Abigail Henderson / January 18, 2020
The Boulos Company, Northern New England’s largest commercial real estate firm serving owners, investors, and tenants, has released its 2020 Greater Portland Market Outlook, a comprehensive 32-page annual report on the commercial real estate market in southern Maine.
The Market Outlook is researched, written, and compiled by the company’s in-house staff of administrative assistants, associates, associate brokers, and brokers, drawing from industry data and the Boulos Company’s vast market knowledge. Boulos is Maine’s largest commercial real estate firm, and consistently ranks at #1 for market share. The company closed out 2019 with over $420 million in sale and lease transaction volume – the highest in its 45-year history.
While the report covers statistics pertaining to all Class A and Class B office buildings in the Greater Portland area (to the best of the Boulos team’s knowledge), it also includes deep dives into selective various geographic locations, industry sectors, and specific projects. It does not, however, address the retail market.
In the report’s introduction, managing director Drew Sigfridson addresses the concern that, if the current real estate boom follows historical patterns, it should be coming to an end. Despite some cautionary signs, Sigfridson predicts on behalf of the company that 2020 will be another strong year, riding the wave of a resurgence on the Peninsula and a wider-reaching construction boom. The challenges of this market, he says, are mostly felt by new or growing businesses faced with few locations to choose from, sometimes at prohibitive costs.
Data from the Boulos Company’s annual survey of 12 million+ square feet in almost 350 Class A and B office buildings indicates that the overall office vacancy rate in Greater Portland increased to 6.7 percent in 2019. This marks the end of a steady 10-year decline in overall vacancies, and a dramatic shift from 2018’s rate of 4.18 percent. However, partner Nate Stevens explains the story behind the shift, attributing most of it to activity in the suburban market. Because of Greater Portland’s relatively small market size, he said, 80% of the added vacant square footage can be traced even more narrowly to just a few buildings (UNUM’s consolidation into two of their three Outer Congress Street buildings and WEX’s move from the Maine Mall area to downtown Portland).
Meanwhile, downtown office demand continued to grow in 2019, with only 10,000 SF of Class A space available across 25 buildings, representing a .4% vacancy rate and the tightest Class A market since 2001. Available Class B office space also decreased in 2019 to a rate of 7.72%; and according to Stevens, less than a third of it is in modern or recently renovated buildings. In a snapshot story within the report, Samantha Marinko explores how this trend has extended to Monument Square/Congress Street, which is experiencing an investor resurgence after several tepid years. Speaking to the need for more square footage and the wider downtown resurgence, the report also included a breakdown of 19 downtown development projects, eight of which are underway now, and 11 more in various stages from planning to proposal to approval.
The medical office market vacancy rate throughout Greater Portland has steadily declined over the last six years, with only three small vacancies across 56 medical buildings throughout Greater Portland. Still, this is a sector where landlords need to keep their properties fresh and renovated to keep their tenants – even in times of low vacancy. With current construction costs making that extremely difficult for landlords, some Class A medical office tenants are contemplating their own new construction projects. In the Boulos report, partner and Designated Broker Jessica Estes expounds on the broader medical industry trends, and how they are driving several medical office relocation and new construction projects underway now.
The report also includes an in-depth look by Associate Broker Jon Rizzo at the 500-acre mixed-use Scarborough development, The Downs, including how flexible zoning has allowed the developers to deliver on a true live-work-play concept alongside much-needed modern industrial space – a market that Associate Broker John Meador presents a thorough analysis of later in the report. And Associate Broker Noah Stebbins reports on a trending concept around the country that will soon be coming to Greater Portland’s other major mixed-use project, Rock Row: Maine’s first modern food and beer hall.
The report closes with a spotlight on the Augusta area (Augusta, Gardiner, and Waterville), where investors are bullish on revitalization efforts and new construction projects. 2020 Market Outlook, including data on dozens of major transactions and 20+ demonstrative charts and infographics, can be found at mainemarketoutlook.com