Maine’s Midcoast Market Update 

By Roy Donnelly | Associate Broker

Running from Sagadahoc County to Waldo County, Maine’s roughly-defined Midcoast region is home to just under 160,000 people. By contrast, Cumberland County has a population of 300,000+ and York County’s population is around 220,000. This relatively smaller populace coupled with the distance from I-95, the state’s commercial corridor, means the stretch from Bath to Belfast is traditionally a residential destination for transplants rather than a commercial real estate powerhouse.

In 2023, the Midcoast continued to grow as a residential market following COVID’s effect on relocation trends and remote work. And in 2024, the region’s commercial leasing market more acutely felt the effects of that change. Last year the total square footage and transaction count for new leases signed fell by roughly one-third:

Businesses considering expansion ran into a tight labor market, high transportation costs, expensive debt, and election year uncertainty.

The Midcoast historically attracts and retains smaller, local tenants and 2024 was no exception. Leasing highlights include Topsham’s 6 Center Park Road small-bay industrial complex and other mixed-use retail on many of the area’s tourist-laden Main streets. Medical was also a source of strength in the leasing market led by PCHC’s expansion of the Seaport Community Health Center in Belfast and MaineHealth’s growing presence.

Looking ahead, the Midcoast’s current market dynamics will continue to present challenges for larger industrial and office users. However, there are opportunities for smaller businesses to find niches in towns. Wealthier zip codes will likely lead the way and attract home service companies and retail/restaurant users. The region’s relatively older population will continue to support the need for medical facilities, though medical operations may feel reimbursement pressures to consolidate space.

For commercial sales, 2024 showed an increase in both volume (driven by a few larger transactions) and deal count. By contrast, multifamily sales have slowed as interest rates rose and rent inflation cooled. Residential sales remained relatively steady year-over-year, with the increase in volume largely driven by appreciating home prices.

It’s notable that commercial property sales in this part of the state are largely driven by owner-users. There is a trend towards businesses wanting to own their space versus leasing it. Midcoast Co-Working purchased 157 Main Street in Damariscotta, Jar Cannabis purchased 564 Bath Road in Woolwich, and Horch Roofing purchased a large industrial building outside Ellsworth. Bath Iron Work also purchased 6 Farley Road in Brunswick as a childcare services center for their employees. This last example points to the highly competitive labor market; BIW chose to invest in real estate as a hiring tool.

Importantly, the Midcoast continues to garner attention from affordable housing developers. The Szanton Company opened the Uptown (60-unit 55+ complex in downtown Bath), Developers Collaborative completed Congress Square Commons (36-unit complex in Belfast), and Peasley Park (49-unit 55+ complex) is slated to come online in 2025. Smaller projects in Newcastle and Rockland have also benefitted from the advent of the Rural Affordable Housing Rental Program.

This year there will likely be a sticky bid-ask spread in investment sales that’s largely driven by higher interest rates and labor challenges. However, if the region continues to interest both wealthy residents and affordable housing developers, the Midcoast’s attractive and scarce real estate will turn the tide back towards sustainable growth.