Topher Stephenson / January 19, 2023
2021: A Pivotal Year
Drew Sigfridson, SIOR, Managing Director
Originally featured in our 2022 Greater Portland Market Outlook.
What will 2021 be remembered for? COVID-19 and the Delta variant? Masks vs. no masks? Vaccine or no vaccine? Record fast distribution of vaccines for those who wanted it? The year that the validity of our elections was questioned? The U.S. Capitol stormed? The withdrawal from Afghanistan after the 20-year anniversary of 9/11? Tom Brady winning a 7th ring? Climate change and Earth’s warming? Major weather disasters throughout the world? Massive gains in the stock market? Record high deficits? Supply chain breakdown? Significant dead-lock in the political dialogue between Republicans and Democrats and massive social movements related to Black Lives Matter? What is the result of all of this noise and upheaval in the back-drop of “our normal lives” in which we are raising families, going to work, going to school, helping our neighbors, and working to make a living? In one word: stress. At this point, 2021 may be remembered as a time of significant stress, angst, and anxiety.
Despite all of these social, economic, climate, pandemic, and governmental factors creating significant risks and disruptions, the Maine economy continues to be strong. Our state boasts record low unemployment, significant population growth, record high increases in real estate pricing and sales volume, stable and appreciating lease rates, and low vacancy rates. The year 2021 was a pivotal year for Maine with an influx of people and businesses relocating out of nearby urban environments or other areas experiencing severe droughts and wildfires. We expect that this trend will continue, and that the remote workforce environment will have a profound impact on our state for many years to come.
Last year, I mentioned the “silver lining” in certain sectors, the growth of certain industries, and the significant influx of people migrating to Maine and investing here. These trends have only accelerated in 2021 and will continue to accelerate in 2022. There is significant demand for affordable housing, market-rate housing, warehousing and distribution facilities, hospitality, entertainment venues, education and research facilities, manufacturing, etc. Developers are pushing to construct and renovate commercial properties to accommodate the growth in all of these sectors. In some areas, the growth and demand has been unprecedented. For instance, at The Downs in Scarborough, we sold all of the industrial lots for the entire Innovation District in just two years. Flex buildings constructed on speculation have filled pre-construction. Hotels just recently constructed in Portland have sold to private equity firms at record numbers. Demand from investment groups historically focused on “core” markets are now interested in focusing their attention on – and making investments in – Maine. For some high-quality assets, we are dipping into record pricing based on all metrics: price per square foot, price per unit, cap rates, and dollars per acre.
Institutional investments are also being made in a significant way, which will change the landscape of Greater Portland. The Roux Institute at Northeastern University has announced the purchase of the B&M Bean plant on the ocean in Portland, the University of Maine Law School and Graduate & Professional Center and graduate school is moving to 300 Fore Street in downtown Portland, Maine Medical Center has completed its $150 MM capital campaign, and construction is underway for its new wing on Congress Street. Northern Light Mercy Hospital completed its move off of State Street down to Fore River Parkway and the Gulf of Maine Research Institute completed its purchase of Union Wharf and will continue to expand and preserve the working waterfront of Portland. These are just a few of the many significant investments underway by local organizations.
Opportunities Abound
New housing construction, and particularly affordable housing and workforce housing, are going to be a major focus for developers in Greater Portland for the next 2-3 years. We have a significant shortage of quality affordable housing, making for great development opportunities going forward. The other significant demand throughout the state comes from warehousing, distribution, and manufacturing companies for industrial and flex product. We continue to see more development underway in this market sector, but constraints bounded by permitting and high construction costs will limit the timing and ability for developers to meet market demand.
Despite the difficulties of the pandemic and the stress on our society, we continue to see tremendous resilience and perseverance in the real estate and construction industries. We sincerely thank all of our clients, vendors, and members of our team for their extraordinary efforts over the past year. While there has been stress, we have also worked to focus on teamwork, camaraderie, and flexibility in the workplace environment. My partners and I are appreciative of their efforts every day. I also want to personally welcome our new brokers, associates, and marketing professionals who joined our team over the past year in our Portland, Portsmouth, and recently opened Manchester, NH office. Our company has benefited from an influx of talent moving to Maine, and we hired several new people with commercial experience from New York, Washington DC, Manchester, NH and even Jackson Hole, WY. We look forward to 2022 with our growing team and will work to provide our clients with the best possible service and professionalism each and every day.
Drew Sigfridson, SIOR, Managing Director
