Alaska Economic Forecast

January 7, 2012

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BOMA

I attended a BOMA, (Business Owners and Managers Association), meeting at the Anchorage Hilton yesterday at the invitation of Charlene Moss. Although it seemed to focus more on Anchorage than Alaska there was still plenty of useful information.

If you don’t want to read this whole article you can go away with this: most of the speakers thought 2012 would be like 2011 only better.

Neil Fried was the first speaker and he did focus mostly on Alaska. Currently Alaska is #2 in job growth behind North Dakota. Although Alaska is better off than most of the lower 48 there are some clouds on the horizon. Mostly Freid is worried about a reduction in dollars from the federal government and a possible oil production decrease. Commodity prices are high and look like they will stay high for awhile. That is good for all sectors of Alaska natural resource extraction, from copper to gold to coal, so there will continue to be a demand for natural resource production.

Brian Meissner

Brian Meissner discussed commercial construction and rental which both saw a slight uptick this last year. Military spending is down with very little on the horizon for JBER, (Joint Base Elmendorf-Richardson). There will be a mini-boom in commercial construction on the Kenai this year compared to recent history. He discussed the Port of Anchorage noting that there is still quite a lot of construction to do there.
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Brandon Walker

Brandon Walker presented information on the retail rental market. There is currently a 5% vacancy rate in Anchorage which is very healthy compared to rates nationwide. There are many rumors for national retail chains to come into the area, but so far they are mostly rumors. The going rate for retail space is $0,93 a foot while the construction costs for similar space is about $1.25 a foot or higher so we will not see much construction in this sector unless its for an owner occupant.

Ted Jensen was the last speaker focusing on office space mostly in Anchorage. While the vacancy rate is a healthy 6% compared to 16% nationwide, it appears that the supply will slightly increase next year with diminishing demand. This doesn’t bode well for investors wanting to get into this market. As with the others however, he does not expect any large movements in the economy, things appear to be pretty stable.

Every one of these speakers were careful to point out the perils of predicting the future. Alaska is particularly unpredictable because it’s such a small economy that can turn on a dime. A large oil discovery, or a problem with the pipeline could cause a boom or a bust. And anyway, as Yogi Berra said, “it’s tough to make predictions, especially about the future”.

Alaska Economic Forecast

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