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October 6, 2020 at 6:00 am · · Comments Off on The Right Equation for Responsible Development: Spotlight on Station Square, Gorham

The Right Equation for Responsible Development: Spotlight on Station Square, Gorham

In a multi-part series, exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, difficulty of the development, uniqueness, social impact and job creation.

Our 2019 Top 7 recipients include:

62 Spring Street, Auburn, Anew Development / Auburn Housing
Founders Place Campus, Bangor, Bangor Savings Bank / CJ Developers
Cape Arundel Cottage Preserve, Arundel, Arundel-Kennebunkport Cottage Preserve, LLC
WEX Global Corporate Headquarters, Portland, Jonathan S. Cohen – 0 Hancock Street, LLC
Hannaford Center, Hampden, Good Shepherd Food Bank
Southgate, Scarborough, Avesta Housing
Station Square, Gorham, Great Falls Construction

MEREDA’s Board intended to honor the award winners at the 35th Anniversary Gala. Originally scheduled for the end of March 2020, the Gala was postponed indefinitely due to COVID-19. Though they may have their formal award delayed, these projects have only gained practical significance as they serve their communities–especially under additional strain and stress of these unprecedented times.  We look forward to formally recognizing these recipients at a future MEREDA event.

Please join us this week in celebrating Station Square in Gorham.

MEREDA:  Describe the building and project.

Great Falls Construction:  Station Square is a great representation of Great Falls’ most recent commitment to excellence and meeting diverse community needs in construction and development to best support Maine’s economy. Station Square stands as a 70,000SF, five story, thirty-three residential, six commercial unit property located in the heart of Gorham’s thriving Village. Station Square is currently home for nearly fifty-five residents as well as the new hub for Village entertainment, dining, commerce and more. The building, now at full residential capacity, nearly tripled the rental offerings in the Village prior to this development. In addition, Station Square has employed over 100+ people throughout the construction and development process and will continue to employee 150+ people through the commercial offerings. Throughout the planning and development process, this project has contracted over 75 Maine companies. These companies worked hard together to produce this project and millions of dollars were circulated through these companies to the hard-working Maine people whose hands created this.

In addition to the economic impact, Station Square includes countless thoughtfully chosen environmentally sustainable upgrades. Throughout the entirety of the project significant choices for sustainable upgrades were selected and executed upon. Some notable examples include the building’s envelope at an R value of 42, which is double the amount required by code. In short, this selected upgrade drastically reduces the consumption of heat and a/c. Should the occupants turn on their heat or a/c they use a highly efficient ducted electric heat pump. Each of the 33-residential units are equipped with an efficient heat pump system to ensure sustainable consumption by all occupants. Station Square also has a storm water treatment system on site in the form of storm tree brand filters to clean water run off on site. In addition, our upgraded choice in flooring for the numerous outdoor patios and common roof deck is a recycled tire material that allows water to pass through and run off where required. By using recycled materials, we help eliminate waste and reuse existing materials that withstand the harsh Maine climate conditions. The durability of this upgrade will ensure that they last for years to come.

Finally, from a historical and cultural perspective the building intentionally preserves Gorham’s historic identity and modernly invites the community to enjoy working, living and playing in the center of Gorham. The name and design of the space is centered on Gorham’s history as a heavily traveled train village. The building is situated at 7 Railroad Avenue atop where the old train ran from 1851 until the tracks were ultimately abandoned in 1961.

MEREDA:  What was the impetus for this project? 

Great Falls Construction:  The impetus behind Station Square was the passion to construct with a purpose. Station Square’s purpose is to gather, live, work and play in the middle of Gorham, Maine. Station Square allows for the entire community to convene and enjoy what Gorham has to offer. Promoting community, walkability, sub-urban living environments, age-friendly family fun options, and economic activity were all forces behind the execution of the project. The project is a new space that offers so much now and for the future but also represents the past by nodding to the history of Gorham as a train traveled village. The name and overall design of the project was executed by the design team to pay tribute to Gorham’s past while offering so much for the present and future. Finally, Jon and Cindy Smith, co-owners of Great Falls Construction, are just plain passionate about developing and constructing with a Purpose and this was the energy that moved the project so successfully forward.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

Great Falls Construction:  The planning phase of the project took a few years before we formally brought the project forward then a year or so from there to complete. It was close to a five-year project duration from conception to completion because we wanted to make sure we designed and executed the project so as to give the property the best chance for success.

MEREDA:  Tell us about the most challenging aspect of getting this project completed.

Great Falls Construction:  As we embarked on the conceptual phase of the project, we quickly realized the current zoning wouldn’t support the mixed-use nature of the project. A contract zone would be required. Striking the right balance between commercial and residential uses and the right balance between number of units and number of parking spaces proved to be a laborious task. As we moved into the construction phase, we encountered some unknowns on the site such as, underground tanks, special soils, and railroad ties just below the surface. We also encountered an unknown concrete structure which was clearly important at one time. Building 70,000 sf on a village site with three businesses in another building onsite presented challenges at times. Thankfully, My-Fit24, The Gorham School of Music, and The Little Red Schoolhouse Daycare were very excited about the project and very understanding. Our other neighbors were all very understanding as well. We implemented many measures to minimize our impact on neighboring businesses and residents with the largest one being the use of our ground floor footprint as a laydown area for the project. Overall, our challenges were just more opportunities for solutions, some requiring more time than others, but none were insurmountable.

MEREDA:  Something unexpected you learned along the way was….

Great Falls Construction:  During the process the unexpected for us was the need for this type of building in our community and the overall great response. From the moment we broke ground to today when we do tours community members love the idea of the live/work environment and the accessibility to everything that Gorham has to offer. All of the apartments are currently full and from the response from the tenants they love the location and safe living that happens at Station Square.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable? 

Great Falls Construction:  Station Square’s most notable feature is its ability to bring the community together. Gorham has never had somewhere to gather like Station Square and the community has made it known that it has become a quick staple for placemaking in our small Maine town. Station Square was made possible by countless talented individuals who worked their craft in order to make this community building such a large success. It will be exciting to now watch this building evolve in its role within the community. The ability to have hundreds of community members gather and socialize in a local, safe setting is the most rewarding testament to the vision and work of so many people.

September 22, 2020 at 6:00 am · · Comments Off on The Right Equation for Responsible Development: Spotlight on Southgate, Scarborough

The Right Equation for Responsible Development: Spotlight on Southgate, Scarborough

In a multi-part series, exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, difficulty of the development, uniqueness, social impact and job creation.

Our 2019 Top 7 recipients include:

62 Spring Street, Auburn, Anew Development / Auburn Housing
Founders Place Campus, Bangor, Bangor Savings Bank / CJ Developers
Cape Arundel Cottage Preserve, Arundel, Arundel-Kennebunkport Cottage Preserve, LLC
WEX Global Corporate Headquarters, Portland, Jonathan S. Cohen – 0 Hancock Street, LLC
Hannaford Center, Hampden, Good Shepherd Food Bank
Southgate, Scarborough, Avesta Housing
Station Square, Gorham, Great Falls Construction

MEREDA’s Board intended to honor the award winners at the 35th Anniversary Gala. Originally scheduled for the end of March 2020, the Gala was postponed indefinitely due to COVID-19. Though they may have their formal award delayed, these projects have only gained practical significance as they serve their communities–especially under additional strain and stress of these unprecedented times.  We look forward to formally recognizing these recipients at a future MEREDA event.

Please join us this week in celebrating Southgate in Scarborough.

MEREDA:  Describe the building and project.

Avesta Housing:  Southgate Apartments represents an exceptional example of historic preservation to meet the affordable housing needs of a community. Southgate is located at Dunston’s Corner in Scarborough and offers 38 much-needed affordable apartments for low-income families. The development consists of two separate buildings: a new 30-unit apartment building and the rehabilitation of a separate historic Federal Style brick farmhouse into eight apartments.

Prior to construction, the historic farmhouse was in serious disrepair. Over the past 200+ years the farmhouse had seen a variety of uses including a farm and country retreat, a restaurant and inn, and rental housing. As a result of these varied uses, the property had undergone multiple reconfigurations leading to significant deterioration rendering most of the units uninhabitable by modern building codes.

The new building is separate from this historic building. It was designed in a vocabulary that is reminiscent of an old barn to complement the historic farmhouse but with a contemporary entrance so as not to compete with the original historic structure.

Southgate’s expert development team included: Avesta Housing, developer and owner; Goduti-Thomas Architects, architect; Benchmark Construction, general contractor.

In addition to the development team, key partners included the Town of Scarborough, the Scarborough Housing Alliance, MaineHousing, the Maine State Historic Preservation Office, Boston Capital, Bangor Savings Bank, Federal Home Loan Bank of Boston, Federal Home Loan Bank of Atlanta, NeighborWorks America, and Community Housing Capital.

MEREDA:  What was the impetus for this project? 

Avesta Housing:  As gentrification continues to put pressure on local labor markets, it is vital that we provide safe, decent, and affordable housing for our workforce. For years, the Town of Scarborough has recognized the need for affordable housing in their community and has been actively encouraging new opportunities to create housing for a diverse range of incomes. Because of this project, 38 households will be able to stay in their communities, access quality schools, and be in close proximity to a variety of employment opportunities.

Avesta’s Southgate development project has breathed new life into an important Maine landmark. The original farmhouse was constructed in 1805 by Robert Southgate. It is an important part of Scarborough’s cultural heritage and one of the Town’s oldest surviving structures.  Currently listed on the National Register of Historic Places, the farmhouse offers one of the best examples of preserved Federal Style brick farmhouses in New England.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

Avesta Housing:  After coming up short in several tax credit applications, Southgate finally received funding in 2017 (three years after purchase). During that time, construction costs rose significantly and additional layers of funding subsidies were necessary. Southgate represents a unique and lengthy mix of financial sources, including a TIF from the Town of Scarborough, a grant from the Scarborough Housing Alliance, Low Income Housing Tax Credits, Federal and State Historic Tax Credits, and AHP funding from the Federal Home Loan Bank of Boston. Southgate also received funds from the Federal Home Loan Bank of Atlanta.

MEREDA:  Tell us about the most challenging aspect of getting this project completed.

Avesta Housing:  The varying and intricate design of the historic building required high attention to detail. Given the ongoing labor shortages in the construction trades, it was often challenging to find skilled labor that could complete the work both on time and within the allotted budget. Unlike other more uniformly designed historic rehabs, such as schools and mill buildings, no two rooms were alike. While this adds to the elegance of the final product, it also presents challenges during construction.  An example of this was the replacement and refurbishment of the building’s historic windows. In total, the historic building has 44 windows comprised of 15 distinct window types.

MEREDA:  Something unexpected you learned along the way was….

Avesta Housing:  Southgate was Avesta’s first development in Scarborough. Each community we work in has different visions, resources, and challenges for creating affordable housing. Working with Town officials and the Scarborough Housing Alliance was a wonderful experience. Without their support this project would not have been possible. The Town went above and beyond to ensure that the project would meet the needs of the community while remaining proactive and flexible as issues arose. Our relationship with the Town was something we didn’t have before the start of this project but is something we look forward to continuing as we build more affordable homes in Maine.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable? 

Avesta Housing:  By preserving one of the original Federal Style agricultural estates in Maine, Southgate has protected a cultural resource and connection to our past that was in jeopardy of being lost. In order to maintain the project’s feasibility during escalating construction prices, Avesta had to pursue a unique variety of funding sources. To the best of our knowledge, this project is the first in Maine to be awarded subsidy from two Federal Home Loan Banks for a single project.

In addition, 20% of Southgate apartments are preserved for households who have previously experienced or are at risk for homelessness. To help this population and our other residents succeed, Avesta is committed to provide services to foster greater financial awareness and self-sufficiency. These efforts include offering our residents free credit counseling, fraud avoidance, and homeownership courses. By supporting vulnerable populations and giving residents the tools to improve their own financial literacy, Southgate can contribute as a stabilizing force to our local economy and communities.

September 15, 2020 at 7:19 am · · Comments Off on Business Interruption Insurance and COVID-19

Business Interruption Insurance and COVID-19

By Conor Shankman, Associate, Bernstein Shur

Few industries or aspects of business have been left untouched by COVID-19 and the resulting economic closures. Though construction was permitted to continue in most areas, the construction industry has and continues to experience substantial hurdles:

  • Subcontractor defaults and cancellation of projects,
  • Supply chain delays, or unavailability of materials,
  • Temporary project shutdowns, and
  • Slowed progress and increased costs resulting from the implementation of social distancing and other safety measures.

As economies are slowly beginning to open again, many are counting their losses and turning to business interruption insurance to help cover the gap.

Business interruption, or business loss insurance, is a type of insurance that covers the loss of income that a business suffers after a disaster. Typically, the loss must result from a physical disaster closing of the business facility or due to the rebuilding process in response to physical damage. Many businesses, the insurance industry, and the legal system are currently debating whether COVID-19 had sufficient physical impact to trigger business interruption coverage for insureds.

This debate is playing out in courtrooms across the country. In California, the French Laundry, a James Beard award winning restaurant, brought suit against Hartford Insurance requesting a declaration that business losses resulting from COVID-19 are covered by their policy. Similar suits are playing out in New Orleans and Boston, where Legal Seafoods and Oceana Grill are suing their insurers seeking coverage for their losses. While the actual claims and policies vary, the goals are the same.

The lawsuits largely argue that COVID-19 is physical in nature, which has led to the government mandated shutdown of business, and therefore coverage is triggered. In the alternative, some businesses have asserted claims that COVID-19 is a pollutant thereby triggering pollution coverage. In the months and year to come, this question will ultimately be determined by the courts, and will likely vary state-to-state and policy-to-policy. The devil is in the details.

What Should Business Owners Do?

If you have incurred a business interruption or a slowdown of business as a result of COVID-19 and you have business interruption insurance of any kind, you should submit an insurance claim to your broker in writing, requesting that your broker submit the claim to all applicable policies. To the extent you have potential coverage, your insurer requires prompt notice of any claim and you should make every effort to meet policy requirements. If you are not sure if you have business interruption insurance, you should contact your broker to review your policies and provide you with information regarding your available coverage. All correspondence with your broker should be in writing so there is a clear record of the request and the broker’s response. During this time, you should start and continue to carefully track your losses and document your damages.

Some brokers having reviewed policies are recommending that insureds not make claims based on the physical damage requirement of the policy – we recommend you make the claim even if the business interruption claim will likely to be denied. We recommend that you should then provide the denial letter and a full copy of your policy, which your broker can provide, to your attorney for review. While many have initiated lawsuits in response to denials, the prudent action for most businesses may be to submit a claim, receive their denial, and then wait for others to litigate the issue of coverage. If courts decide that business interruption policies cover COVID-19 losses, you will have preserved your claim and can renew its pursuit later (you usually have one year from date of denial to bring a coverage action against your insurer) when issues regarding coverage have already been clarified by the courts. But, this is only possible if you submit a timely claim against your policy now, and are able to document your damages later. In this case, an ounce of prevention may be worth a pound of cure.

Article originally published by Bernstein Shur on May 28, 2020, https://www.bernsteinshur.com/what/publications/the-construction-advantage-business-interruption-insurance-and-covid-19/ 

September 8, 2020 at 6:00 am · · Comments Off on The Right Equation for Responsible Development: Spotlight on Hannaford Center, Hampden

The Right Equation for Responsible Development: Spotlight on Hannaford Center, Hampden

In a multi-part series, exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, difficulty of the development, uniqueness, social impact and job creation.

Our 2019 Top 7 recipients include:

62 Spring Street, Auburn, Anew Development / Auburn Housing
Founders Place Campus, Bangor, Bangor Savings Bank / CJ Developers
Cape Arundel Cottage Preserve, Arundel, Arundel-Kennebunkport Cottage Preserve, LLC
WEX Global Corporate Headquarters, Portland, Jonathan S. Cohen – 0 Hancock Street, LLC
Hannaford Center, Hampden, Good Shepherd Food Bank
Southgate, Scarborough, Avesta Housing
Station Square, Gorham, Great Falls Construction

MEREDA’s Board intended to honor the award winners at the 35th Anniversary Gala. Originally scheduled for the end of March 2020, the Gala was postponed indefinitely due to COVID-19. Though they may have their formal award delayed, these projects have only gained practical significance as they serve their communities–especially under additional strain and stress of these unprecedented times.  We look forward to formally recognizing these recipients at a future MEREDA event.

Please join us this week in celebrating Hannaford Center in Hampden.

MEREDA:  Describe the building and project.

Good Shepherd Food Bank:  This project included the renovation and conversion of the old Bangor Daily News printing press building into the northern distribution center for Good Shepherd Food Bank. The 40,000 square foot Hannaford Center now houses state-of-the-art refrigeration systems, warehouse style storage for dry goods, and new loading docks for receiving and distributing goods.

Not only does the building have a mass amount of storage space for goods, it was built with the larger community in mind. The second and third floors feature meeting and pre-function space, breakout rooms, and prep kitchen areas. The Onion Room has a seating capacity of 32, the Tradewinds Markets Room seats 10, and the Freeman Ellis Family Room seats 14. Each of these rooms features smart televisions and power integrated into all the tables. Good Shepherd Food Bank envisions these rooms as a hub for the nonprofit and business community at large.

MEREDA:  What was the impetus for this project?  

Good Shepherd Food Bank:  Strategically located, the new Hampden Distribution Center, will allow Good Shepherd to purchase and distribute more food, more frequently, and more efficiently to northern, central and Downeast Maine. This facility is fundamental to achieving their bold goal: By 2025, all Mainers struggling with hunger will have access to the nutritious food they need to thrive, when and where they need it. Good Shepherd Food Bank knows that they need to provide an additional 8.5 million meals annually to meet the goal. This is on top of the 25 million meals the Food Bank already provides each year, the Hampden location will be instrumental. This project was completed under a $5 million Food For All capital campaign, which actually exceeded the target donation amount and was funded by more than 900 donors.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started? 

Good Shepherd Food Bank:  Good Shepherd Food Bank purchased the building in December of 2015. We dug in and started planning right away in 2016, but the construction for the project actually began a couple years later in 2018. 

MEREDA:  Tell us about the most challenging aspect of getting this project completed. 

Good Shepherd Food Bank:  There are many, many challenging aspects of completing this size project but one of our major challenges was running the food bank while construction was happening in the same building.

MEREDA:  Something unexpected you learned along the way was…. 

Good Shepherd Food Bank:  With every construction project, there will always be surprises. Ours was finding that some concrete was 10 feet thick in the area where the printing presses were located.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable?  

Good Shepherd Food Bank:  This project repurposed a long vacant and unproductive building into a modern, state-of-the-art food distribution and community center. Having this location, improves the timeliness and efficiency of providing nutritious foods to meet the needs of Mainers struggling with hunger. One of the greatest obstacles to meeting the Food Bank’s long-term goals was the limited capacity of the Auburn-based distribution center and cold storage. Now, even during non-growing seasons, the Food Bank can distribute healthy produce for longer periods of time because of the new freezer and cold storage units. The increased capacity then allows Good Shepherd to invest more into Maine’s agricultural economy to help supply Mainers with the nutritious, fresh foods they need to thrive.

August 25, 2020 at 6:00 am · · Comments Off on The Right Equation for Responsible Development: Spotlight on Cape Arundel Cottage Preserve, Arundel

The Right Equation for Responsible Development: Spotlight on Cape Arundel Cottage Preserve, Arundel

In a multi-part series, exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, difficulty of the development, uniqueness, social impact and job creation.

Our 2019 Top 7 recipients include:

62 Spring Street, Auburn, Anew Development / Auburn Housing
Founders Place Campus, Bangor, Bangor Savings Bank / CJ Developers
Cape Arundel Cottage Preserve, Arundel, Arundel-Kennebunkport Cottage Preserve, LLC
WEX Global Corporate Headquarters, Portland, Jonathan S. Cohen – 0 Hancock Street, LLC
Hannaford Center, Hampden, Good Shepherd Food Bank
Southgate, Scarborough, Avesta Housing
Station Square, Gorham, Great Falls Construction

MEREDA’s Board intended to honor the award winners at the 35th Anniversary Gala. Originally scheduled for the end of March 2020, the Gala was postponed indefinitely due to COVID-19. Though they may have their formal award delayed, these projects have only gained practical significance as they serve their communities–especially under additional strain and stress of these unprecedented times.  We look forward to formally recognizing these recipients at a future MEREDA event.

Please join us this week in celebrating Cape Arundel Cottage Preserve in Arundel.

MEREDA:  Describe the building and project.

Arundel-Kennebunkport Cottage Preserve, LLC:  Cape Arundel Cottage Preserve (CACP), proud recipient of the NAHB 2018 BALA Award, is a distinctive seasonal cottage resort community near the south coast of Maine. Integrated into a landscape of bold granite outcrops, expansive Maine forests, natural wetlands and vernal pools the 300-acre project includes 263 charming cottages, community center and amenities, carefully designed into intimate neighborhoods to encourage family interaction.

MEREDA:  What was the impetus for this project?  

Arundel-Kennebunkport Cottage Preserve, LLC:   The project was envisioned to satisfy a market for seasonal homes set in a community setting in Southern Maine providing access to the natural beauty, culture and growing vibrant urban scenes within the Coastal Maine and Kennebunkport-Arundel area.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

Arundel-Kennebunkport Cottage Preserve, LLC:  5 years

MEREDA:  Tell us about the most challenging aspect of getting this project completed. 

Arundel-Kennebunkport Cottage Preserve, LLC:  In one-word Granite! This project has taken a constraint – granite and ledge throughout – and found an opportunity by integrating ledge into all aspects of the project – from flowing masonry and boulder walls to natural water features and exposed granite throughout and building veneer.  As a sustainable practice, ledge was crushed onsite to create gravels for use in construction, reducing the carbon footprint of additional trucking of materials to the site.

Additionally – protecting the natural resources – wetlands, vernal pools, streams onsite and designing a stormwater management system which respects and complements these assets.

MEREDA:  Something unexpected you learned along the way was….

 Arundel-Kennebunkport Cottage Preserve, LLC:  How the natural setting and topography influenced the connection between the built and natural environment.  An example is engineering boulder walls to minimize tree cutting and satisfy grading requirements on difficult topography resulting in magnificent western sunset views from cottages.  Secondly the positive impact this project has had on the local Arundel-Kennebunkport communities – not just economically but raising the bar in creating a sense of place.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable? 

Arundel-Kennebunkport Cottage Preserve, LLC:  The integration of site design, landscaping and architecture that is representative of the Maine vernacular.

 

August 18, 2020 at 7:00 am · · Comments Off on What’s Happening in the Market?

What’s Happening in the Market?

Market Insights

By The Boulos Company Brokerage Team

Because of the uncertainty in the business climate, our brokers are regularly asked what is happening in the commercial real estate market, and what to expect going forward. Never have we wished so hard for a crystal ball! However, based on our experience and knowledge of the market, we do have some insight to share. We asked our brokers to contribute their thoughts and here’s what they came up with:

Samantha Marinko: When this all began, the brokerage community collectively held its breath – but particular markets have proven that a pandemic cannot and will not slow down their progress. The industrial market, which was already extremely tight prior to COVID-19, has seen a surge of users looking to break into or expand further into the Maine market, resulting in multiple offer situations and steadily climbing lease rates.

Joe Italiaander: During regular outreach to various businesses and business owners, I am noticing that the overall sentiment regarding the future is optimistic. While many business owners may be experiencing lower sales volume and activity, they are largely taking this period to ensure success for the long-term.

A popular talking point with prospects and business owners has been the ‘sale-leaseback’ – the concept does not require a business to move, expand or shrink their footprint, which is perhaps an unorthodox approach when pitching a company. Rather, the ‘sale-leaseback’ is an opportunity for a business to capitalize on their (historically illiquid) real estate asset, free up funds for future growth, and even take advantage of tax incentives down the road. I believe that this will continue to be a popular concept in the near-term.

On the flip side, it is apparent that certain business owners and segments are experiencing a sharp increase in demand, mainly in the warehousing and distribution space. It will be interesting to see how logistics and e-commerce evolve as a result of new consumer trends sparked by the pandemic.

Kent White: Office and retail have slowed considerably, but the industrial market is still strong. Available space is still limited and demand has not changed much since earlier in the year.

Greg Boulos: Depends on the market segment. In general, when people call and want a “deal” I advise they’re about 6 months too soon. There will be deals, but it will take a while for the economic hit to flush the economy.

Noah Stebbins: Although COVID-19 has negatively impacted certain asset classes (i.e. retail, hospitality), industrial properties of all sizes continue to be in high demand throughout Central Maine and the Greater Portland area. In the future, I expect many industrial companies to start reshoring their operations back to the U.S., as the virus exposed many companies who heavily rely on importing/manufacturing goods outside of the country, which will more than likely lead to even more industrial demand in the coming years.

Craig Young, CCIM: Industrial product in the Portland area remains in high demand, particularly smaller units (2000-5000 SF) or large 100,000 SF facilities with high ceilings. They were pre-COVID-19 and they remain so today. Rates for both have only escalated through the pandemic and vacancy rates are 1% or less. There are slightly higher vacancies as you drive north on I-95.

Retail is tough. It was pre-COVID and remains so today. If you are a developer and represent (i.e. control) the tenant then you control the deal. There are a few isolated deals, but most retailers are seeking rent abatement’s or are just not paying rent. The notable exception might be the quick-care medical industry which continues to expand and look for site. And with the virus still among us, I see this trend continuing.

Dan Greenstein: On a positive COVID note: In trying to put a deal together in Farmington, the seller suggested we all meet, meaning a 4-hour round trip drive for the buyer and myself. When I asked the seller where we should meet, he said, “on a zoom call, of course.” I hadn’t even considered that that would be acceptable for a “face-to-face” meeting. What a relief, and time saver!

John Finegan: Maine is in a unique position to capitalize on the market forces that are impacted by the Coronavirus – most importantly, the increase in telecommuting will provide opportunities for folks to relocate here and enjoy our great quality of life.  This will in turn make Maine even more livable and bring additional income to the state.

John Meador: I’m speaking to a lot of investors and tenants saying the following: “Find me industrial land in NH and ME that has the potential to construct meaningful density (100k + SF).”

As investors try to predict the long-term changes in office demand, Greater Portland is seen as a RELATIVELY attractive place to put capital. The demand trends that will help the office product will inevitably result in an increased consumer base, particularly of a younger demographic. Northern New England hasn’t been a region focused on in scale by e-commerce related companies until now, and that demand is expected to grow.

Tony McDonald, CCIM, SIOR: We see the next few months as an inflection point in the market cycle during which the pace may slow a bit, but once a new direction is established, things will be off and running again. The market goes up and the market goes down—that’s what makes a market.

Derek Miller: My best advice to clients is to just be patient if they can. The suddenness of the pandemic, lockdown and subsequent economic difficulties that have arisen have been unprecedented. Opinions vary as to what the recovery will look like and a lot of that depends on how we balance the reopening with keeping people safe and healthy. Business owners should take advantage of government programs that make sense for their businesses while also trying to be nimble in terms of how they work with customers and clients (such as investing in new technology or e-commerce initiatives). The real estate business always bounces back, and by working with landlords and lenders, folks can hopefully avoid making rash decisions that will have adverse long-term effects.

Jessica Estes: Downtown Class A office space had less than 1% vacancy prior to the pandemic, and we haven’t seen speculative construction in the market so we’re not overbuilt. Because we started from such a strong place, and we don’t rely on public transportation (which is a barrier for sending folks back to the office in other places), we expect Portland’s office market to fare better than many other northeastern cities over the next 24 months.

Nate Stevens: In many conversations I’ve had with office occupiers in the Greater Portland region, many have reported that while they have seen some success with employees working from home, they still see value in a physical office location for collaboration, efficient communications, and boosting office moral and comradeship. While almost all of our office occupier clients have some employees working from home now and for the foreseeable future, this doesn’t necessarily mean reducing their office footprint but utilizing spaces differently as adjustments to office space programs are needed in this time. Over the last several years, there was a trend for less square feet per employee and we will likely see a reverse in this movement as companies try to give employees more room. Taking the long view with their current office square footage, companies may opt to not downsize and keep the ability to increase employees to pre-COVID numbers at some point in the future.

Article originally published June 30, 2020, https://boulos.com/whats-happening-in-the-market/

August 11, 2020 at 7:00 am · · Comments Off on The Right Equation for Responsible Development: Spotlight on Founders Place Campus, Bangor

The Right Equation for Responsible Development: Spotlight on Founders Place Campus, Bangor

In a multi-part series, exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, difficulty of the development, uniqueness, social impact and job creation.

Our 2019 Top 7 recipients include:

62 Spring Street, Auburn, Anew Development / Auburn Housing
Founders Place Campus, Bangor, Bangor Savings Bank / CJ Developers
Cape Arundel Cottage Preserve, Arundel, Arundel-Kennebunkport Cottage Preserve, LLC
WEX Global Corporate Headquarters, Portland, Jonathan S. Cohen – 0 Hancock Street, LLC
Hannaford Center, Hampden, Good Shepherd Food Bank
Southgate, Scarborough, Avesta Housing
Station Square, Gorham, Great Falls Construction

MEREDA’s Board intended to honor the award winners at the 35th Anniversary Gala. Originally scheduled for the end of March 2020, the Gala was postponed indefinitely due to COVID-19. Though they may have their formal award delayed, these projects have only gained practical significance as they serve their communities–especially under additional strain and stress of these unprecedented times.  We look forward to formally recognizing these recipients at a future MEREDA event.

Please join us this week in celebrating Founders Place Campus in Bangor.

MEREDA:  Describe the building and project.

Bangor Savings Bank / CJ Developers:  Bangor Savings Bank’s new corporate headquarters consists of three primary structures on a 4.8 acre downtown waterfront campus consolidated from private and public lots.  The campus consists of three buildings: 1) a 5 level 35,500 SF Corporate Headquarters in a renovated historic structure; 2) a 5 level 120,000 SF state-of-the-art Operations Center; and 3) a new 5 level, 457 space parking garage.  Particularly noteworthy is the facility’s extensive environmental systems that include 80 geothermal wells and, at nearly 1,400-panels, one of the State of Maine’s largest solar arrays covering the parking garage.

MEREDA:  What was the impetus for this project?  

Bangor Savings Bank / CJ Developers:  Recognizing that attracting the best regional banking talent to one of the most remote urban centers of New England in a tight labor market would require providing more modern amenities, the project’s function and design was formulated to satisfy these requirements in the form of a dynamic legacy headquarter for the remainder of the 21st century.  Accordingly, the campus and facilities were planned with flexible and collaborative working environments, extensive environmental/sustainable systems and extensive and automated natural daylighting and views.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

 Bangor Savings Bank / CJ Developers:  We were in the research and planning phase 12-18 months

MEREDA:  Tell us about the most challenging aspect of getting this project completed.

 Bangor Savings Bank / CJ Developers:  The most challenging aspect was the expedited timeframe. Bangor Savings Bank conceived of its relocation into a new headquarters in January of 2017 without determining a new location and with existing leases terminating in January of 2019.  The first prerequisite was to identify a location in the heart of downtown Bangor, where BSB was founded in 1852.  With 24 months to secure site control and permit, design and construct a new legacy campus, fast tracking the project was essential.  Within months, three adjacent properties were secured and consolidated from private and public sources and design had begun on developing the next era of founder’s vision to serve and support the City of Bangor and its residents.

MEREDA:  Something unexpected you learned along the way was….

 Bangor Savings Bank / CJ Developers:  Given the time constraints, the one thing we learned was the importance of valued business partners, such as Dunbar and Brawn, Cianbro, Sargent Corp, and all the other engineers alongside the BSB team. We had to all work toward a common goal to achieve and successfully complete a project of this size.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable? 

Bangor Savings Bank / CJ Developers:  Bangor Savings Bank’s new corporate headquarters campus is prominently located on the Bangor Waterfront so as to 1) cement the future of the Bank’s headquarters in Bangor, 2) attract talent and meet the expectations of an existing workforce by adding amenities typical of an more urban environment, 3) incorporate and leverage environmentally sustainable technology into the buildings, and 4) redeveloping Bangor’s waterfront.   Ultimately, the development has brought together over 400 employees with the capacity for up to 500 professional jobs in the Bangor workforce that will spur additional business growth to the area.

August 4, 2020 at 7:00 am · · Comments Off on Industrial Market Mid-Year Review

Industrial Market Mid-Year Review

by Justin Lamontagne, CCIM, SIOR, Partner, Designated Broker at NAI The Dunham Group

How’s the market? It is the most common question asked of any commercial broker in these trying times. And, most often, the answer is “…depends”. Unlike retail and the mixed-bag office market, the industrial sector is thriving through Covid. Manufacturing, warehousing and distribution are proving essential.  And examples abound of industrial companies pivoting in a positive way to provide much needed services and products in account of this pandemic.

At NAI The Dunham Group, we are pleased to present a mid-year update to our annual Industrial Market Survey. Indeed, the statistics reflect a dynamic market and confirm our anecdotal and transactional workload. In 2020 we’ve added Falmouth to our survey and are now tracking a nearly 20,000,000 SF Greater Portland market including Saco & Biddeford.

Today, our vacancy rate holds steady at 2.79% and that includes the only significantly large vacancy in all of Greater Portland, a 167,000 SF warehouse at 203 Read Street in Portland. That building is getting a lot of activity and, if leased, our overall rate will drop to a stifling 1.95%. And, practically speaking, because most industrial end-users are looking for smaller units, that sub-2% availability is what tenants and buyers are dealing with. Herein Sam LeGeyt reports on the “sweet spot” for industrial users and the dramatic lack of this type of inventory. We are hopeful these market conditions lead to long-awaited speculative development.

Sales demand for existing inventory remains at an all-time high. Bullish investors, both local and regional, are competing with end-users. This consistent and competitive demand has driven average sales prices towards $80/SF with peak pricing well over $100/SF. It seems the volatility of the stock market and the uncertain economic outlook is driving investors to bricks & mortar. And, as mentioned, no sector is better positioned to weather the Covid storm and prosper post-pandemic than industrial.

Nationally, the industrial sector remains as healthy as ever. Unlike in Maine, speculative construction has kept up with demand and vacancy rates remain historically low throughout most of the country. Tertiary markets, in particular, are seeing great new development as businesses are attracted by cheaper land, tax incentives and interstate connectivity to find Mid-Year Review employees. In fact, many manufacturing businesses are choosing labor pools over geography as the driving reason for plant location.

Of course, the great caveat to all of this is Covid and the still lingering long term ramifications. I’ve said to many clients, we’re very much IN this. This pandemic is happening right now. It’s never been harder to make projections or predictions because there are so many variables and possible trickle-down effects from this pandemic we haven’t even considered.

In summary, the industrial market is proving Covid-resistant and the environment has never been more competitive. We see few signs of change in the near-term but this pandemic is truly unlike anything we’ve ever seen. It would be irresponsible to say the industrial market is immune to the effects of this crisis. But so far it sure is putting up a good fight.

July 28, 2020 at 6:00 am · · Comments Off on The Right Equation for Responsible Development: Spotlight on 62 Spring Street, Auburn

The Right Equation for Responsible Development: Spotlight on 62 Spring Street, Auburn

In a multi-part series exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation. MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, difficulty of the development, uniqueness, social impact and job creation.

Our 2019 Top 7 recipients include:

62 Spring Street, Auburn, Anew Development / Auburn Housing
Founders Place Campus, Bangor, Bangor Savings Bank / CJ Developers
Cape Arundel Cottage Preserve, Arundel, Arundel-Kennebunkport Cottage Preserve, LLC
WEX Global Corporate Headquarters, Portland, Jonathan S. Cohen – 0 Hancock Street, LLC
Hannaford Center, Hampden, Good Shepherd Food Bank
Southgate, Scarborough, Avesta Housing
Station Square, Gorham, Great Falls Construction

MEREDA’s Board intended to honor the award winners at the 35th Anniversary Gala. Originally scheduled for the end of March 2020, the Gala was postponed indefinitely due to COVID-19. Though they may have their formal award delayed, these projects have only gained practical significance as they serve their communities–especially under additional strain and stress of these unprecedented times.  We look forward to formally recognizing these recipients at a future MEREDA event.

Please join us this week in celebrating 62 Spring Street in Auburn.

 

MEREDA:  Describe the building and project.

Anew Development | Auburn Housing Authority:  62 Spring Street is a mixed-use development in the heart of downtown Auburn, with 32 affordable units, 9 market rate units, and over 2500 square feet of street-front retail space. 62 Spring Street was developed by Anew Development in partnership with Auburn Housing Development Corporation, a community housing development corporation affiliated with Auburn Housing Authority.

MEREDA:  What was the impetus for this project?  

Anew Development | Auburn Housing Authority:  Ethan Boxer-Macomber became aware of underutilized property available next to the historic Engine House and across from Hannaford Supermarket on Spring Street in Auburn. In 2014 he approached Rick Whiting of Auburn Housing with the concept of maximizing use of the site through the creation of a four- story, mixed -use property which would bring back some of the housing density previously lost to fires and demolitions for parking. AHDC purchased the property with a pre-development loan from the Genesis Community Loan Fund, an underutilized rambling funeral home was demolished, and Anew/AHDC applied for low income housing tax credits multiple times before being awarded credits in the 2017 competition. Instrumental in all of this was the active support of the City of Auburn, which provided 70% Tax Increment Financing & a forgivable $250,000 Fed-Home loan.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

Anew Development | Auburn Housing Authority:  We struggled with cost containment issues, as the original design by Marilyn Leivian of PDT Architects (now CHA) involved expensive covered parking beneath the building structure that needed to be value-engineered out of the design in order to be cost-competitive. Additionally, environmental issues with the site, due to the presence of a former “gasoline alley” nearby required careful investigation and mitigation efforts, including a V-R-A-P with Maine D.E.P. The Auburn Planning Board initially approved the original design in August 2014 after a very positive public meeting was held in a neighborhood church. In 2016, Marilyn Leivian and her team pursued an aggressive schedule to re-design the project, which became the first development approved under the City of Auburn’s new form-based code at the August 2016 meeting of the Auburn Planning Board. In Maine Housing’s 2016 LIHTC competition, 62 Spring Street was finally awarded tax credits and began construction in December 2017.

MEREDA:  Tell us about the most challenging aspect of getting this project completed.

Anew Development | Auburn Housing Authority:  The project, already handicapped by a winter start, was hampered by the longest cold snap in decades, and took a while to get moving. However, Benchmark Construction proved up to the task and completed a high-quality building & durable site work in a very tight urban setting.

MEREDA:  Something unexpected you learned along the way was….

Anew Development | Auburn Housing Authority:  Even though the delay was frustrating, the response in terms of demand for the units was unprecedented, with over 200 applications received for 41 residential units and lease-up occurring in two months. The development continues to maintain a waiting list of over 200 applications to this day, due to the property’s central location and amenities.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable? 

Anew Development | Auburn Housing Authority:  Although the neighborhood has no architectural unity, with a grocery store, a seventies modern bank, a historic fire station and library, and residential buildings, nonetheless 62 Spring Street “fits” the neighborhood in terms of scale, use and appearance, and is a welcome addition to the street.

July 21, 2020 at 6:54 am · · Comments Off on Depreciable Life of Qualified Improvement Property

Depreciable Life of Qualified Improvement Property

By John Hadwen, CPA, Principal, Baker Newman Noyes

April 1, 2020

(A long overdue technical amendment)

Updated as of April 22, 2020

This article was updated on April 22 to incorporate the guidance of Rev. Proc. 2020-25. It provides another means (the use of filing a Form 3115 in addition to amending a return) by which a taxpayer can implement the shorter tax life given to qualified improvement property (QIP) by the CARES Act. It also gives taxpayers the ability to make a late election or revoke/withdraw an election to use the Alternative Depreciation System (ADS) or not claim bonus depreciation on any asset class for the 2018, 2019 or 2020 tax years.

April 9 Update: As we explain in an April 9 article, Revenue Procedure 2020-23 now allows (until September 30, 2020) partnerships that are subject to the “BBA” rules to make corrections to previously-filed 2018 and 2019 tax returns, thereby implementing retroactive features of the CARES Act in a manner that impacts those tax years (and the partners in place at those times), rather than impacting the 2020 year (and its partners). The reduced tax life and bonus depreciation associated with the Qualified Improvement Property are excellent candidates for this temporary leeway.

The CARES act finally fixes a well-known qualified improvement property (QIP) “glitch” that was bungled in 2017’s Tax Cuts and Jobs Act (TCJA). QIP is generally defined as any improvement made to the interior portion of a nonresidential building any time after the building was placed in service. QIP does not include any improvement for which the expenditure is attributable to the enlargement of the building, any elevator or escalator, or the internal structural framework of the building.

In 2017, TCJA legislation inadvertently caused this category of assets to be assigned a depreciable tax life of 39 years and become ineligible for bonus depreciation. In spite of congressional intent to correct this oversight for more than two years, nothing materialized until now. The CARES Act changes the depreciable life back to its pre-TCJA 15 year life and makes QIP eligible for 100% bonus depreciation. As a bonus to taxpayers, the technical correction is retroactive to January 1, 2018, so additional tax benefits can be realized by taxpayers for their 2018 and 2019 tax years.

Generally taxpayers may have to file an amended return to benefit from this change. However, Rev. Proc. 2020-25 gives taxpayers another option to change the depreciation of QIP placed in service by the taxpayer in a tax year ending in 2018, 2019 or 2020. Additionally the revenue procedure allows taxpayers to make a late election or to revoke or withdraw an election to use the Alternative Depreciation System (ADS) or not claim bonus depreciation on any asset class for the 2018, 2019 or 2020 tax years.

BNN Observation: With the issuance of Rev. Proc. 2020-23, all partnerships, corporations (C or S), trusts, and individuals can file amended returns for 2018 and realize this benefit in the 2018 tax year. BBA Partnerships or partnerships subject to the partnership audit rules should file amended returns and issue amended Schedule K-1s prior to September 30, 2020 before the relief in Rev. Proc. 2020-23 expires.

Some taxpayers have made a farming business or real property trade or business election under Section 163(j)(7)(B) and (C), requiring the use of ADS and disallowing bonus depreciation for certain property. Rev. Proc. 2020-22 gives these businesses much needed relief and flexibility for making or revoking the election to be an electing real property trade or business or electing farm trade or business for the business interest limitations purposes.

Taxpayers should consult their tax advisors to review their facts and determine the best courses of action. For many taxpayers, filing Form 3115 may be the most efficient and fastest way to get the benefit(s) associated with QIP and to make or revoke related elections. However, situations may exist where filing an amended tax return may be a better option (e.g., if a taxpayer is already amending a tax return for other items or amending generates a larger NOL carryback claim.)

BNN Observation: It is important not to forget the state income tax implications of this provision, because many states do not conform to bonus depreciation or allow NOL carrybacks.

Original article published April 1, 2020, https://www.bnncpa.com/resources/depreciable-life-of-qualified-improvement-property/