Central Maine Real Estate Weathering Pandemic, Poised For Growth
The 2020 real estate market in central Maine has faced pandemic-related challenges, just like the rest of the world. The good news: while the market faced many challenges in 2020, central Maine is in a position to come out of a tough year and make 2021 a year to remember.
Last year’s market was highlighted by low leased vacancy and low workforce occupancy. In Lewiston, for example, TD Bank and Maine Community Health Options are still paying rent, but workers are at home. The same thing is happening in Augusta with the Maine State buildings and also the Waterville Colby properties.
Driving the market are smaller users, 3,500-sq.ft. and below. At MRA, agents are working hard to place these tenants because the bigger entities aren’t making decisions quite yet.
In central Maine, residential is really driving the market (I call it “flight to isolation” as more and more people leave denser population areas especially in Massachusetts, New York and Connecticut). It’s also a “flight to quality/commute” that’s changing the face of residential real estate in our state.
Look At The Data: Lewiston/Auburn
Lewiston/Auburn experienced a relatively flat office market in 2020, including the University of Southern Maine’s decision to delay their highly anticipated move to downtown.
In these two highly connected Maine cities, it’s again residential driving the market with companies like Chinberg Properties working on major projects like the Continental Mill, as well as Pineland Lumber (a 250-unit development for medical workforce housing) and more. One major goal in this area: connect the new Auburn area down to the Mill District in Lewiston, which will set the entire area up for further growth.
“Thankfully we haven’t heard any huge changes to businesses office space plans,” says Misty Parker, Lewiston’s economic development manager. “The next six months will really be telling. A lot of businesses are looking at 2021 as a planning year to come back. There’s definitely a need for smaller offices for smaller businesses. People have been cooped up for so long that having an independent, safe space to conduct business is valuable.”
L/A Forecast: Lewiston/Auburn will make a swift and speedy return. When USM resumes their search for downtown space, the market is going to escalate quickly. The entire area is looking at major office movement this year. In residential, it’s going to be important to offer a premium product to capture renters’ attention. The multiple new projects coming online in the next year will make residential absorption a little flat because there’s so much product coming online, but it will happen.
Pro Tip: Small is good. In summer 2020, MRA took a large professional office building (The Professional Building on Lisbon Street) and subdivided it to give professionals working at home a chance to get out of the house. The entire property hit full occupancy within a month of acquisition.
Look At The Data: Augusta
Due to so many readily apparent factors, vacancies are popping up in the office market, but local users remain engaged.
The good news: Sales are happening, including monster sale of space developed by FD Stonewater for Maine DHHS and PERS to Winthrop Advisors out of Boston for $39-million dollars–a clear record for 2020. Another mega transaction for central Maine, 442 Civic Center Drive for $8.7-million dollars.
“We’re coming off one of the historically biggest economic cliff drops in recorded history,” says Keith Luke, Augusta’s economic development director. “Here in Augusta, remarkably, the development picture has remained hot and there’s certainly lots of untapped development potential here.”
Augusta Forecast: There is activity in the market. Multifamily is fueling the growth in Augusta, as well, with quality developments keeping the market here on track. Slow office absorption and flat rent increases are facts on the ground that will hinge on the country and state’s ongoing response to management of coronavirus.
Pro Tip: Although smaller deals are happening in Augusta, there is activity. Look out for smaller buyers and renters to get a return on investment. When it comes to industrial, look at land development projects with 5,000-25,000-sq.-ft. of industrial space. Install necessities including docks and floor drains to create demand.
Look At The Data: Waterville
Don’t forget about Waterville! It’s been a year on pause with Colby College and other major players taking time to get back on track post-pandemic. As students go back to school and companies kick back into gear, Waterville is going to be just fine.
Waterville is hot right now! The industrial market is benefitting from cannabis industry growth, and residential is absolutely on fire with multifamily transactions closing at an all-time high rate.
Waterville Forecast: Look for rents across all sectors to go up in this area considerably as the inventory is reduced and existing product is leased up. Sales are happening in Waterville, though on a much smaller scale as far as space and price.
Pro Tip: Waterville is a tough market to move into, but there are opportunities in smaller developments. There are deals going through left and right, including two big projects under development: The Seton Project (68 residential units, 35,000-sq.-ft. of development–the old Maine General Hospital); and FirstPark has industrial lots available with excellent infrastructure in place.
Summing It Up
Overall, all of the players in the central Maine real estate market have been biding their time on breaking new ground while keeping existing projects on-time and on-budget. Surprisingly given the pandemic, there’s a well-grounded optimism at play.
“It’s a scary, yet promising time to be involved in central Maine,” says Parker. “Our planning department is hoping to analyze current zoning standards to see where we can support additional commercial, industrial and residential housing opportunities by encouraging density where it makes sense while not changing the character of the neighborhoods.”
Written by Frank Carr
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The New Normal: Real Estate Challenges & Opportunities in Maine Post-Coronavirus