Building sector maintains gains from 2013

  • By ELWOOD BREHMER Morris News Service-Alaska
  • Saturday, June 28, 2014 8:39pm
  • News

Crews are busy across Alaska as the summer building season is in full swing.

With the exception of Fairbanks, year-to-date building activity in the state’s largest cities has been comparable to the first months of 2013, a rebound year for construction in much of Alaska when employment returned to its pre-recession peak.

In the Municipality of Anchorage, more than $301.6 million worth of residential, commercial and government property building permits were applied for through May 31, nearly identical to the $302.8 million in permits through May of last year. Of that, roughly $160 million was commercial permit applications, compared to $187.8 million for the same period of 2013.

While the value of commercial applications in Anchorage declined so far this year, the number of permits has increased by 11 percent from 457 to 508 for new construction and existing alterations or additions combined.

The municipality received building permit applications valued at about $240 million through the first five months of 2012, making the last two years a 25 percent improvement. Activity bottomed out in recent years in 2010 when permits totaling $144 million were applied for through the spring.

One of the bigger projects in Anchorage, Cook Inlet Region Inc.’s new home, the Fireweed Business Center, is ahead of schedule, CIRI real estate project director Chad Nugent said.

“We took advantage of last year’s Indian fall,” to get early digging work done, he said.

The eight-story, 110,000 square-foot glass-encased office complex valued at $23.8 million according to its building permit should be move-in ready by early spring 2015, according to Nugent.

CIRI will occupy about 40 percent of the building at the intersection of Fireweed Lane and the Seward Highway, leaving about 60,000 square feet of class A office space available for lease, he said.

The CIRI office development, along with other office construction in Anchorage — namely JL Properties’ 100,000 square-foot office building at C Street and International Airport Road — could help alleviate a tight commercial real estate market in the city.

The class A vacancy rate in Anchorage was at 4.3 percent at the end of 2013 and expected to remain that way until the new developments are on the market, according to commercial brokers in the city.

Elsewhere in Southcentral, 18 commercial permits valued at $8.23 million were applied for in Palmer through May 31. The largest application was for a $4 million Matanuska-Susitna Borough project.

Through May, 45 building permits were sought in the City of Palmer totaling about $11 million. In 2013, the same period had 24 applications for just less than $6 million.

The Matanuska-Susitna Borough and the City of Wasilla do not track building permit valuations.

A slow start to the year in Kenai has put permit activity well off the pace of 2013. As of June 7, there had been 31 combined residential and commercial permits applied for totaling $2.25 million. The commercial portion of that was 12 permits for $786,000 worth of construction.

In 2013, Kenai had accepted 44 total permits valued at more than $4.57 million, of which 20 were commercial work for an estimated $1.71 million. A single $600,000 project at the Homer Electric Association headquarters in Kenai contributed to the valuation spike last year.

Just down the road in Soldotna, city building official Ralph Linn wrote in a report that 2014 so far has been a steady building year for the City of Soldotna.

By June 23, a total of 41 permits valued at $24.27 million had been applied for. Comparatively, $9.47 million worth of permits were sought in all of 2013. Expansion at the Kenai Peninsula College and the city library in 2012 pushed permit values beyond $25 million that year, up from just more than $9 million in 2011.

This year, planned expansion at the borough’s Central Peninsula Hospital, remodels of the Kenai Peninsula College library and nursing buildings, and a remodel of Soldotna’s city hall are driving permit values, according to Linn.

Permit activity in Fairbanks was down for the first five months of 2014 when compared to 2013. There were 36 commercial permit applications valued at $11.38 million in the Golden Heart City through May 31, less than half of the estimated permit value of $24.8 million applied for last year.

Residential construction in Fairbanks continued to slow, a trend that has established itself in recent years due in part to high home heating costs, local real estate agents have said. Through May 31, residential building permits valued at $862,000 had been applied for among 31 permits.

For the full year of 2007, the near-term peak of residential construction in Fairbanks, 981 residential construction permits were sought.

Bigger budget projects in Juneau have pushed the value of commercial work to nearly $39 million on 97 permit applications as of June 23, up from $26.7 million on 98 permits for the same time in 2013.

Combined residential and commercial construction has remained fairly steady in the capital city since a low of 385 permits for $26.4 million of work in 2011 year-to-date. In 2012, those figures rebounded to 398 permits valued at $56.5 million; last year it was 402 permits for $40.8 million, and so far in 2014 it has been 414 permits for an estimated value of $51.3 million.

Elwood Brehmer can be reached at

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