Small Offices, Mixed Shop/Office, and Large Leases in Demand in Mat-Su

The state’s gross domestic product, or the total value of all goods produced within the state in a defined period, also recently exceeded the level Alaska held before the 2015 recession.

“Both of those suggest that we finally recovered from all the losses we saw during the recession and the pandemic,” Watson says.

But a troubling detail lurks in those January job figures, Watson says: employment in January shrunk, year over year. “This is the first time that this has happened since the pandemic recovery, that we’ve seen job losses from one year to the next,” Watson says. He’ll be watching to see if it’s just a preliminary data blip or if there’s evidence of contraction. “This would be a pretty troubling sign for the Alaska economy, given the consistency of job growth that we’ve seen over the last four years.”

Troubling, he says, because while Alaska’s economy took a little longer than most other states to recover after the COVID-19 pandemic, it ended up growing at a faster rate than the US economy in 2023, 2024, and part of 2025. However, as the US economy began to slow last year, Alaska’s economy slowed faster.

Part of that is because Alaska ranks high on the list of states most affected by international tariffs—sixth or seventh, Watson says. “Our key sectors, sectors like the seafood industry, the oil and gas industry, the mining industry—they have to import a lot of equipment and commodities in order to run. So, for example, the oil and gas industry imports a lot of drilling equipment from Canada, that equipment has become significantly more expensive and increases their cost of operations,” he explains.

Other states are also seeing job losses. Watson notes, “Alaska’s not alone, though, among the states seeing some employment contraction year over year in January. Our contraction isn’t necessarily as severe as some other US states, but we’re certainly not growing at the rate that some states are seeing job growth.”

An interesting point to Watson’s data: Alaska is now less dependent on the oil industry than it was prior to the 2015 recession.

“In 2015, oil contributed around a third of our state’s GDP. Today, it contributes around a fifth to our state’s GDP,” Watson says. “This is a pretty significant decline. But, as I noted earlier, our state’s GDP and employment is around the same level as it was ten years ago.”

It’s a signal that Alaska’s economy is diversifying. Most of the employment growth in the last decade has come from the healthcare sector—that’s the largest employment driver in the past six years, Watson says, adding 3,500 jobs between 2019 and 2025. Support industries such as transportation, warehousing, and utilities have also grown, and so has the construction sector.

Real Estate Outlook Shows Bright Spots Amid Clouds

Willardson says the commercial real estate industry had a challenging year in 2025 and seems to be headed into 2026 with similar challenges, but there are a few bright spots amid the gray.

Year over year, the number of total active listings, new listings, and closed deals were nearly identical between the first quarters of 2025 and 2026, with slightly fewer closed deals in 2026.

Tariffs imposed in 2025 dampened the commercial real estate market somewhat, she says, but the market saw a small boost during summer, followed by another slowdown as the federal government shut down for forty-three days in the fall, the longest full shutdown in the nation’s history.

Mat-Su has a large proportion of small, family-owned businesses and not as many larger national or international companies, Willardson says. Therefore, “These businesses, when they’re faced with uncertainty, have a hard time making major business decisions—especially things like opening a new business, expanding, relocating, signing a lease,” she says.

With several natural resource projects in the works, from Nova Minerals’ antimony mining endeavor and the possibility of an LNG pipeline from the North Slope to activities related to the West Susitna Access Road project heating up, a lot of infrastructure projects are up in the air. Businesses planning to participate in those projects are coming to the market looking for space to lease, Willardson says.

“These users need shops; they need a place to have physical operations. There are some users who are coming to the market saying, ‘I’m looking for 20,000 to 30,000 square feet,’ and I have to tell them that barely exists in Wasilla,” she laments.

Whether those users build space themselves or find a way to make smaller spaces work for their needs, that incoming demand will compete against existing small business owners in the rented industrial space, she says. “It could put upward pressure on rent, and they are more sensitive to those upward movements in rent than larger users” coming in from the Lower 48 or Canada, she says.

Willardson adds that she believes the second quarter of 2026 will have more closed deals. Mat-Su, with more single-story storefronts and fewer large office buildings, has more flexibility in how that space is used, which she believes is ultimately a boon.

“We’re not in as bad shape as some large cities that have these really tall office buildings that are already sitting vacant due to COVID,” Willardson says.