MULTI FAMILY AT ALL TIME HIGHs, ONE WOULD EXPECT TO SEE MORE MULTI FAMILY UNITS FOR SALE. But just as surprising as the vacancy rate is, there is very little in the way of multi-family properties now on the market. Appraisers tell us that one “hidden” explanation for this has been the increasing number of multi family units that have been purchased over the past five years by seasonal/tourism operators who need to house their employees. This involves not only retail workers, but those involved in shoreside tour operations, air taxis and other seasonal service providers.

A RETAIL SHIFT IS EVIDENT IN LOCAL MALLS WITH THE RECENT RECEIVERSHIP STATUS OF THE NUGGET MALL. Not only is this “limbo” status making existing tenants nervous, its forcing retailers to look at other options. This is not good timing in view of the challenges business people now face due to the uncertainty of the State budget, and it remains to be seen if additional fallout is to be expected in the Juneau retail sector. What is important to keep in mind, is that nationwide, malls are under pressure to re-design or repurpose themselves into “walk-up” retail locations which are preferred by national franchises. Recent examples of this are the additions of Petco and Office Max that are now located at the Nugget.   Important to Juneau, however, is the continued survival of small businesses, which have chosen to locate in both Juneau malls. 

WAREHOUSE INVENTORY CONTINUES TO BE ALMOST NON-EXISTANT, PRIMARILY DUE TO THE CONTINUED CONSTRUCTION OF BOAT CONDOS. Yes, “Boat condos, pretty much constitute our warehouse Market,” according to Carlton Smith, whose remarks were noted at a recent meeting of Juneau bankers. The reason for this is that our smaller regional hub supports very few large companies who would normally demand larger warehouse spaces, and the draw for Boat Condos continues to be for the relocation of small contractors and business who require both office and storage/warehousing in the same location. And in industrial zones, an apartment can be included. There is a shortage of larger spaces, which will be addressed by new construction once more industrial land becomes available.

LOOKING FOR INDUSTRIAL OR GENERAL COMMERCIALLY ZONED LAND? The pickings are slim, and the outlook is for continued shortages for businesses to grow. Just a handful of sites are now zoned this way, and the demand for sites—particularly from one half acre to two acres is strong. Asking rates have leveled out, and now range from $16.00 to $18.00 psf depending on location. Since 2015, we’ve seen values for Industrial and General Commercial merge to become similar, where previously industrial land sold for much less. Lemon Creek and the Airport area continue to be the preferred locations for each.