Industrial Market Outlook

Jon Rizzo  /   January 27, 2022

March 2022 Maine Industrial Market Update:

In the first quarter of 2022, Maine’s industrial market has, by and large, played out as most have expected. Out-of-state investment in the industrial market (and in Maine’s CRE markets in general) continues to grow, as lease rates trend closer to double digits in Greater Portland and the Lewiston/Auburn market. Vacancy rates continue to live below 2% fueling the construction of spec buildings, and executed build-to-suit lease transactions. Below, you’ll find a brief overview of significant industrial transactions and project developments that have taken place in Q1 of 2022, which both validate the trends anticipated in our initial 2022 Market Outlook and demonstrate the monstrous strength of Maine’s industrial market.

2022 Q1 Notable Industrial Transactions & Developments:

955 Portland Road, Saco, Maine: A 29-acre land parcel sold and slated for industrial development. (The site is also being marketed as for sale or build-to-suit lease opportunities, with other potential uses being considered).

Land sold for industrial use in Saco, ME










54 Milliken Street, Portland, Maine: 68,088 SF industrial building built on spec, 35,000 SF of which has been filled. Get more info here.

Industrial Spec Building For Lease in Portland Maine









45 Industrial Park Road, Saco, Maine: As site work began on this massive industrial spec building, a 125,000 SF build-to-suit lease was signed.

45 Industrial Park Road in Saco, Maine Rendering








45 Center Street, Scarborough, Maine: Construction is underway on this 30,000 SF spec building.

30 Center Street, Scarborough, Maine: A 28,000 SF industrial spec building has been approved.

70 Holmes Rd, Scarborough, Maine: The Beech Ridge Motor Speedway is under contract for sale, and is now being marketed as a built-to-suit lease opportunity for up to 700,000 SF.

In addition to the trends laid out in our initial 2022 Industrial Market Outlook, we now see potential sellers of industrial buildings truly pushing the envelope with listing prices to see just how high of a price they can get. While the strength of the market may very well justify this approach, we advise buyers to proceed with at least a healthy dose of caution when pursuing these opportunities, being honest with themselves about what value they can add to the project, and whether that value will enable the property to meet the goals of their investment strategy.

The 2022 Market Outlook:

(Initially posted in January of 2022)

It is no surprise that we may sound like a broken record over the last two years as it relates to the industrial market. Extremely high demand coupled with historically low supply has created a rising tide for sale prices and lease rates across the United States. According to Cushman & Wakefield’s U.S. National Industrial Q3 2021 market report, the year-over-year (YOY) rent growth in Q3 2021 increased 8.3% from Q3 2020. Analysts also believe that the rents will grow between 6% and 9% across most markets over the next couple of years.  

We have seen record absorption in 2021 due to demand; and although construction costs have risen due to the increased price of steel and lack of labor in the market, new construction projects have not slowed down, as the demand needs to be met. According to Cushman & Wakefield market research, “The market absorbed 140.7 million square feet (msf) in Q3 2021…this brought the year-to-date (YTD) 2021 absorption total to 365.9 msf, 98.0% above the same period in 2020, and the most absorption ever recorded in a single year with another quarter still to come.” Warehouse and distribution were the leading uses of the space that was absorbed, due to continued e-commerce demand and final mile needs to keep up with consumer sales. We saw this trend increase last year due to COVID-19, however, the change in overall consumer behavior seems to be here to stay, as companies have streamlined their e-commerce presence and made it easier for consumers to receive goods through an online ordering platform.  

National and global supply chain issues have posed challenges to many companies, often affecting the end consumer – both businesses and individuals alike. While there are several factors that lead to these issues, we explore the current impact on the industrial real estate market and how those challenges will be faced in 2022.  

Businesses are looking to streamline efficiencies – now more than ever – to keep up with demand and to deliver goods to their customers as fast as possible. Even if they have in-house logistics capabilities, these businesses also rely on third party logistics and shipping companies to help manage this process. While businesses typically do not like to have product sitting on the shelf, this mindset is changing, as delays in receiving product leads to delays in sales – ultimately resulting in a hit to revenue and the bottom line. Companies are looking to “stock up” in order to meet demand as orders are received. Due to the uncertainty of receiving additional product in the recently popular “lean warehousing” model, they are taking on more product and thus emphasizing the importance of warehousing needs. Does this mean an increased demand for warehousing and distribution uses in 2022? All evidence would suggest so.  

Another issue being discussed on a national level is the bottleneck in port cities around the country. Product is arriving in the ports and sitting onsite for days or weeks. There is simply not enough industrial supply available to warehouse this product and distribute to the end user. What does this mean? Until additional inventory is made available (generally provided in the form of new construction), this will continue to be a problem, as it stalls the delivery of product due to a lack of efficient logistics. New construction may need to happen further outside of the “core” markets, thus widening the area in which industrial activity takes place. The hope here, in my opinion, is that it increases job opportunities and boosts the residential areas – and therefore the economy as a whole for a number of port markets across the country. From an industrial market standpoint, it also would indicate an increase in average lease rates, as new construction continues to be the only solution to solve for demand.  


We are still in an extremely tight industrial market with vacancy rates hovering between 1.5% and 2% in Greater Portland and demand remaining strong. Demand for functional, efficient, and convenient (location, layout, etc.) space remains at an all-time high, especially among users looking for 5,000 square feet or less. Smaller “flex” units are getting absorbed incredibly quick, which is great for sellers and landlords, but is leaving many buyers and tenants frustrated at the pace at which available buildings and vacancies are scooped up. Consistent with national trends, this fast-paced activity continues to fuel increased sale prices and lease rates. 

At this time last year, 43% of the light industrial lots in Phases 1 – 3 at the Innovation District at The Downs were under contract or sold. This equated to 23 lots of the 54 total lots available. To date, 100% of the lots are sold in all three phases of the project, with many buildings already complete, under construction, or in planning. Again, this type of absorption is unprecedented and follows the trend of new construction being the best (and perhaps only) option for end users.  


The vacancy rate will remain in the range that we have seen the last few years until new inventory can catch up to demand. Speculative development may increase, so long as construction costs do not prove to be too prohibitive to make developers/investors feel overly exposed to carrying cost and vacancy risk. While the average lease rate in the industrial sector has certainly increased over the last few years, one would think that there is a ceiling to these asking rates beyond which tenants will not find feasible. If demand for “flex” units remains high, we may see this development trend continue with this type of product.  

The Greater Portland market has an opportunity to help address the supply chain and bottlenecking issues. Portland is certainly “on the map” as an extremely appealing city that provides a high quality of life. More residents relocating to the Portland area creates a higher demand for residential development, which in turn could create higher density in the Portland suburbs and increased business and economy. The e-commerce trend is here to stay, and therefore, final mile distribution centers become more important to these businesses providing product to the end consumer. More warehouse space will be needed based on both aforementioned factors. If we can be proactive in efficient planning and offerings of land or existing inventory to solve for this demand, we can avoid some of the pitfalls that larger markets have seen over the last 12 months.  

The Greater Portland capital markets for industrial product will remain strong in 2022. As the market continues to grow due to strong demand, we may see an uptick in new capital from private equity groups and institutional investment groups who typically shied away from our “small” market in years past. 

It is feeling more and more evident that the gap between “major markets” and the Greater Portland market is much smaller than it once was. 



Jon Rizzo, Partner, Broker