Portland seeing nearly $540 million development explosion, but office space vacancies still high

This image was released by property management and development firm East Brown Cow, depicting how the group's proposed Canal Plaza Hotel would appear on Portland's Fore Street at night.
East Brown Cow | BDN
This image was released by property management and development firm East Brown Cow, depicting how the group's proposed Canal Plaza Hotel would appear on Portland's Fore Street at night.
By Seth Koenig, BDN Staff
Posted Nov. 04, 2013, at 8:48 p.m.

PORTLAND, Maine — Maine’s largest city is in the midst of a nearly $540 million development boom, and could still see an increase of more than 100,000 new visitors each year starting next summer, according to an economic development report delivered to members of the Portland City Council Monday night.

“I’m not aware of any other community in Maine that has that kind of investment going on in this short a period of time,” Portland Economic Development Director Gregory Mitchell told five members of the council during a sparsely attended workshop Monday.

Mitchell said early expectations are that the return of passenger ferry service from Portland to Nova Scotia, as is planned next summer, will bring between 80,000 and 100,000 tourists to the city each year.

City Manager Mark Rees added that city marketing and outreach efforts will hopefully help cruise ship traffic bounce back from this year’s total of 59 ship visits and just more than 74,000 passengers to 2010-2011 highs of 85 ships and between 80,000 and 90,000 passengers.

But while the vast majority of the news delivered to councilors was bright, there remained room for improvement.

Mitchell said the city still struggles with high office space vacancies, with just more than 10 percent of offices in the city vacant. He said to spur private investment in new office space in the city, that vacancy rate will need to drop to below 5 percent.

City Councilor Kevin Donoghue also pointed out that while housing development is booming, it’s nearly all either high-end housing or tax subsidized, low-income housing. He said the city must focus on better public transportation systems to help accommodate the development of “middle-level” housing.

Mayor Michael Brennan and councilor Ed Suslovic both also noted a shift in the council’s tax increment financing — more often known by the acronym TIF — tendencies from tax deals that primarily benefit developers to those that route revenues back into city infrastructure needs.

Municipalities can use TIF designations to give new property tax payments from a lot back to the developer building there, or to keep more of the new property tax payments for the city, and Brennan said the council plans to lean toward the latter strategy in coming years.

Mitchell told the council in the Monday night workshop that the city is seeing nearly $400 million in public and private projects recently built or currently under construction, while another $138 million in development is in the planning stages.

“We have almost $550 million in projects that are either under development or have been approved,” summed up Brennan.

Included in that total are four new hotels scheduled to open by the end of 2014, as well as at least five housing complexes featuring 224 units recently completed and at least four more housing projects lined up to break ground.

Among the highest profile private projects in the works are the mixed-use $105 million Thompson’s Point development — which will feature an event center, restaurant and sports medicine lab, among other things — and the two-phase, four-tower Midtown project in Bayside that is proposed to ultimately include as much as 90,000 square feet of retail space and 520 apartments.

Phase I of the Midtown project, which would also include a 700-space parking garage, is estimated to cost $38 million, while the second phase would be worth $50 million.

Publicly funded development included in the totals was the $33 million in renovations to the Cumberland County Civic Center.

http://bangordailynews.com/2013/11/04/news/portland/portland-seeing-nearly-540-million-development-explosion-but-office-space-vacancies-still-high/ printed on August 21, 2014