Experts: Incremental, steady growth in Maine commercial real estate for 2012

Posted Jan. 26, 2012, at 2:24 p.m.
Last modified Jan. 26, 2012, at 6:24 p.m.

PORTLAND, Maine — The real estate market in Maine’s major metropolitan areas stabilized in 2011, and that trend should continue into 2012, experts reported Thursday at the annual Real Estate Forecast Conference.

More than 500 people gathered for the conference, held at the Holiday Inn by the Bay in downtown Portland. The morning started with an address by Gov. Paul LePage, who spoke about the need to lower energy costs in Maine, among other topics. Karen Rich of Cardente Real Estate spoke on the southern Maine retail estate market and Bev Uhlenhake of Epstein Commercial Real Estate talked about what’s happening in the Bangor area.

Charles Colgan, an economist with the University of Southern Maine’s Muskie School, gave a recap of his recent overall economic project for the state. He said he expected Maine’s housing market to slowly recover through 2012, picking up speed toward the end of the year and into 2013.

Uhlenhake noted that the industrial real estate market is holding steady in the Bangor region, with vacancy rates increasing slightly in 2011, hitting 10.4 percent, up from 8.7 percent in 2009. There are positive moves in that market, she said. Lemforder left 175,000 square feet vacant in Brewer when they left in 2010, she said, and today 150,000 square feet of that space is filled.

Looking at Bangor area office space, Uhlenhake said there was 3.1 million square feet of existing space and about 28 percent is medical office space. The vacancy rates are stable, at 9.2 percent in downtown Bangor in 2009 and 9.5 percent in 2011. Medical office space was particularly tight, Uhlenhake noted.

The Bangor area has a surprising amount of retail space at 6.1 million square feet. Bangor has a huge market draw, with many consumers driving hours to get to the area from rural Maine and Canada.

“The only reason we can support this is because people come from far and wide to shop in Bangor, to be in Bangor,” said Uhlenhake.

Roughly 3.1 million square feet of that retail space is in the Bangor Mall area. In 2011, there was a retail vacancy rate of 8.7 percent, down from 9.7 percent in 2009. A good piece of that vacancy is the empty Home Depot building, she said.

A number of big box stores that were vacant have been filled, she said, with new entrants including Christmas Tree Shops, Books-a-Million, Lowe’s and Big Lots. While there has been little interest in recent years, national chains have begun showing an interest in the market again, she said.

There was concern in the market for smaller retailers in the nonmall area, along Hammond and Union streets, for instance, Uhlenhake said. The economy has been hard on many of them.

“We’re really hoping the economy rebounds soon, because we’re not sure if they’ll be able to make it,” said Uhlenhake.

She also spoke about the growth and potential for the waterfront area, led by investments in Hollywood Casino and the new arena. Many properties on Main Street aren’t seeing their highest and best use, she said, and are ripe for redevelopment. And the city continues to seek a hotel developer for the area, she said.

“If you haven’t been to Bangor and seen what’s happening on the waterfront, I suggest you get out your GPS, figure out how to hit 95 north and come visit us,” she said.

Looking forward, Uhlenhake said bankers are telling her this January was much busier than January 2011, with businesses seeking loans to expand or add employees. Economic development officers are seeing more people moving ahead with plans for business. And Epstein predicts incremental growth in the market, though significant speculative building is a few years off.

In Greater Portland, Cardente’s Rich said, there was 6.3 million square feet of retail at the beginning of 2011, with 532,000 square feet vacant. At the end of the year, there was 6.4 million in total inventory, with 400,000 square feet vacant.

New franchises have moved into the area, including Five Guys Burgers, Elevation Burger, Urban Outfitters, J.Jill, Buffalo Wild Wings, Aveda, Books-a-Million and others, she noted.

Rich said that for 2012, she expects to see several new retail projects starting, and some underperforming big box stores may face closure. Chains such as Dollar Store, Marden’s, Renys and Goodwill will likely continue to expand, and lease and sale pricing will probably hold steady, Rich said.

“I believe that the worst of times are behind us,” she said.

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