Oil, Anchorage and the Market
By: Brandon Spoerhase, CCIM
Anchorage has enjoyed being one of the top performing markets in the nation during the last ten years,
it has been characterized by low overall vacancy rates and the reliable trends of positive absorption.
The market did not feel the effects of the recession in 2008, however the rippling that reached the
market was consumer confidence and it was shaken, by the wake and impacts of friends and family in
the lower 48. The end of 2015 and the first half of this year is a different story as low prices have now
delivered a blow to confidence and longtime citizens of the Anchorage, and looks to stall the growth
that Anchorage has enjoyed for the last 27 years.
Almost a daily reminder for Alaskans is delivered via the media of the States approximate 4 Billion dollar
budget short fall that has attracted in depth media coverage locally and headlines attention on the
national level. In the first half of 2015 the oil and gas industry through layoffs and reduced hours has
taken over a 350 Million dollar reduction in wages. The impact of this is seen immediately in published
corporate announcements and as a result office space flooding the market. At this time there is over
500,000 sq. ft. of office space available for lease. Even with the with the excess of space coming to the
market we have not yet experienced building owners taking the step of lowering or deflating the face
rents and softening the market to attract new tenants.
That being said the commercial market is less volatile than the residential housing market, which is up
64% in listings over 2015. While we did experience a downturn in tenants leasing space as the oil prices
dropped, good news just might be on the horizon as new class A office buildings are receiving Letters of
Intent to lease space after the stagnant market.
Low interest rates (AIDEA 3.84%) have enticed building owners to refinance their commercial portfolios,
and that is the majority of closings that are happening at the title companies.
Brandon Spoerhase, CCIM
Commercial Real Estate, LLC
3401 Denali Street, Ste. 202
Anchorage, AK 99503
(907) 244-2292 Tel
brandon@bsialaska.com
www.bsialaska.com