Alaska’s Commercial Lease Market: Cautious Optimism in Q3

As we move into the second half of 2025, Alaska’s commercial leasing market is showing a noticeable shift. We felt leasing activity begin to cool at the start of Q2, with tenants and investors pulling back slightly. Now, as we enter Q3, there are signs of cautious optimism returning.

At Elevate Commercial, we monitor both national and local market dynamics to help our clients make informed decisions. Here’s how national trends are playing out in Alaska.

National Leasing Trends

Commercial real estate reports from CBRE, NAIOP, and others highlight that the leasing environment is stabilizing, though challenges remain. Key themes include:

• Office: Still the most challenged sector, with elevated vacancies. Yet demand for high-quality, modern space is growing as companies refine their in-office strategies.

• Industrial: After years of historic growth, this sector is normalizing. Vacancy rates are edging upward as new supply outpaces demand.

• Retail: The strongest of the major sectors, retail benefits from limited new construction and steady consumer spending.

Alaska’s Market in Context

Office Space

Locally, the “flight to quality” trend is clear. Businesses want efficient, well-located spaces with modern amenities. Leasing slowed in Q2 as tenants reassessed their needs, but interest is picking up modestly in Q3. Compared to larger U.S. metros, Alaska’s office market - especially in the Mat-Su Valley - is more resilient, thanks to a continued emphasis on in-person work.

Industrial Properties

Alaska’s industrial sector cooled slightly this year but remains fundamentally strong. Demand tied to logistics, shipping, and oil and gas is steady. While national vacancy increases are making some tenants cautious, Alaska’s limited supply and high construction costs help maintain balance.

Retail Leasing

Retail continues to be a bright spot. Vacancy is low, and consumer demand remains consistent. Activity flattened slightly this year, but has held stronger than office and industrial leasing. In Q3, we’re still seeing steady inquiries for well-positioned retail spaces.

What’s Driving the Shift?

The same forces influencing the national market are shaping Alaska:

• Higher interest rates are slowing financing and acquisitions.

• Economic uncertainty has tenants taking a more conservative approach.

• Rising construction and labor costs limit new supply, especially in Alaska’s higher-cost environment.

• Evolving workplace trends continue to pressure the office sector more than others.

Looking Forward

Q2 was marked by caution, but as we move through Q3, there’s renewed stability and cautious optimism in Alaska’s commercial leasing market. Retail continues to perform strongly, industrial is steady, and even office space is showing selective momentum.

👉 At Elevate Commercial, we specialize in helping businesses and investors navigate Alaska’s evolving real estate landscape. Connect with our team to explore opportunities tailored to your goals.