Maine Retail Real Estate Market Outlook 2024

By Joseph Italiaander | Associate Broker

Maine commercial real estate has experienced a range of highs and lows across all asset types over the past few years. For example, we’ve seen unprecedented growth in the industrial sector. Maine’s warehousing/manufacturing companies, along with investors, have flocked to available product, creating a severe shortage of quality inventory, while driving up rental and sale prices. On the flip side, the office sector has been the subject of alarming headlines on the macro level since the onset of COVID. Here in Maine, office landlords are grappling with lower occupancy levels, looming vacancy, and higher interest rates – all of which are contributing to uncertainty around the future of the sector.

But what has often gone unmentioned in commercial real estate news, both on the macro and local levels, is the viability, resilience, and success of the retail sector over the last couple of years. Retail has been a constant here in Maine – consistent and predictable—and resilient in the face of e-commerce and the “Age of Amazon.” In fact, the driving force behind Maine’s retail economy: Mainers still prefer to get out and shop, in-person, at brick-and mortar locations, as opposed to shopping solely online. Grocery stores, retail shops, banks, and QSRs are all capitalizing from this trend, which is contributing to the success of the sector.

We have seen a little bit of everything, from strong leasing volume, brand expansions (and contractions), and retail development activity. Highlights include Hannaford’s  takeover of the former Payne Road Shaw’s in Scarborough, construction of Market Basket’s newest location in the Topsham Fair Mall area and ground-breaking on the retail/ town center component at The Downs, which is expected to gain steam in 2024. National brand expansions in Maine in 2023 included the likes of Starbucks, Jersey Mike’s, and JPMorgan Chase.

JPMorgan Chase Bank has continued its Greater Portland expansion, which began in 2021. They now have branches in Portland, Westbrook, Falmouth, Yarmouth, and Saco and have inked new leases for branches in Scarborough opening in 2024. We’ve also seen local financial institutions expand. Maine State Credit Union opened in Gray and Rockland, and Dirigo Federal Credit Union and Evergreen Credit Union will be opening in Scarborough in 2024.

Sandwich chain Jersey Mike’s has experienced rapid growth in Maine, seemingly overnight. Following their first store opening in 2021, Jersey Mike’s now has stores open or signed deals in Saco, Portland, Topsham, Auburn, Falmouth, and Bangor. Other QSRs, such as Blaze Pizza, Buffalo Wild Wings, and Wendy’s are also growing in Maine.

And of course Starbucks has continued its aggressive growth across the state – with new 2023 stores opened/deals being inked in Lewiston, Thomaston, Scarborough, and two new Bangor stores. Starbucks plans to grow at a similar pace in 2024 and the foreseeable future. Other coffee concepts, including Aroma Joe’s and Ziggi’s, both signed new deals in Saco and are showing no signs of slowing down.

Perhaps the most exciting news of the year is the grand opening of the long-awaited Costco at Scarborough Downs. Costco first announced its plans in 2021, and has spent the last two years permitting and constructing the 160,000± SF building, which is now open to the public. It is the first Costco in Maine, and the anchor for the Downs mixed-use development. It is also another significant step for retail development in Maine.

Clearly, demand for anchored, high-visibility, quality real estate in Maine’s denser trade areas is incredibly high, and Maine has proven to be a ripe market for expansion. On the flip side, supply is constrained, development parcels are becoming increasingly more difficult to find, and elevated construction costs are making deals difficult to pencil. As a result, there has been a significant premium allocated to free-standing, single-tenant properties, along with welllocated, 2–3 tenant strip buildings. With that said, inflated rents and higher barriers to entry haven’t appeared to slow things down, as leasing/sale velocity remains high.