2018
Greater Portland Market Outlook
2018 GREATER PORTLAND MARKET OUTLOOK
CBRE | The Boulos Company
31
A MESSAGE FROM OUR MANAGING DIRECTOR CBRE | The Boulos Company is pleased to present the 2018 Market Outlook for Greater Portland’s commercial real estate market. We are pleased to present you with this year’s Market Outlook for the State of Maine’s commercial real estate environment. We have focused on the trends and factors influencing our market in 2017 and forecast expectations for 2018. The pace of change continues to gain momentum in our world and Maine’s real estate market will be impacted by market disruptors. Twenty-four-hour news cycles, endless social media posts, emails, and podcasts all vie for consumer attention with predictions about our future. What can we expect in a rural state like Maine? Will we soon have our pizza delivered by drones? Will Amazon take over retail, rendering our malls and downtown shopping districts obsolete? Will the growing telecommuting trend leave our office buildings vacant? Will self-driving cars eliminate the need for parking lots and garages? Will tiny house developments be the new normal? In this publication, we are stepping back and reviewing the fundamentals of our market. We are looking through a lens which is aware of the new trends and disruptive industries, but real-world data should still govern investment and development decisions. Our industrial market is hotter than it’s ever been, unemployment and interest rates remain low, and our multifamily market is experiencing record growth and investment demand. The main factor limiting the velocity of transactions in Capital Markets is a lack of available product. In the office market, as long as firms continue to hire and expand in Portland, the need for office space will increase. New product will be constructed to meet this demand. Due to new construction projects and renovations of existing spaces, lesser-quality buildings will struggle to retain their tenant base, unless owners make necessary investments and improvements.
How long will this strong market last? In all likelihood, we are just past the peak in the market cycle. Now is presumably a good time to sell, as prices have started to soften over the past 12 months. We expect cap rates to flatten over the next year and pricing to stabilize in all sectors. Still, 2018 is expected to be a strong market with solid tenant and investor demand. Given the amount of conflicting information coming at us from every direction, it can be difficult to make informed real estate decisions. We are here to provide consultation and advice based on objective, real market data. While most of us do not have plans of moving into a tiny house any time soon, we are looking forward to having our lunch delivered by drones one day. As the leading firm in Maine’s commercial real estate market, we are continuously making the investment in educating professionals to ensure we are on top of emerging trends and able to advise our clients with their current and upcoming real estate needs. Best of luck throughout the year in 2018.
Yours truly,
Drew Sigfridson, SIOR Managing Director
TABLE OF CONTENTS Office Market Overview Vacancy Rate Summary Downtown Class A Space and Asking Rates Capital Markets Outlook Multifamily Market Spotlight: Restaurants Industrial Market Recap Medical Meets Retail: Medtail Portland - Maine’s Vibrant Growing, City Spotlight: New Developments Regional Market Observations: Augusta, Gardiner & Waterville Regional Market Observations: L/A & Midcoast Maine New England Overview About Us Notes & Credits Brokerage Team
Photo: Corey Templeton
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OFFICE MARKET OVERVIEW
vacant for several years. This one transaction dramatically influenced the suburban market and overall vacancy rate. Another significant suburban transaction was WEX’s lease of 30,000± sf at 30 Darling Avenue in South Portland. As expected, the Westbrook and South Portland/Scarborough submarkets accounted for the majority of the suburban activity in 2017.
By Nate Stevens, Associate Broker
The Greater Portland office market finally surpassed a total market size of 12 million square feet in 2017 in 341 Class A and Class B buildings — due to the addition of several new buildings. Vacancy rates continued to fall for the 8th consecutive year. Overall vacancy decreased to direct rates of 4.41% with a total rate of 4.61% that included subleased space. This is the lowest total vacancy rate we’ve seen since 2002. We had positive net absorption of 364,000± sf, which is considerably more than the previous three years however, this absorption can be attributed to just a few deals. It’s interesting to note that the suburban market out-performed the downtown market for the first time in three years. Downtown Over the past several years, the downtown office market was the key driver behind overall falling vacancy rates, but in 2017 downtown office markets inched up to 6.93%. Even with this slight increase, we still saw a positive net absorption of 14,000± sf due to the Class A market, where we added 42,000± sf at 16 Middle Street. There was lower activity in the Class A market with a slight increase to 3.55% vacancy, but more DOWNTOWN VACANCY RATES importantly, no new direct leases were signed over 14 8,000± sf last year due to CL ASS A CL ASS B the limited availability of 12 space. There were very few 10 spaces for Class A tenants 8 looking for space over 8,000± however, additional 6 product in the pipeline and 4 low absorption could lead to more opportunities in 2 2018. The Class B office 0 vacancy saw a marginal 2012 2013 2014 2015 2016 2017 decline to 9.85% with
2
2018 GREATER PORTLAND MARKET OUTLOOK
CBRE | The Boulos Company
slowed activity over the last 12 months. The largest vacancies in the Class B market remain in the larger office towers in the Monument Square area. Smaller buildings in the historic Old Port area have much lower vacancy rates. The lack of movement overall downtown can be attributed to a lack of supply of Class A office space and a lack of demand in the Class B office space. Suburban As previously mentioned, the suburban market had its largest drop in vacancy in over 10 years with a total rate of 3.41%, similar to the rates we saw in 2005 and 2006, and down from 6.53% in 2016. The suburban market had a positive net absorption of 303,000± sf; due in a large part to Maine Health’s purchase of the 134,000± sf building at One Riverfront Plaza in Westbrook—a property that had been
SUBURBAN VACANCY RATES
14
CL ASS A CL ASS B
12
Medical MEDICAL VACANCY RATES Available medical space remained scarce through 2017 with medical companies behind 14 CL ASS A some of the larger suburban CL ASS B 12 office leases. The overall 10 vacancy rate fell to just 1.57%. Only one vacancy was reported 8 out of the 36 Class A medical 6 buildings in Greater Portland, resulting in some medical 4 practices leasing Class B office 2 buildings and retail buildings. 0 Significant transactions included 2012 2013 2014 2015 2016 2017 Maine Medical Center leasing 19,000± sf at 265 Western Avenue in South Portland, Intermed leasing 24,000± sf across the street at 50 Foden Road, and the sale and occupancy of the10,000± sf building at 117 Auburn Street in Portland.
10
6
In 2017 the total office market increased by 191,500± sf in new construction projects.
4
• 16 Middle Street, Portland, 42,000± sf
8
• 97 Technology Park Drive, Portland, 20,000± sf
2 0
Photo: 97 Technology Park Drive, Portland Source: Scott Simons Architects and Robert Benson Photography
Summary We anticipate additional new space will be introduced to the market in 2018. We also expect vacancy rates, especially in Class A markets, to remain low enough to spur new construction, with several significant projects already underway. Developers recently broke ground on the 100,000± sf WEX headquarters on Hancock Street in downtown Portland and two buildings—totaling 40,000± sf—are under construction at 1945 Congress Street. Another smaller building in downtown Portland is set to break ground shortly, this results in great opportunities for businesses looking to relocate or grow their businesses. In short, 2018 should be another year of steady but limited improvement with no large vacancies on the horizon and several new construction projects coming to fruition.
• 705 US Route One, Yarmouth, 35,000± sf 2012
2013
2014
2015
2016
2017
• 1 Tyler Drive, Yarmouth, 94,500± sf (expansion)
2018 GREATER PORTLAND MARKET OUTLOOK
CBRE | The Boulos Company
3
VACANCY RATES BY SUBMARKET
VACANCY RATE SUMMARY
LOCATION
CLASSIFICATION
Downtown Portland
SUBMARKET SIZE
12.1.2017 Total SF Occupied
ABSORPTION
Suburban Portland
11,563,096
363,486
12.1.2016 Total Occupied
11,199,610
SINCE 2016
FAL MOUTH, CUMBERL AND & YAR MOUTH
2017
PORTL AND DOWNTOWN
Scarborough South Portland
4,335,200
Downtown Portland
WESTBROOK
All Suburban Markets
626,519
Suburban Portland Falmouth, Cumberland, Yarmouth
M AINE M ALL ARE A
Westbrook SUBURBAN PORTL AND
Maine Mall Area
1,881,761
Scarborough , South Portland All Suburban Markets
2,054,193 SC ARBOROUGH
878,826
Medical 1%
2%
3%
4%
5%
6%
7%
MEDIC AL
1,276,792
Medical
51,485
2.62%
63,574
3.17%
14,192
9.95%
229,315
9.85%
8,822
Subtotal
4,335,200
284,288
6.60%
292,889
6.76%
Class A
950,307
8,000
0.89%
12,537
1.32%
-
Class B
931,454
40,654
4.38%
31,959
3.43%
-
1,881,761
48,654
2.67%
44,496
2.36%
-
781,425
2,700
0.41%
12,419
1.59%
-
2018 GREATER PORTLAND MARKET OUTLOOK
CBRE | The Boulos Company
23,014
261,770
10,383
3.97%
19,485
7.44%
-
1,043,195
13,083
1.43%
31,904
3.06%
-
Class A
382,544
134,340
35.12%
-
0.00%
-
Class B
243,975
20,972
8.60%
14,858
6.09%
-
Subtotal
626,519
155,312
24.79%
14,858
2.37%
-
Class A
1,640,903
57,401
3.35%
45,838
2.79%
Class B
413,290
78,135
19.27%
44,397
10.74%
-
2,054,193
135,536
6.40%
90,235
4.39%
-
354,431
9,724
2.74%
9,075
2.56%
-
Class A
1,812
Class B
524,395
54,469
9.94%
19,386
3.70%
-
Subtotal
878,826
64,193
7.11%
28,461
3.24%
-
Class A Suburban Total
4,109,610
212,165
5.30%
79,869
1.94%
Class B Suburban Total
2,374,884
204,613
8.57%
130,085
5.48%
-
Subtotal
6,484,494
416,778
6.53%
209,954
3.24%
-
971,163
4,165
0.45%
10,500
1.08%
-
Class A Class B
1,812
305,629
30,864
9.84%
20,047
6.56%
-
Subtotal
1,276,792
35,029
2.81%
30,547
2.39%
-
Class A Downtown, Suburban & Medical
7,088,141
267,815
3.88%
153,943
2.17%
16,004
Class B Downtown, Suburban & Medical
5,008,345
468,280
9.29%
379,447
7.58%
8,822
12,096,486
736,095
6.17%
533,390
4.41%
-
72,076
0.60%
24,826
0.21%
-
808,171
6.77%
558,216
4.61%
Total Office Space and Vacancy - Direct Lease SUBLEASE SPACE
Totals
4
Sublease '17
232,803
Subtotal
TOTAL VACANCY RATES
Vacancy Rate '17
2,327,832
Class B
Maine Mall Area
Available SF '17
2,007,368
Subtotal
1,043,195
Vacancy Rate '16
Class B
Class A
Westbrook
Available SF '16
Class A
Subtotal
Falmouth, Cumberland Yarmouth
Total Rentable '17
12,096,486
2018 GREATER PORTLAND MARKET OUTLOOK
CBRE | The Boulos Company
5
DOWNTOWN CLASS A SPACE AND ASKING RATES
One Canal Plaza
Two Canal Plaza
Three Canal Plaza
One City Center
Two City Center
145 Commercial Street
254 Commercial Street
511 Congress Street
7 Custom House Street
280 Fore Street
300 Fore Street
54 Marginal Way
63 Marginal Way
84 Marginal Way
16 Middle Street
100 Middle East Tower
100 Middle West Tower
130 Middle Street
One Monument Square
Two Monument Square
25 Pearl Street
27 Pearl Street
One Portland Square
Two Portland Square
TOTALS
Building SF
129,780
44,273
64,495
202,754
26,753
30,400
95,000
118,400
49,600
69,481
61,129
50,989
34,000
102,804
42,154
106,149
99,600
32,000
114,400
119,442
32,000
46,767
190,000
145,000
2,007,368
Available SF
7,706
-
1,675
5,325
-
-
3,369
6,100
-
-
-
-
-
-
16,128
-
4,935
-
14,058
-
-
-
-
4,278
63,574
Price/SF MG
$23.75
-
$23.75
$19.50
-
-
$24.50
$21.50
-
-
-
-
-
-
$24.78
-
$23.00
-
$19.75
-
-
-
-
$26.00
Occupancy
94.06%
100%
97.40%
97.40%
100%
100%
96.45%
94.85%
100%
100%
100%
100%
100%
100%
61.74%
100%
95.05%
100%
87.71%
100%
100%
100%
100%
97.05%
96.83%
7,257
-
-
-
-
-
2,450
4,485
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,192
10
4
6
13
5
3
5
9
5
5
6
5
4
10
5
7
7
4
10
9
3
4
10
7
1970
1972
1980
1984
1985
2000
1900
1974
2000
2004
2007
2002
2007
2008
2017
1986
1986
1981
1973
1980
1989
1971
1987
1990
Sublease Floors Built
6
2018 GREATER PORTLAND MARKET OUTLOOK
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2018 GREATER PORTLAND MARKET OUTLOOK
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7
CAPITAL MARKETS OUTLOOK
2017 CAPITAL MARKETS TRANSACTIONS
By Chris Paszyc, CCIM, SIOR, Broker, Partner BUILDING NAME
Equity markets at historic highs • U.S. equities were up 16.9% in 2017 • REITs were up 2.6% and on average are trading at NAV (Net Asset Value) • Markets remained bullish despite geopolitical uncertainty and economic cycle concerns
Debt markets remained favorable • The 10-year treasury yield was stable at attractive levels • Life Company lending continued to post strong origination activity, accounting for more than 24% of non-agency commercial loan closings in Q2. This level was down from their 38% market share in Q1, but above their 20% share a year ago. • Banks accounted for 18% of loan volume in Q2, compared to 26% in Q1 and almost 50% a year ago • Other lenders made up 28% of real estate lending • CMBS conduits led all other lenders in terms of market share tracked by CBRE Capital Markets. They accounted for 36% of non-agency origination activity in Q2, well above their 16% market share in Q1 and 10% market share a year earlier
Real estate activity has moderated from the 2015 high • YTD 2017 sales were down 7% • REITs were net sellers, while foreign capital was a net buyer. Foreign investors continued to have an appetite for US real estate. However, foreign investors favored large gateway U.S. cities. • Investor appetite is reacting to the changing landscape in commercial real estate
Longer term trends continue to support U.S. real estate • Institutions remain under-deployed to real estate • Foreign capital continues to look to the U.S. • Real estate within alternative investments is capturing more capital • High net worth noticeably targeting commercial real estate investments
CITY
BLDG SF
SALE PRICE
CAP RATE
TYPE
145 Fore Street
Portland
179 Rooms
$53,700,000
DND
Hospitality
Brunswick Landing Portfolio
74 Neptune Drive
Brunswick
407 Units
$45,000,000
7.20%
Multi Family
Anthem Headquarters
2 Gannett Drive
South Portland
217,672
$42,171,294
DND
Office
RiverPlace Apartments
1 River Place
South Portland
136 units
$33,250,000
5.50%
Multi Family
Sunbury Village
955 Ohio Street
Bangor
115 units
$30,500,000
6.10%
Senior Housing
Bangor Savings Bank
280 Fore Street
Portland
69,979
$21,500,000
5.80%
Office
Hathaway Creative Center
10 Water Street
Waterville
236,000
$20,150,000
8.19%
Multi Family / Office
Dead River Company
82 Running Hill Road
South Portland
114,017
$17,900,000
7.36%
Office
Retail transactions were down 32% YOY.
Mallside Plaza
198 Maine Mall Road
South Portland
98,948
$16,500,000
DND
Retail
Multifamily transactions were down 5% YOY. September 2017 volume was down 16% YOY suggesting that there is concern over future trends at current prices.
Augusta Crossing
274 Western Avenue
Augusta
41,235
$12,000,000
6.00%
Retail
Rite Aid
210 Main Street
Waterville
14,673
$11,650,000
5.75%
Retail
Hotel transactions were down 45% YOY. Hotel cap rates have been trending up over the past two years due in part to changes in the quality of what is transacting. Limited service hotels were at a 9.2% cap rates in Q3 2017.
Cumberland Avenue Portfolio
340-380 Cumberland Avenue
Portland
80,485
$8,600,000
7.28%
Mixed
Fore Street Portfolio
Fore and Wharf Streets
Portland
65,000
$7,500,000
8.20%
Retail / Multi Family / Office
Local Trends We expect continued strong demand for investment property statewide. Cap rates were essentially unchanged in most markets and sectors. Large-scale multifamily assets and single-tenanted buildings with “A” credit long-term leases continue to trade in the lowest cap rate range. Similar to 2016, long-term fixed debt and historically low rates were available to investors throughout the year. There also continued to be a steady mix of out-of-state capital and local buyers demanding product throughout the State of Maine.
Gorham Savings Bank
63 Marginal Way
Portland
27,740
$5,400,000
7.80%
Office
740 Broadway
740 Broadway
South Portland
22,152
$4,100,000
DND
Retail
CVS
8 Union Street
Auburn
10,125
$3,500,000
5.00%
Retail
Rite Aid
461 Main Street
Saco
11,739
$3,054,247
6.90%
Retail
75 Darling Avenue
75 Darling Avenue
South Portland
30,000
$2,700,000
8.90%
Office
Park East Apartments
321 Stillwater Avenue
Bangor
40 Units
$2,700,000
8.70%
Apartments
Harvey Building Products
80 Anthony Avenue
Augusta
33,000
$1,900,000
8.19%
Industrial
We had the pleasure of assisting our clients in over $230 million in sale transaction volume in 2017. Nearly $200 million of that volume represented investment transactions. The multifamily sector alone accounted for 42% of total sales transaction volume at over $84 million. The most challenging factor in 2017 continued to be finding enough investment product to satisfy demand. As I write this article, several investment properties are coming to market and we expect that to bring robust activity into the first and possibly second quarter of 2018.
105 Main Street
105 Main Street
Bangor
22 units
$1,875,000
DND
Multi-Family
30 Thomas Drive
30 Thomas Drive
Westbrook
18,693
$1,850,000
DND
Office / Industrial
Central Maine Power
280 Bath Road
Brunswick
25,335
$1,600,000
10.29%
Industrial
Bangor Savings Bank
20 Marginal Way
Portland
0.41 ac
$1,444,444
DND
Land
Dollar General
947 Sokokis Trail
North Waterboro
9,100
$1,287,000
6.95%
Retail
Sector Fundamentals Office transactions were down 18% Year Over Year(YOY). Investors have been more willing to step up to Central Business District office deals in the less pricey non-major Metro locales. Industrial transactions were up 8.2% YOY. Northeast and West markets witnessed a significant cap rate compression in the sector while both cap rates and prices remained flat in other regions over the past few years.
National Trends (source CBRE Capital Advisors)
8
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ADDRESS
Residence Inn
NATIONAL CAPITAL MARKETS YEAR- OVER-YEAR ACTIVITY Office Transactions
Multi-Family Transactions
18%
5%
Industrial Transactions
Retail Transactions
8.2%
32%
Hotel Transactions
45%
*Source: CBRE Capital Markets
Photos: 10 Water Street, Waterville Brunswick Landing,Brunswick 82 Running Hill Road, South Portland 2018 GREATER PORTLAND MARKET OUTLOOK
CBRE | The Boulos Company
9
2017 NOTABLE MULTIFAMILY TRANSACTIONS
By Vince Ciampi, Broker
Units Completed (millions)
Local National Reflecting National trends, the local market experienced a similar change over The National multifamily market experienced little change over the past year and has the past 12 months. Valuations and cap rates remained seemingly unchanged, remained healthy and strong. While the statistical change in vacancy rates and effective however, transaction volume decreased significantly. The peak in demand for rents was minimal year-over-year, both trend in a negative direction. Vacancy rates the past five years and a proportionate amount of inventory hitting the market are trending upward, and effective rents have decreased (both by less than 1%). The resulted in sustained low cap rates and healthy transaction volume. In 2017 minor changes in vacancy and rents can be attributed, in part, to the completion of new there was a shift in the supply (sellers) in the market that resulted in less frequent units that are outpacing the rate of absorption. The unbalanced supply and demand transactions. Over the past 12 months Portland experienced only one sale of for existing multifamily product has resulted in a decrease in year-over-year transaction an apartment building with more than 10 units. volume and could potentially shift the focus from acquisitions to new developments. Demand for pre-existing multifamily product remained at an all-time high, but the pool Investors seeking multifamily acquisitions in 2017 had to look outside the of sellers effectively disappeared in 2017. Results from Q3 2017 showed an increase Portland market. The larger transactions occurred in Biddeford, Bangor, of 5% in acquisition volume that pointed to more sellers entering the market. As new Brunswick, and South Portland (See table A—Notable Transactions). Maine’s completions continued to outpace absorption and the supply/demand ratio remained largest multifamily transaction in 2017 was the sale of 74 Neptune Drive unbalanced, the market continued to be in favor of the seller. in Brunswick—also known as The Brunswick Landing Portfolio. This portfolio consisted of 407 units and achieved a price of $45,000,000 at a cap rate of DEMAND AT THE HIGHEST LEVEL IN THREE YEARS, 7.2 percent. Another notable sale in 2017—and the best indicator of the current BUT OUTSOURCED BY COMPLETIONS market sentiment—was River Place in South Portland. The 136-unit waterfront complex sold for $33,250,000. The cap rate on the sale was 5.5 percent. Completions 300 The high price per unit and low cap rate were indicators that we remain in a Net Absorption 250 seller’s market. Demand is high and remains steady with inventory still lacking, 200 and despite the higher cost of debt, sellers still hold the greater leverage in 150 multifamily acquisition negotiations. 262
239
188
128
111
100
106
122
109
50
217
194
230
205
118
72 50
40
31
126
202
245
87
78
77
0 -3
-50 2006
10
257
254
2007
2008
2009
2010
2018 GREATER PORTLAND MARKET OUTLOOK
2011
2012
2013
2014
CBRE | The Boulos Company
2015
2016
Year Ending Year Ending Q3 2016 Q3 2017
Another factor that contributed to low acquisition volume in 2017 was the threat of a rent control ordinance in Portland. Most investors or current owners were in a holding pattern as they waited for election results. In November, the ordinance was voted down by approximately 6,000 votes in a total turnout of just over 20,000 voters.
PROPERTY ADDRESS
CITY
NUMBER OF UNITS
SALE PRICE
PRICE/UNIT
CAP RATE
74 Neptune Drive
Brunswick
407
$45,000,000
$110,565
7.2%
1 Riverplace
South Portland
136
$33,250,000
$244,485
5.5%
321 Stillwater Avenue
Bangor
40
$2,700,000
$67,500
8.7%
145 Main Street
Biddeford
18
$850,000
$47,222
8.1%
Moving Forward Thus far, local absorption of new rental units appears to be positive. Two notable apartment buildings added to the market were 117 Lofts, a 56-unit redevelopment of the Schlotterbeck & Foss property on Preble Street, and Hiawatha Apartments, a new 132-unit building at the former Joe’s Smoke Shop site on Congress Street. Each of these were successfully filled within six months of completion and are currently performing well. To safely assume the current trends continue, the local market should continue to experience positive absorption and potentially see new construction taper off. Some developers may see the demand for rental units come to a peak in Portland as we’ve already seen JB Brown convert what was intended as a multifamily development into condominiums on the corner of York and High Streets. If the local market continues to reflect national trends, new unit completion will begin to outpace absorption and we will likely experience new sellers taking advantage of the market as seen in the Q3 report from CBRE. Q3 ACQUISITIONS RISE 5% YEAR-OVER-YEAR
Photo: Riverplace Apartments, South Portland Source: CBRE | New England
PREDICTIONS
60
Units Sold (millions)
MULTIFAMILY MARKET
50
• Continued slow increase in apartment vacancy rates as new units are completed and hit the market.
40 30
• Transaction volume to increase with no threat of rent control and sellers taking advantage of the unbalanced supply and demand ratio.
20 10 0 Q3 2005
Q3 2006
Q3 2007
Q3 2008
Q3 2009
Q3 2010
Q3 2011
Q3 2012
Q3 2013
Q3 2014
Q3 2015
Q3 2016
Q3 2017
• Slow absorption as new construction outpaces the demand for high-end units. • Local markets continue to reflect national trends and remain strong.
National Multifamily Market (source CBRE Capital Advisors)
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CBRE | The Boulos Company
11
SPOTLIGHT: RESTAURANTS By Catie Seavey, Associate Broker
Restaurant and food service jobs account for 10% of employment in the State
Portland is known for its restaurant scene, and ends up at the top of many “best of” lists throughout the country. The city and its surrounding communities have embraced our designation of a “foodie town” and every year, there’s a lot of shuffling in the market—from food trucks becoming restaurants to existing restaurateurs opening new locations to showcase different food styles. But it isn’t just local growth; while people were initially wary of national chains, they’re expanding in our area as well. Here are some highlights from the vibrant restaurant scene:
Source: Maine Restaurant Association
TRUCKS TO TABLES The food truck frenzy made its way to Portland several years ago which created an opportunity for chefs to bring unique food concepts to the area at relatively low start-up costs. Trucks, campers, and carts were transformed into mobile test kitchens and gave chefs the opportunity to experiment with different recipes and locations while fine-tuning their menus and establishing a loyal customer base. Over the past few years owners have opted to permanently park their trucks and set up shop in more traditional restaurant locations. • Love Kupcakes/ baristas + bites
32
469 Fore Street, Portland
• Mami
339 Fore Street
• CN Shwarma/Baharat 91 Anderson Street
LICENSED FOOD TRUCKS IN PORTLAND
• Highroller Lobster Co.
EATERY EVOLUTION
CONVENIENCE CUISINE
STILL CRAFTY
As local foodies’ palates continue to evolve, so does the restaurant scene. Sudden closures of what were once considered neighborhood staples created an opportunity for successful chefs and restaurateurs to expand their loyal customer bases by exploring new neighborhoods and concepts.
While several sectors of Maine’s restaurant scene experienced growth and expansion, there has been a significant shift in quick-serve establishments. Where various chains have closed their doors, others have found an opportunity to bring new tastes to the state. For example, both local and national fast/casual restaurants repurposed the newly vacated Tim Horton’s restaurants to expand or establish their presence.
No summary of greater Portland’s restaurant scene would be complete without a mention of the continued growth and expansion of local craft beverage businesses. Each year, new concepts pop up to accommodate consumer demand for locally-sourced beer and wine proving that there’s still plenty of opportunity surrounding Portland’s craft beverage marketplace.
• Bob’s Clam Hut
315 US Route One, Kittery Additional new location: 109 Cumberland Ave, Portland
• Tuscan Kitchen
Royal River Grill, Yarmouth, and Tuscan Bistro, Freeport Additional new location: 390 Gorham Road, South Portland
• Juiced
130 Water Street, Hallowell Additional new location: 561 Forest Avenue, Portland
• Tipo
Central Provisions, 414 Fore Street, Portland Additional new location: 182 Ocean Avenue, Portland
Here are just a few of the notable new entrants and/or expansions in the craft beer and wine market.
New to the Area:
Notable Expansions:
• Krispy Kreme
• Aroma Joe’s
• Chick-fil-A
• Starbucks
• Goodfire Brewing Co. | 219 Anderson Street, Portland
• Popeye’s
• Chipotle
• Blue Lobster Urban Winery | 219 Anderson Street, Portland
• Firehouse Subs
• Sweet Frog
• Bow Street Market Tasting Room | 495 Forest Avenue, Portland
• Five Guys
• Maine Craft Distilling | 123 Washington Avenue, Portland
• Amato’s
• Flight Deck Brewing | Brunswick Landing
• Holy Donut
• Nonesuch River Brewery | Scarborough
• Mainely Wraps
104 Exchange Street
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2018 GREATER PORTLAND MARKET OUTLOOK
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Overall vacancy rates in the industrial market remain at all-time lows
INDUSTRIAL MARKET RECAP By Derek Miller, Associate Broker
The industrial market in Maine in 2017 continued the strong trend that was a hallmark of 2016 that saw robust commercial real estate activity. Overall vacancies remained at all-time lows (below 5%) which was a boon for property owners and that drove an up-tick in pricing. It has also led to numerous properties being built-to-suit. Lack of supply meant occupiers of industrial real estate had to be opportunistic in their searches and, in all likelihood, either be flexible in terms of location or willing to pay top dollar for their desired locale. The Greater Portland market was especially tight, with markets in Central and Southern Maine not too far behind. In 2017, some notable new construction warehouse projects landed tenants. At 155 Rumery Road in South Portland a new 24,000± sf build-to-suit was marketed after the old building was destroyed by snow load. The new building was leased in its entirety by Webber Supply in Q2 of 2017 and has since been completed. In 2016, 15 Saunders Way hit the market in Westbrook as a proposed 60,000± sf building. A lease was signed by Maine Beer Company for 30,000± sf in the fall of 2017, and the property is expected to be completed in Q2 2018. The balance of the building is being developed on speculation and is available for lease. That said, new construction in the Greater Portland industrial market in 2017 was not just limited to large blocks of space. At 15 Washington Avenue in Scarborough, a developer built a spec building that catered to another market segment where it can be equally challenging to find space: small industrial users who want 1,500-3,000± sf. Tenants looking for space this size were historically limited to a select few properties in the area such as 1 Industrial Way in Portland or 125 John Roberts Road in South Portland. Vacancies in
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those properties have been scarce and when they become available, tend to lease quickly. Marketing began on 15 Washington Ave in the summer of 2017 and the response from prospective tenants was overwhelming. At the end of 2017 the building was fully committed. There are a few more of these multiSIGNIFICANT INDUSTRIAL LEASE TRANSACTIONS IN MAINE – 2017
Southport Yachts
70,056± SF
650 River Rd, Gardiner
CHEP
60,000± SF
7 Washington Ave, Scarborough
Modula
47,411± SF
75 Westminster St, Lewiston
Eimskip, ISA
44,626± SF
90 Spencer Dr, Wells
PODS
39,834± SF
1 Madison St, South Portland
A. Duie Pile
34,000± SF
1 Runway Rd, South Portland
Dieletric, LLC
32,173± SF
1 Gendron Dr, Lewiston
Webber Supply
29,760± SF
155 Rumery St, South Portland
Huttig Building Products
20,480± SF
64 Anthony Ave, Augusta
Scholastic
20,400± SF
33 Spring Hill Rd, Saco
Clear H2O
20,000± SF
117 Pleasant Hill Rd, Scarborough
tenanted industrial buildings—comprised of smaller suites—planned in Southern Maine and with the success of projects like 15 Washington Avenue, there may soon be more to come. It is important to note that each of the three new projects described here were built on land already owned by the developer/landlord. Construction costs are at an all-time high, and tenants can rarely afford to pay the lease rate required for ground-up construction that includes land acquisition costs. Asking lease rates for new construction range from $6.75 to $8.50/sf NNN. We have seen some smaller flex spaces rent for pricing in the range of $10.00/sf NNN. The largest new industrial project currently planned for Southern Maine is the 120,000± sf Americold facility on West Commercial Street in Portland. This project needed a zoning change in order to accommodate its 68’ building height. After unanimous approval by the Portland planning board, the Portland city council granted the needed zoning change in September with an 8-1 vote. This specialized freezer warehouse is an exciting project for Portland’s port and seafood businesses and will serve to further grow Portland’s relationship with shipping company Eimskip. The zoning change also paves the way for the possibility for other specialized marine facilities to be built along Portland’s West Commercial Street. This tight market, due to low vacancy rates, left limited options for tenants who had larger space needs which we see as a contributing factor to some notable lease renewals. One of the largest of 2017 was at 10 Southgate Road in Scarborough were Alere Scarborough, Inc. renewed its lease of 111,290± sf.
Image: Proposed Americold Building at West Commercial Street, Portland Source: Canal5 Architects
Another sizable renewal was CHEP’s lease of 60,000± sf at 7 Washington Ave in Scarborough after exploring other area options. As Maine’s state government grapples with crafting the recreational cannabis laws, investors have been busy getting ready to secure a foothold in this new (and undoubtedly lucrative) business. Industrial properties—both large and small—have been purchased in an effort to scale their operations as quickly as possible when the doors to Maine’s recreational cannabis market finally open. Many industrial properties that languished for years or suffered from being (at least somewhat), functionally obsolete have been purchased with an eye toward growing alongside Maine’s newest cash crop. Increase in demand from this new industry has made it more challenging for traditional industrial businesses to lease and purchase real estate in a market with already low supply. We expect continued strong demand in 2018 for quality warehouse space. This will likely keep pricing power strong for landlords. The success of the build-to-suit projects that were new to the market in late 2016 and early 2017 we feel will lead to more of the same for 2018; however construction costs are sometimes prohibitive with resulting lease rates that are often too high for tenants. It remains to be seen how legalization of recreational cannabis will impact the state’s industrial market, but with the government poised to pass some form of the law in the upcoming year we are sure to find out.
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MEDICAL MEETS RETAIL: MEDTAIL
Traditional medical office space vacancy rates still hover at the 1% mark
By Drew Sigfridson, SIOR, Managing Director
Who can predict what companies will be the next Circuit City, Kohl’s, Best Buy, Sears or K-Mart? As additional vacancies dot the retail landscape, there are not enough large retail users to backfill the space. Amazon is building distribution facilities in industrial areas, and has only a small brick-and-mortar presence which makes it easier to shop online than go to a store. Grocery stores have not been disrupted yet in Maine; but other retailers are closing stores throughout the state and the demand for retail space is changing. Large retail boxes are being repurposed for service-based businesses and entertainment. We have witnessed many such spaces turn into yoga studios, trampoline parks, go-kart tracks, and churches. Other larger spaces have been converted to back-office operations such as a portion of the Auburn Mall for TD Bank’s call center and Paychex at the Promenade Mall. However, the biggest opportunity yet for retail landlords and developers is on the way: hospitals and healthcare providers. As with many industries, healthcare organizations are under pressure and dealing with competition, diminishing operating margins, and changing customers—in this case patient—expectations. Patients demand convenience, fast response times, limited waiting times, and “consumer-friendly” experiences. This translates into demand for a real estate footprint that is closer to major transportation routes, closer to rooftops, highly visible with convenient access and significant parking. Enter the “Medtail” concept: as retail big-box developments start to transition with limited prospects for retail back-fill opportunities, healthcare organizations will find options for prime real estate at a discounted cost when compared with ground-up development options. The renovation of these retail properties falls squarely in line with the goals of providing more convenient, lower cost ambulatory care and
increases their ability to handle large volumes of outpatient services in a more efficient manner. The locations were built to handle a high number of customers. There are large parking fields and off-site transportation infrastructure to handle significant traffic demand. The visibility and signage potential are added benefits in this increasingly competitive industry for gaining market share. This medtail trend began in our market several years ago as ambulatory and urgent care facilities started leasing spaces in prime retail locations, such as Concentra on Western Avenue near the Maine Mall and more recently Convenient MD, which will open in a newly renovated center on Marginal Way in 2018. We have seen a continued shift towards more Urgent and Primary Care facilities with extended hours, shorter wait times and more convenient locations. There are several projects underway where a medical user is taking space that was occupied by, or is fit for, a retail use:
Over time, we expect this trend to continue beyond urgent care facilities mixing with other retail uses in small shopping centers. As more junior box and big box spaces become available, these prime real estate locations will be consumed by larger hospital and healthcare functions due to the below replacement cost value and convenient locations. Eventually, we will see more medical office buildings, micro-hospitals, comprehensive care centers, imaging centers and primary care facilities in these retail locations—hopefully, next to our favorite bakery and yoga studio. Features of retail properties that are desirable to medical users: • Proximit y to major transportation routes and public transportation • High traffic counts and visibilit y
• 50 Foden Road, South Portland – Intermed is taking over a 24,000± sf building for imaging, quick care and lab facilities • 265 Western Avenue, South Portland – Maine Medical Center has signed a lease on a 19,000± sf former Kaplan Universit y location which was previously a furniture store
• Abundance of parking on-site • Proximit y to residential areas
• 191 Marginal Way, Portland – ConvenientMD leased 5,044± sf as the anchor tenant at a newly redeveloped retail strip
Images: 191 Marginal Way, Portland Source: Ben Walter CWS Architects 50 Foden Road, Portland Source: Canal5 Studio Architects 265 Western Avenue, South Portland 16
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PORTLAND—MAINE’S VIBRANT, GROWING CITY By Jon Rizzo, Associate
During the power outage after the storm in the fall of 2017, I was chatting with my neighbor across the street about the frustrations of not having electricity. He works from his home for a Boston company, and travels to the city once a week. He was worried about being online so he could work. My wife called her friend in Eliot for advice on how to warm our six month old son’s bottle. Her husband also works remotely and his company is based in Boston. The five days we had without power gave me opportunity to ponder the many friends and acquaintances I have in the greater Portland area who work remotely. They have the ability to work from anywhere in New England and they chose to live here. Why? My wife and I were living in Denver, Colorado and knew we would move back to the East Coast where we’d both grown up in order to start a family and be closer to our family and friends. We fell in love with Denver during the six years we lived there because of the lifestyle of living in a smaller city. There was no stress about traffic, finding a parking spot, or being able to easily escape the city and be on a bike trail in fifteen minutes. There were many transplants from all over the country who were proud to say they lived in Colorado. There was a strong sense of community
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and life was comfortable—people took the time to appreciate their natural surroundings. I see many similarities between Denver and Portland. When we moved to Denver in 2010, the city was growing. There were only a handful of craft breweries and rent was cheap. As word got out about how great Colorado was, there seemed to be a steady influx of millennials who relocated and called Denver “home.” As a result, all of the warehouse spaces that sat vacant for decades became hot commodities, and were turned into breweries, boutiques, coffee shops, or urban marketplaces—something we see happening in Portland’s East Bayside neighborhood. Neglected neighborhoods became places people wanted to live, mainly because population growth and job opportunities became the catalyst for development in those areas. While we haven’t seen, and may never (or want to see), the level of growth in Greater Portland that Denver experienced, I have the same feeling today as I did when I first arrived in Denver in 2010—there’s an energy to the city and surrounding area that draws people in. There’s a sense of community and quality of life here that you don’t get to experience
“Portland, Maine. Yes. Life’s good here”
There’s a sense of community and quality of life here that you don’t get to experience in a larger, more crowded city.
in a larger, more crowded city. You dine on cuisine from all over the world—and almost any restaurateur will be able to tell you which local farm your produce and poultry came from. You can go to Two Lights or the Eastern Prom and watch the sunrise, for free. If there ever does come a point where you need a change of scenery, you can hop on the Downeaster and be down in the “big city” in no time at all. I’m proud to tell people I live in Maine and that my son was born here. And, while Portland may still be a small city, it certainly has big potential.
Photos: Corey Templeton
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SPOTLIGHT: NEW DEVELOPMENTS By Samantha Marinko, Associate Greater Portland continues to see expansion throughout the major commercial real estate sectors. Here are some examples of projects underway or making their way through the permitting and approvals process.
RETAIL Dirigo Plaza, a 500,000± sf regional power center is under construction in Westbrook, with Market Basket as its anchor tenant.
HOSPITALITY
OFFICE
With occupancy rates and revenue climbing, we see continuing robust activity in a sector that in recent years, has already added hundreds of new rooms throughout Greater Portland. In addition to several hotel properties completed in 2017, the following projects are in the planning stages:
Construction is underway on the 100,000± sf building designed for WEX. The developer, 0 Hancock Street, LLC, purchased the site from the City of Portland, and the building will have approximately 5,000-10,000± sf of retail space available.
• West Elm has announced plans for a 150-room, full-service boutique hotel to be developed in Portland Foreside, formerly Portland Company Complex, off Fore Street. • A 148-room hotel has been proposed for the active, mixeduse Thompson’s Point site. • The developer proposing to build on the Rufus Deering Lumber site on Commercial Street recently updated its master plan to include a 128-room hotel. • A Florida-based developer has plans for a 128-room hotel at 203 Fore Street. • A plan for a 96-room hotel has been proposed on the waterside of Commercial Street.
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An 18,000± sf, three-story office building is under construction on Widgery Wharf in Portland. The top floor has been leased and the other floors are being marketed.
INDUSTRIAL A new 60,000± sf building is under construction at Saunders Business Park. 30,000± sf of the high-bay warehouse has been leased, with the remainder available for a new tenant. At 15 Washington Avenue in Scarborough, a new 12,000± sf industrial building was constructed on spec, designed to accommodate users from 1,500 – 6,000± sf. Within just a couple months of marketing, the entire building was leased.
ConvenientMD is the anchor tenant in a newly redeveloped strip center on Marginal Way in Portland. Several suites are available for lease.
ADDITIONAL SIGNIFICANT DEVELOPMENTS Currently under contract to a Scarborough-based developer; redevelopment of Scarborough Downs seems likely. Even if it’s not the next Amazon HQ, it looks like a sizable mixed-use redevelopment is inevitable. Maine Medical Center’s plan for a $512 million expansion and renovation was approved by the State; groundbreaking is set for 2018. The City of Portland is currently in negotiations with several developers looking to transform the vacant lots and existing buildings where the Public Works presently resides in the Bayside neighborhood. Some developers are looking to seek permits and approvals for residential and commercial uses in early 2018. The Children’s Museum will be moving from 142 Free Street to Thompson’s Point. The 3-story, 30,000± sf building is expected to be ready by the spring of 2019.
Images: 65 Hanover Street, Lot 5, Portland Source: Barrett Made WEX Headquarters at Hancock Street, Portland Source: Jonathan Cohen
REGIONAL MARKET OBSERVATIONS AUGUSTA, GARDINER & WATERVILLE By Nick Lucas, Associate
Augusta Late in 2017, FD Stonewater and the State of Maine broke ground at the former Department of Transportation site on Capitol Street in Augusta. Plans include a 26,000± sf office building for the Maine Public Employees Retirement System (MainePERS), which is currently located next door to the site. Additionally, a three-story, 104,000± sf office building will be constructed and leased to the State of Maine. The MainePERS building is scheduled to be built first, the existing MainePERS building will be demolished to make way for the 104,000± sf building. The larger building will house approximately 520 state employees, predominantly from the DHHS. Gardiner Work started in 2017 at the former T.W. Dick parcels on Summer Street. The developers are planning to build 15 units of workforce housing and an 8,000± sf facility leased to Fresenius Medical Care, an international company that specializes in dialysis services. The construction of the buildings commenced in autumn of 2017 and will take approximately nine months to complete.
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A recent study showing that affordable housing was in high demand in Gardiner was the catalyst for this development. Gardiner has seen growth in the downtown area since the iconic “Milliken Block” sold for $287,500 in 2017. The building has since been converted into an artist space and microbrewery. Waterville Waterville continued to experience the redevelopment of its downtown in 2017 led by Colby College and the Alfond Foundation. Colby College is currently constructing a $25.5 million dollar residential complex at 150 Main Street. The 100,000± sf building will house 200 students and eight faculty members, with 7,500± sf of retail space. Colby also purchased and demolished the former Levine’s clothing store. A 42-room boutique hotel is scheduled to be constructed in its place in the spring of 2018. More than $5 million has been invested in The Hains Building located at 173 Main Street where CGI, a Montreal-based IT company will be a tenant and has pledged to create 200 jobs within four years. The Hains building will also house Colby faculty
and two 2,500± sf street level retail units. In 2018 we anticipate the downtown to continue its transformation into a vibrant area with shops and restaurants.
Images: Colby Residence Hall - 150 Main Street, Waterville Source: Colby College Former Hains building - 173-175 Main Street, Waterville Source: Colby College Former DOT site - 109 Capitol Street, Augusta Source: FD Stonewater
Capital Markets Activity 274 Western Avenue in Augusta, a recently constructed 41,235± sf retail plaza, sold as an investment sale for $12 million with a capitalization rate of 6% in 2017. Known as Journal Square, tenants include Five Guys Burgers & Fries, Starbucks, Supercuts, US Cellular, Men’s Wearhouse, Goodwill, and a land lease to Bangor Savings Bank. The other significant investment sale in the market was the Hathaway Creative Center in Waterville, which sold for $20 million. Maine General is a tenant in the 236,000± sf building which includes high-end apartments and retail offices. The Central Maine Commerce Center in Augusta is a 304,200± sf multi-tenanted office building that has been listed with an asking price of $24 million. The Shaw’s Plaza in Augusta was auctioned in late 2017, and other retail centers in the market may meet the same fate in 2018.
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REGIONAL MARKET OBSERVATIONS LEWISTON/AUBURN & MIDCOAST MAINE By Tim Millett, Associate Broker
Lewiston-Auburn In November, residents of Lewiston and Auburn soundly rejected the proposed merger of the two cities, therefore, both municipalities will continue as they have since they were both respectively incorporated. Positive momentum with Lewiston’s downtown revitalization efforts continued in 2017. Spurwink Services and Rinck Advertising moved downtown. Berman & Simmons, a century-long downtown Lewiston law firm, made their commitment to Lewiston known by undergoing a total exterior and interior renovation of the historic Osgood Building at 129 Lisbon Street. The Hartley Block is poised to start construction in the upcoming year, adding 60 units of mixed-market housing with street level retail units. The Promenade Mall, now known as Gendron Place, acquired its first office tenant, Paychex, and looks to continue repurposing efforts into 2018. The most notable investment offering in the market during 2017 was the 63,982 ± SF State of Maine DHHS property at 198-200 Main Street. The building is fully leased to four tenants and was priced at $7.5 million. The major story coming out of L-A in 2017 was a high-performing industrial sector. A significant amount
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of vacant product was absorbed. For example, 32,173 ± SF was leased by Dielectric at 1 Gendron Drive in Lewiston, 47,514 ± SF was leased by Modula at 75 Westminster Street in Lewiston, and the 120,000± SF former Cascades Auburn Fiber building sold for $2 million to an owner/user. We expect 2018 to be a year characterized by new industrial and multifamily housing construction. As we see industrial rates rise and vacancy decrease in Portland, demand in Lewiston/Auburn will remain strong due to competitive rates, central location, and blue collar workforce. Housing development is slated for the Mount Auburn Avenue community and various sites in Lewiston. Midcoast There was a lot of redevelopment and growth to report on in Brunswick and Topsham in 2017. Most notably, 407 units of former Navy base housing were purchased for $45 million and the new owners are already planning to build more units on excess land due to strong demand. Over the six years since the naval base closed, Brunswick Landing has experienced $350 million in private sector investment and is now home to 1,500 jobs. Cook’s Corner activity remained strong; Sam’s Italian leased a
build-to-suit building at 21 Gurnet Road, CDI (Center for Diagnostic Imaging) leased build-to suit space at the entrance to Brunswick Landing on Admiral Fitch Drive, and Summit Realty has indicated their Cook’s Corner Mall has major redevelopment plans for 2018 as well. The Topsham Fair Mall area saw continued growth in 2017 and we expect the trend to continue in 2018. Both the former Best Buy center and Dick’s Sporting Goods center at 105 & 131 Topsham Fair Mall Road sold in 2017. The Best Buy center will be redeveloped. In 2018 we anticipate the Midcoast Regional Redevelopment Authority (MRRA) will offer more Navy-owned properties to the private sector. Given the overwhelming success of TechPlace, a manufacturing incubator on the Landing, we should see growth of those startups move from the incubator to their own designated space on the Landing. We also expect new businesses to expand or relocate to Cook’s Corner, following Tucker Ford vacating their 157 Pleasant Street location for the former Bill Dodge Hyundai at 262 Bath Road.
Images: 62 Spring Street, Auburn Source: PDT Architects 188 Lincoln Street, Lewiston Source: Caleb Johnson Studio 131 Topsham Fair Mall Road, Topsham
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NEW ENGLAND OVERVIEW By Evianne Netherwood-Schwesig and Suzanne Duca, CBRE | New England Commercial real estate has often been critiqued as being out of step with today’s fast-paced, tech-driven, sharing-economy world. 2017 was arguably the first year in which the industry made major strides in closing that gap, and New England was at the forefront of this transformation. From West Cambridge to Windsor, Connecticut, occupiers and owners have been changing their relationships with the built environment in ways that are affecting all the players in the ecosystem – not to mention the end users who ultimately live and work in the reimagined properties. Flexible workplaces are a trend that have been gathering steam in the last few years and epitomizes what much of this new paradigm is about. Driven by the purported preferences of Millennial employees, who make up an ever-increasing share of the workforce, ‘traditional’ office configurations have become a borderline liability in many places. Instead of long hallways with closed-door private offices and low-ceilinged, fluorescent-lit cube farms, open bench seating and exposed HVAC systems are becoming de rigueur for most remodeling efforts. Glass-walled ‘huddle rooms’ provide privacy for small group discussions and confidential phone calls, while lounge areas and expanded cafes encourage collaboration and innovation.
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Boston is particularly well-positioned for this talentdriven economy, with the stability of world-class educational institutions. The perennial strength of these universities also bolsters the overall economy in the region, which has weathered recent downturns much better than much of the country. If there was one struggle in past years, it was trying to identify why so many of these young graduates fled the region after graduation. This issue hasn’t been entirely solved, but the tide has been stemmed, partially due to the proliferation of Boston’s TAMI (technology, advertising, media and information) and life science industries. Companies in these fields continue to drive demand in Greater Boston, with lab rents, in particular, on a seemingly never-ending upward trajectory. Some landlords with build-to-suit spaces have begun designing them as ‘lab-ready’ in hopes of luring this lucrative industry segment. It’s not just workplaces that are feeling the influence of Millennial tastes. As more people turn to the internet to complete their shopping, an unprecedented convergence of the retail and industrial worlds is occurring. Retailers have been seen transitioning their real estate into experiencedriven showrooms, and sometimes not carrying much inventory – they’re no longer fighting the idea of the consumer buying online as long as people are still
buying their product from them. This means that they need to have competitive shipping options, which increasingly translates to same-day delivery. As a result, warehouse spaces close to the urban core have become a hot commodity, even if the buildings are outdated. By contrast, their suburban brethren are growing into monster logistics centers with more square footage, more loading docks and higher clear heights, in order to accommodate the increased volume that they are responsible for processing. From the design of spaces, to where they are placed, to who occupies them and for how long, it’s clear that commercial real estate is going through radical changes. What’s less clear is how these changes will affect the long-term health of the market. Will the industry’s embrace of these new concepts be forward-thinking, or will some trends prove to be only fads? Perhaps the answer matters less than it would have a decade ago. Commercial real estate is finally showing itself to be able to adapt to changing winds, disassociating its pace of change from the word ‘glacial.’ As the economy heads towards what many consider to be uncertain waters, this newly developed skillset will enable landlords and tenants to navigate more smoothly, ensuring a straighter course for themselves and all those they interact with.
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ABOUT US
NOTES & CREDITS
CBRE | The Boulos Company is Northern New England’s largest commercial real estate services firm. The Boulos Company was founded by Joseph Boulos in 1975 and became the Maine affiliate of CBRE— the world’s largest commercial real estate firm—in 2001.
Information contained herein is researched and provided by our in-house staff of administrative assistants, associates, associate brokers, and brokers.
The company services real estate owners, investors, and occupiers by offering strategic advice and execution for property leasing and sales, along with property and facilities management and project management services. In 2017, CBRE | The Boulos Company represented clients in over $312 million in transaction volume. Today, the company, with offices in Portland, Maine, and Portsmouth, NH, consists of 20 licensed brokerage professionals who assist clients in all aspects of commercial real estate transactions across the entire state of Maine and seacoast of New Hampshire. Our client list includes many of the region’s largest employers, developers and commercial real estate investors.
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BROKERAGE TEAM
We have included, to the best of our knowledge, all Class A & Class B office buildings in the Greater Portland area. Please feel free to contact us if we have inadvertently missed one. Survey data collected is current as of 12/1/2017. Rents are shown as modified gross and defined as all expenses included, except electricity for lights and plugs, tenant’s janitorial, and parking. Rents not quoted as modified gross were converted by the addition of an estimated $1.50 for HVAC and common area maintenance expenses as reported by owner.
Drew Sigfridson SIOR, Partner, Managing Director
Jessica Estes Partner, VP of Operations
Greg Boulos Partner
Dan Greenstein Partner
Tony McDonald CCIM, SIOR, Partner
Craig Young CCIM, Partner
Chris Paszyc CCIM, SIOR, Partner
Charles Day Broker
Nate Stevens Associate Broker
Derek Miller Associate Broker
Ty Hobbs Associate Broker
Catie Seavey Associate Broker
Tim Millett Associate Broker
Jon Rizzo Associate
Samantha Marinko Associate
Nick Lucas Associate
Micki Francombe Assistant Office Manager
Kim Paquette Administrative Assistant
Michelle Peacock Marketing Specialist
Courtney Acheson Executive Assistant
Katherine Gemmecke Front Desk Admin
Retail space is not included in this Survey. Net Absorption measures the total amount of SF leased over a period of time minus space vacated during the same period. Rental rates outlined in this Survey reflect rates for direct lease availabilities. When a range of rental rates are available, the prevailing rate is reported. Only direct lease rates are quoted in cases when direct and sublease space is available. When only sublease space is available, no rate is quoted. Definitions of Class A & B office buildings vary between markets. We define Class A office buildings as those that are investment-grade properties that feature a unique design with immediate access to parking. They must be ADA-compliant and benefit from highly professional property management. Class B office buildings are considered to offer utilitarian space without special amenities, are of ordinary design, except for historic, renovated buildings and feature good maintenance with all floors handicapped accessible. Please note that outside the context of this report, the Greater Portland market uses many definitions and thus any building noted herein may, as a matter of opinion, fall into a different category in the open marketplace.
CBRE | The Boulos Company
Photo: Corey Templeton
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