The pandemic economy did not cause most Maine businesses to shed office space as employees stayed home to work, with some starting to sign longer leases while cementing their future strategies, real estate experts said.
Unlike the erratic but booming residential real estate market in which prices have continued to soar, the commercial market has remained mostly stable during the pandemic despite early concerns that businesses could deemphasize in-person work well into the future.
“There’s been a misconception that when people went remote they gave up their office space,” Carol Epstein, president and owner of Epstein Commercial Real Estate in Bangor, said. “They didn’t.”
The Bangor market has been particularly tight, while greater Portland has been stable in both lease prices and occupancy rates as businesses gain footing, poll employees and map out office plans. That is a big change from early in the pandemic, when businesses were not sure how long they would have to keep their doors closed.
The pandemic highlighted the importance of face-to-face collaboration in an office, Epstein said, but she expects it will take time for the market to play out as businesses hone their at-work strategies.
“There is way less ‘I don’t know’ happening than one year ago,” Christopher Stephenson, vice president of operations at The Boulos Co. in Portland, said. “Offices were on hold, but now people are renewing leases.”
He said the majority of his agency’s clients kept their space. In a Boulos survey in October, 64 percent of businesses said they planned to hold onto office space, while 15 percent planned to decrease it and 5 percent said they would increase it.
Some 74 percent of respondents said they have reopened offices for in-person work and half of workers are back full-time. Those numbers were lower in companies with more than 100 employees, with only 33 percent of respondents saying they are back in the office full-time.
Many businesses that renewed leases were hesitant and initially signed one-year leases. As more certainty surrounded office working plans in the past six months, businesses started once again to sign typical five- to 10-year leases.
Some are expanding or consolidating into a larger location. Sebago Technics, an engineering and land development company that acquired two other companies in the past year, recently leased an additional 6,000 square feet of office space in South Portland. It has been a Boulos tenant since 2012.
The Maine Department of Inland Fisheries & Wildlife last month consolidated its offices into the 43,000-square-foot former Maine State Housing Authority office in Augusta, which it leased for five years.
The shift from businesses having no idea what they would do to now deciding whether and how they will open their office has been dramatic, Stephenson said.
“We’ve come a long way in a pretty short amount of time,” he said.