An employee of Sibley Transportation Inc. of Bangor watches a truck back in toward the warehouse to pick up goods ready for transportation on Jan. 21, 2022. The company wants to buy or lease warehouse space in the Bangor area, but the tight industrial market may force the company to build more space instead. Credit: Sawyer Loftus / BDN

Bangor is poised for a rebirth of industrial construction, with the vacancy rate for existing buildings below 1 percent because demand for warehousing is rising alongside adult-use marijuana cultivation space.

The critical need for industrial and flexible space in the Bangor area is driving companies to build new space and increasing sales of vacant lots for the first time in a long time, Tanya Emery, Bangor’s director of community and economic development, told a real estate conference on Thursday. Many existing spaces date to the 1970s.

“Zoning is being expanded in shopping areas for light industrial use,” she said. “But there are limited opportunities for industrial space without new construction.”

It is part of a trend that reached Bangor later than other areas of Maine. Greater Portland, Brunswick and Topsham and the Lewiston-Auburn areas are also seeing new construction and escalating lease and purchase prices for industrial space. That segment of the real estate market has not been affected by the pandemic, with cannabis operations and demand for warehouse storage emerging as two big factors eating up space.

“There’s seemingly no amount that cannabis companies won’t pay to get real estate,” Justin Lamontagne, a broker at The Dunham Group, said.

Marcus Sibley is the President of Sibley Transportation Inc. of Bangor. His company stores and transports goods all over the country for customers. Credit: Sawyer Lofrus / BDN

Sibley Transportation Inc. of Bangor is looking to add another warehouse to the four encompassing 250,000 square feet that it already owns or leases in the city, including the Galt Block Warehouse Co. building on Miller Street, which it purchased last year. The company stores a variety of goods, including paper for mills.

If an existing warehouse became available, it likely wouldn’t fit Sibley’s storage needs because many industrial properties are older and the ceilings are too low for the goods it stores, said President Marcus Sibley, who is now considering building from scratch.

“Marijuana manufacturers have taken up every available square foot of space in greater Bangor,” said Sibley, who is the fourth generation running the trucking and warehouse company. 

But marijuana companies can operate in places with lower ceilings, said David Hughes, an industrial real estate broker with Epstein Commercial Real Estate in Bangor.

He did not have estimates for the total amount of space held by marijuana companies in the Bangor area, but state license records list several companies with cultivation facilities on the outskirts of the city on Hildreth Street near Hermon and Bomarc Road close to Glenburn.

A truck backs in at Sibley Transportation Inc. of Bangor to load up goods on Friday, Jan. 21, 2022. Credit: Sawyer Loftus / BDN

Increased warehouse space demand in Bangor started around 2017, with St. Croix Tissue in Baileyville using hundreds of thousands of square feet and the recent demand by marijuana companies, Hughes said. There also is more demand to store materials for infrastructure projects and solar farms.

The industrial vacancy rate in Bangor, Brewer, Hampden and Hermon fell by half from 10 percent in 2014 to 5 percent in 2017, then to less than 2 percent by 2020 and less than 1 percent now.

While investors are building industrial space in other markets to lease, they would need to get $11 to $13 per square foot from lessees in Bangor to make their investment pay off. That is happening in Portland and Lewiston-Auburn, but it is not taking place in Bangor yet, he said.

But owners who build to use the structure are taking on new construction. One example is HVAC wholesaler Johnstone Supply, which is building a 30,000-square-foot warehouse in the Hampden Business and Commerce Park.

A big area of need is for smaller industrial space of 5,000 square feet or less. Hughes said that at least a dozen businesses that wanted to move to the Bangor area contacted him during the pandemic, but he had no space to show them.

The situation is not much better for larger spaces, causing him to watch carefully when an occupant is at the end of their lease.

“I feel like I’m playing musical chairs,” Hughes said. “I’m filling space before it’s vacant.”