PORTLAND, Maine – More than 500 developers, brokers, architects, bankers, attorneys, accountants and other professionals who support commercial real estate in Maine gathered in Portland today for the Annual Real Estate Forecast Conference sponsored by the Maine Real Estate & Development Association (MEREDA).
The conference featured forecasts for various commercial real estate sectors in major Maine markets, as well as remarks by Department of Economic and Community Development Commissioner John Richardson and former state economist Charles Colgan of the Maine Center for Business and Economic Research at the University of Southern Maine.
“With all of the uncertainty in the economy, this year’s conference is especially timely,” said Roxane Cole, MEREDA president and a broker and principal at Ram Harnden Commercial Real Estate Services in Portland. “Our experts gave us a mixed bag of predictions today, with some markets likely to slow down and others likely to remain strong in the coming year. Despite the signs of a general slowdown, Maine’s development community is a resilient group of people, and we will continue to play a major role in the state’s growth and prosperity.”
Held concurrently with the conference was MEREDA’s Fourth Annual Member Showcase, where 60 MEREDA members exhibited their products and services and networked with others involved in Maine’s commercial real estate industry.
The following are highlights of the forecasts given by Maine real estate experts at the conference:
Southern Maine Office – Drew Sigfridson, CBRE/The Boulos Company
(207-772-1333)
Several large tenants are likely to be in the market for space and demand on the Portland peninsula will remain strong. We will see continued absorption of existing space and further development in Bayside and on the eastern waterfront. There will be limited new construction as renovation proves more cost effective. Rental rates will stabilize and higher capitalization rates will be achieved on investment sales.
Greater Androscoggin Market Forecast – Daren Hebold, Ram Harnden Commercial Real Estate Services
(207-773-3531 or dh*****@ra********.com)
The stage is set for growth due to strong workforce, good access to the Maine Turnpike, and well appointed office and industrial parks. Market activity will be temperate, however, due to a limited number of large employers and the overall slow pace of growth in Maine.
Southern Maine Industrial Forecast, Michael Miller, NAI/The Dunham Group
(207-773-7100 or mm*****@du**********.com)
There will be continued interest in owning vs. leasing as interest rates are lowered by the Federal Reserve. A lack of viable “for sale” properties will continue to exert upward pressure of existing building prices and result in quick sale of prime properties. Government and DEP regulations will make existing land values increase but a lack of demand will flatten prices. A large inventory of “for lease” space and slow demand will make lease rates stagnant, and landlords will be well-advised to retain existing tenants, even if it means making concessions like lowering rates or making improvements.
Maine State Economic Forecast – Dr. Charles Colgan, Maine Center for Business and Economic Research
(207-780-4008 or co****@us*.edu)
Maine has same exposure to subprime mess as the rest of country and housing will continue to decline on all measures through 2008. The fall in new housing construction will bottom this year. Home prices may drop a little but modest growth should begin in 2010. The economic recovery in Maine will begin in 2009 but will be limited by effects of the Naval Air Station Brunswick closing. Overall, the effect of the economic slowdown in Maine will be much less than the U.S. as a whole or in other regions of the country.
Greater Bangor Market Forecast – David Hughes., Epstein Commercial Real Estate
(207-945-6222 or dh*****@ep***************.com)
Cianbro’s new Eastern Manufacturing Facility in Brewer, Hollywood Slots new facility now under construction on Main St. in Bangor, and further development of major retail and lodging properties in the Bangor Mall area are fueling continued growth in the Greater Bangor area.
Southern Maine Residential Forecast (multi-family) – Brit Vitalius, Sullivan Multi-Family Realty
(207-318-2555 br**@su***********.com)
Portland will remain generally healthy and properties on the peninsula a will continue to rise. Others So. Maine cities will struggle and prices will continue to drop in an attempt to attract buyers. For 2 – 4 unit properties, there will be more foreclosures and short sales for “underwater” buyers; for 5+ unit properties, increased expenses and conservative appraisals will put downward pressure on prices. Landlords will attempt to raise rates to compensate for higher expenses as defaulting homeowners return to the rental pool and would be homeowners will stay put in the rental pool for now.
Southern Maine Residential Forecast (residential) – Anne Weigel, Coldwell Banker Residential Brokerage
(207-253-3159 or an*********@ne*****.com)
Inventory levels remain about the same as last year this time last year. Prices will continue to soften this year, but the market is likely to bottom out in the 2nd quarter. This will remain a buyer’s market through 2008, with low interest rates and prices at or near the bottom of the cycle making it a great time to buy. High rankings by lifestyle, travel and business publications continue to highlight Maine and the Portland region an attractive location.
Southern Maine Retail Forecast, Dale Holman, Malone Commercial and Investment Real Estate
(207-772-2422 or dh*****@ma******.com)
1,000,000 square feet of new space will hit the market in 2008, which is scary since the current vacancy rate is 3-4% higher than in recent years. Absorption will be slow and developers will have to offer incentives to prospective tenants. Some national retailers may be cutting back on future development in Maine or cutting back on the size of prototype stores.
Maine Vacation/Hospitality Forecast, Sean Riley, Maine Course Hospitality Group
(207-865-6105 ext. 635 or se**@mc**.com)
More than a dozen new hotels are expected to open in Maine over the next three years, but the health of Maine’s hospitality properties will be impacted by a variety of factors including occupancy rates, rate increases, tighter equity markets, gas prices and the state of the overall economy.
Founded in 1985, MEREDA is an organization of commercial real estate owners, developers and related service providers, whose mission is to promote an environment for responsible development and ownership of real estate throughout the State of Maine.
