RECAP OF FEBRUARY 29, 2024 MEREDA REGIONAL FORECAST

By Chris Paszyc, CCIM, SIOR | The Boulos Company – Partner, Broker

On February 29th Chris Paszyc participated on the “Regional Outlook” Panel at the Maine Real Estate & Development Association’s (MEREDA’s) 2024 Annual Forecast Conference. Below is a recap from his presentation.

AUGUSTA

The office market in Augusta has proved to be resilient and often surprising, bucking regional and national trends.  Office leasing and sales have held up well despite the work-from-home movement.  Furthermore, rents have seen an uptick in the past 12-18 months.  Augusta also had one of the largest investment sales to occur in Maine at Central Maine Commerce Center, which sold for $18.5 million in 2023.

On the residential front, Augusta’s City Council has a stated goal to encourage new and varied types of housing development.  This has led to a variety of single-and-multifamily project to be permitted.  However, many of them have yet to be constructed.  Given the difficulty and costs associated with debt, equity and construction pricing juxtaposed with market rents, it may be a while before we see shovels in the ground.  The leadership at Augusta also want to see industrial development, as their vacancy rate is practically zero.  Again, given the high costs of new development versus market rents, it will be difficult to move new developments forward.

WATERVILLE

Waterville continues to excite!  According to a recent tally by the Central Maine Growth Council, downtown initiatives investment now total over $100 million.  Some exciting projects on the slate for 2024-2025 include the Head of Falls Village on Front Street, spearheaded by a partnership of Todd Alexander at Renewal Housing and Josh Benthien at Northland.  This is the new 63 units planned, with a project budget of $36 million.  Demo and site remediation to start Spring 2024.  In addition, North River has 145 new units planned at Lockwood Mills – 65 units of workforce and market rate in Phase 1, with 80 more planned in Phase 2.  There’s also 120,000 sf of new industrial planned for the new Trafton Rd exit, a new Reny’s and a new $60 million performing arts center at Colby.

LEWISTON/AUBURN

In Lewiston/Auburn, there’s demand for housing – a market study states there is demand for 2,600 new market rate units, with downtown capturing 560 of those units.  There are numerous housing projects in various stages of development:

• Jason Levesque and Joe Mannisto have 320 units with approvals near Central Maine Medical Center in Lewiston
• The Residences at Great Falls on the Androscoggin have 244 units approved
• Dave Gendron has site plan approval for over 200 units in Lewiston, and John Gendron has 96 now permitted, with plans for over 1,100 in Auburn
• In all, Auburn as 475 new units in the pipeline for since 2020

However, the office market outlook for L/A is uncertain.  There are a number large office buildings currently not utilized.  In all, we estimate over 700,000 sf currently sitting idle or underutilized.  The alternatives are industrial conversion, housing or retail.  Or smaller subdivided office, just not likely with the existing tenants.

Industrial continues to dominate with very little functional vacancy.  Dave Gendron has started construction on another spec multi-tenanted flex industrial building in Auburn and permitting another in Lewiston after recently filling the last remaining vacancy.

In conclusion, Auburn is vying to become one of Maine’s federally designated Tech Hubs for advancement of innovative forest bioproducts with a large industrial project in the works around Exit 75.  That will be making headlines in 2024.

THE “DARK HORSE”

My “dark horse” bet for 2024 is the Jay Paper Mill redevelopment.  Developers are going thru SLODA to subdivide the land and buildings to make available for lease and purchase opportunities.  They’re also going thru with a gas turbine and solar facility taking advantage of the 150MW interconnect.  Recently, they announced a deal to sell a 60-acre parcel to construct a 300,000 sf plant that will manufacture oriented stand board (OSB).  However, it’s just the start for this 1,000 acre site with 900,000 sf of existing high-bay industrial space.

In summary, Central Maine remains an integral component of Maine’s commercial real estate landscape.