ELLSWORTH, Maine — When home improvement giant Lowe’s closes the chain’s Ellsworth location sometime next month, more than 80 people will be out of work just prior to the holiday season.
But Lowe’s anticipated closure raises another important question for the city: what will happen now to the four-year-old building — comparable in size to two football fields, including end zones — located in a corner of Ellsworth targeted for development of big-box stores?
“It is not the best of times to be selling anything, so it is likely going to be difficult” to find a buyer, said Ellsworth assessor Larry Gardner.
Lowe’s will be vacating the Ellsworth store at a time when many retail chains are slowing their expansion plans due to the struggling economy. The chain closed its Biddeford location earlier this week, and 18 other stores have already been closed or will be in the next month.
Further complicating matters, several other big-box retailers including Walmart, Maine-based Marden’s and Home Depot have moved into new spaces in the same part of Ellsworth in recent years.
Abby Buford, a spokeswoman for North Carolina-based Lowe’s, said it was too early to say what type of long-term arrangements will be made for the Ellsworth property, which the company owns.
“The real estate team we have will start working immediately to try to find buyers for these locations,” Buford said.
Lowe’s opened the 117,600-square-foot retail store in Ellsworth in January 2008, which economists now say is about the time that the current recession began. Less than four years later, Lowe’s appears to be cutting its losses and closing 20 of what the company has called “underperforming” stores.
The store’s closure will have a variety of impacts on the city, most notably the loss of roughly 80 workers plus tax revenues from sales. With a total assessed value of just over $16 million, Lowe’s in Ellsworth paid more than $233,500 in property tax in 2011.
Gardner said Lowe’s is one of the largest property tax payers in the city. Lowe’s will continue to owe property taxes on the land, the building and all equipment or fixtures as long the company owns the property. And because store inventory is not included in property tax assessments, it would not make a difference if the store is vacant.
But Gardner said that Lowe’s, after vacating the store, could seek a tax abatement from the city to reflect the lower market value of the property, which, if granted, could result in less taxes flowing into city coffers.
“We’re always concerned when any business is leaving us, but we also understand that during hard times we have to expect these things,” Gardner said. “We will have to go forward, work with Lowe’s and see what they request as far as a tax value.”
Bangor has gone through a similar exercise several times in recent years as big-box retailers vacated buildings, sometimes moving to a different location in town and sometimes leaving the city altogether.
In the past three years, Home Depot, Walmart, Shaw’s, Circuit City and Linens ’N Things have all vacated large stores near the Bangor Mall. In the case of Walmart, Lowe’s tore down the retail space and built an entirely new facility at the site while the former Shaw’s and Linens ’N Things retail spaces have since been filled by new tenants.
The original Home Depot location, however, remains vacant more than three years after the chain moved to a newer, larger facility less than one mile away.
Tanya Pereira, an economic development specialist with Bangor, said large chains often employ both national and local real estate representatives to find a new buyer or tenant for the space. And in some cases, those chains will place restrictions on the property to prohibit a competitor from occupying the space.
“The city doesn’t spend a large amount of time marketing a building like that to big national chains because, typically, the corporate real estate [representatives] have those relationships already,” Pereira said.
Micki Sumpter, executive director of the Ellsworth Area Chamber of Commerce, who also works with the city on economic development efforts, said while Lowe’s corporate real estate office is taking the lead on finding a buyer, both her organization and the city will work with the company however they can to find a new retailer.
But Sumpter said the city and chamber’s top priority is working with Lowe’s as well as Maine Department of Labor officials to offer assistance to those workers who will lose their jobs next month.
That is also Biddeford officials’ top priority as the city and state work to help the more than 100 workers who lost their jobs when Lowe’s abruptly closed its doors there earlier this week.
John Bubier, Biddeford’s city manager, said Lowe’s leases the property, so from a property tax perspective it should not have an impact on the city. Additionally, Bubier said he has heard some retailers have already expressed interest in parts of the space.
“The major issue is the 100-plus people who are going to be out of work,” Bubier said.