Market data from the past three years clearly show that our commercial real estate market has reflected the stability of the Anchorage economy, despite the problems of the national economy. They also show that new construction drives up the vacancy rate for older buildings.
Anchorage’s economy has demonstrated amazing stability over the past two decades. We had uninterrupted job growth of 1 to 2 percent a year for 20 straight years until the national recession hit in 2009. While the national economy suffered greatly, Anchorage experienced only a slight decline in 2009, held steady in 2010 and resumed growing in 2011.
The office and retail buildings constructed here over the past 10 years have the newest designs and operating systems, and that has allowed them to out-compete the older buildings. Even though the new buildings’ lease rates are higher, they are more functional for and attractive to tenants, so they gain tenants at the expense of older buildings. Because of this, vacancies shown in the data are concentrated in older buildings.
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