File photo
Justin Lamontagne
Updated: August 1, 2022
Art of the deal: Finding the right commercial space in Maine can be an intricate process
Photo / Jim Neuger
Scott Pulver, co-owner of Portsmouth, N.H., all-day-brunch eatery the Friendly Toast, says understanding foot traffic and other aspects of the market was key to finding the right Portland location.
Scott Pulver and Eric Goodwin, owners of a Portsmouth, N.H., brunch spot, the Friendly Toast, had been interested in opening a Portland location for a long time.
About three years ago, Pulver, a long-time real estate developer, looked at about a dozen properties over a three-month period. “We got to know the market,” he says.
The goal? To be in the “hot zone” with other successful restaurants. A big factor in his searches for prospective locations is foot traffic. “We’re always looking for a cool spot, too,” says Pulver.
A deal for one location fell through. At the time, says Pulver, their lender thought Portland was saturated with restaurants. They turned their attention to opening other locations in other states. “But Portland never left our thoughts,” he says.
When their broker, Dave Garvey of KW Coastal and Lakes & Mountains Realty, identified a 7,000-square- foot restaurant space at 211 Fore St., the Friendly Toast partners were ready to leap. They had a lender in place and financing through the U.S. Small Business Administration’s 504 program.
“We’d already done the search so we had a good understanding of the market,” says Pulver.
Varied experiences
Understanding the market is a core tenet in commercial real estate, particularly given the variables of different segments. There are a range of factors: Downtown versus suburban, heavy-duty infrastructure versus move-in offices, free parking, room to grow. The right space might pop up, or the quest could take months to years.
“The experience of looking for commercial space varies greatly depending on the asset class, location and general requirements of the business,” says Justin Lamontagne with the Dunham Group.
Some businesses, such as heavy impact manufacturing, have complicated infrastructure needs. Office users might have municipal approvals and fit-ups to deal with.
“The right search can and should be well thought-out, well communicated and pressure-free,” he says.
Even with a short search, negotiations can take a while.
In October 2020, Chris Paszyc with the Boulos Co. was contacted by Ryan Peters, president of Newport-based Lakeside Concrete Cutting & Abatement.
Peters had recently acquired a Westbrook company called Abatement Professionals. Now the company needed a larger site to serve southern Maine. They wanted to be situated between Brunswick and Portland, at a site easily accessible from major highways.
“The search didn’t take too long,” says Paszyc.
They identified a 2.55-acre parcel in Cumberland, at a subdivision called Captain’s Landing, near I-295.
“It took a couple months of evaluating the site, understanding the permitting process with the town and restrictions on Captain’s Landing, and negotiating with the seller before we came to terms on the purchase in February 2021 and closed in July 2021,” says Paszyc. “All of this was done during the pandemic, yet before inflation and supply chain issues reared their ugly head.”
File Photo / Tim Greenway
Chris Paszyc with the Boulos Co.
Perfect fit
In the case of Agren Appliance, the search was unhurried.
The fast-growing Auburn appliance and mattress company, owned by Jason Agren, was looking for new headquarters and warehouse and distribution facilities expansion.
“Jason was ‘in the market’ but relatively passively,” says Lamontagne, Agren’s broker. “He owns a store where his current employees were, so there was not a lot of pressure. So we had the luxury of waiting for the perfect fit.”
Agren already had a 12-acre parcel on Adamian Drive in Auburn. When Lamontagne spotted a for-sale sign at 11 Adamian Drive — a move-in-ready Class A office building with a 70-car parking lot, adjacent to appliance retailer’s parcel — he quickly notified Agren.
“Luckily, the layout and overall condition of the building worked well for his needs so after a short negotiation we were able secure the property,” Lamontagne says.
Lamontagne recently represented Granite Bay Care, a growing Portland service agency for adults with disabilities, searching for larger headquarters. Parameters included more space for training, offices and conference rooms without a lot of build-out. The quest took several months. The result? A 19,392-square-foot office lease at 482 Payne Road in Scarborough.
The deal was complicated by the agency’s existing real estate commitments.
“They had two locations in Greater Portland with conflicting lease expiration dates, so consolidating under one roof was going to be challenging,” says Lamontagne. “However, on one of the spaces I was able to negotiate an early termination right. So that allowed us some flexibility to look for the perfect single roof space.”
After finding the right space, Lamontagne negotiated enough free rent to align the lease expirations.
“It was a complicated process that took 24 months and three landlords, but we pulled it off,” he says.
Benefit of time
For another service agency, the search for real estate took two years.
Greater Portland Health has a dozen sites to serve vulnerable populations and was looking for an additional spot. Parameters included being in the Portland area and close to public transportation.
Photo / Courtesy of The Boulos Co.
Samantha Marinko
“Greater Portland Health had the benefit of time, which isn’t the case for all buyers,” says Samantha Marinko with the Boulos Co.
Still, when a 9,465-square-foot office building at 295 Park Ave. in Portland hit the market, the agency leapt at the opportunity. The former firehouse was move-in ready, already fitted up for medical use.
Key to the process? The organization’s CEO was prepared.
“Their needs were not unusual. Conversely, they were looking for what a lot of buyers were also looking for, a stand-alone office building with parking in Portland,” says Marinko. “I believe we were the first group to tour the Park Avenue building and we knew there would be a lot of interest, so we made an offer immediately to avoid competing offers.”
Marinko and her colleague, Nate Stevens, had a similar experience on the opposite side of a deal, when they listed 55 Foden Road in South Portland, a free-standing office building with plenty of parking. It was listed for less than 24 hours before Connections for Kids, represented by Boulos brokers Noah Stebbins and Craig Young, made an offer.
“They had the same mindset, be the first in the door to make an offer to avoid competing offers,” says Marinko.
Ready with an offer
Increased business in Maine drew Londonderry, N.H.-based Hampshire Fire Protection Co. LLC to look for industrial space for its expansion into Maine.
Hampshire’s parameters included a location south of Portland. The company was able to take on larger square footage than it needed, as long as it was in the right area and the building had strong tenancy.
Photo / Courtesy of Colliers Maine
Robert Tragemann
Represented by Robert Tragemann of Colliers Maine, Hampshire found 41 Spring Hill Road in Saco, a 14,160-square-foot industrial building that hit the marks.
The hunt lasted a couple of years because the client had specific parameters in a market with limited inventory, says Tragemann.
“Although it took a long time, it wasn’t that time-consuming, in the sense that we looked at two properties over the course of just over a year,” he says.
The process became more challenging when the pandemic hit.
“You had to be ready to put a property under contract basically the day it went on the market,” he says.
Global queries
When Candy Manor, a Chatham, Mass.-based chocolatier, was looking for a space to expand production and hoped to lease an industrial space. High real estate costs on Cape Cod convinced owners Paige Piper and Robbie Carroll to look northward, to Portland. They also reasoned that it would be easier to find staff in Portland.
Boulos Co.’s Sasha Bogdanovics and Jon Rizzo found a 5,000-square-foot space at 651 Riverside St., in a Portland corridor known for industrial parks. Candy Manor needed space sufficient for production and HVAC, as well as flex space, which is already in high demand in the Portland market.
“We had been searching for 6-plus months,” says Rizzo and Bogdanovics. “We’ve seen vacancy rates in the sub-2% range for this kind of space so it wasn’t an easy requirement.”
Greater Portland is already on the map for businesses “from away.”
“We have seen companies from all over the globe look to expand operations in Maine,” they said. “We have been working with companies from Australia, Malaysia, Norway, the Faroe Islands, etc. looking for space in Maine. This ranges from office space to industrial space.”
Shock waves
While the industrial vacancy rate is below 2%, the office market has eased. Given the work-from-home trend in the past two years, it has been a bit easier to find office space.
“Until recently, commercial real estate supply and demand has largely been in balance,” says Paszyc. “However, the pandemic has sent shockwaves through the industry, creating more demand for industrial, self-storage, land, single-and-multifamily housing and QSR [quick service restaurants]; and shrinking demand for office and certain elements of retail.
He continues, “The industrial market is still very tight throughout the state, and we’ve seen rental rates for industrial approaching and even exceeding office rental rates in certain markets.”
Paszyc says the industry is seeing developers starting to construct industrial buildings on spec, speculating that if they build it, they will come.
“While we see this all the time in larger markets such as Boston, this is rare for Maine,” he says.
Brokers note that client needs can change during the search.
Lamontagne represented engineering, architect and design firm WBRC Inc. in its search for larger Portland offices.
“We spent two months scouring the inventory and, during that experience, they were able to weigh the pros and cons of being downtown versus a suburban location,” he says.
Ultimately, WBRC leased a redeveloped former Rite Aid outside of downtown but with easy access, new open space and free parking.
“It was a great example of needs evolving during a search period and good communication and acceptance of feedback from management,” he says.
Paszyc notes that searches might end with nothing, as client priorities change or suitable solutions can’t be found.
“As one client often puts it, ‘We can spin a lot of wheels in our business,’” he says.
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