Bangor or bust | New construction flourishes in the Queen City amid easing vacancy rates
Because this issue of Mainebiz focuses on the greater Bangor market, I decided to catch up with some local commercial real estate professionals. While Bangor has seen significant development projects over the last year, the region has surely faced some economic challenges as well. I was curious how the economic downturn has affected the greater Bangor market and what the experts forecasted for the coming year.
I spoke and traded emails with David Hughes of Epstein Commercial Real Estate. Hughes has brokered deals in greater Bangor for almost 10 years and represents clients in all sectors of commercial real estate. I also talked with Charles Day, a commercial real estate broker with CB Richard Ellis/The Boulos Co. and a Bangor native who represents some of the area’s most successful developers and investors. Finally, I caught up with Rod McKay, Bangor’s longtime economic development director.
I first asked McKay to highlight some of Bangor’s recent developmental success stories. He sais that Bangor has seen remarkable levels of new construction over the last two years. “Construction has been visible throughout the city with major projects in the mall area, downtown, in the Broadway, State and Union Street areas, and in the business and industrial areas,” McKay said. “We celebrated the completion and opening of projects that began in 2007 and continued in 2008, such as the Hollywood Slots Hotel and Raceway facility, the Marriott Courtyard and the Hilton Garden Inn, and saw the beginning of new projects such as Eastern Maine Medical Center’s parking garage and the Maine judicial branch court facility.”
McKay offered some statistical data to drive his point home. In 2007, Bangor’s total commercial construction permit value amounted to almost $97 million. In 2008, it dropped to $61.4 million. However, to put that into perspective, for the 10 years prior to 2007, the dollar value for commercial construction typically hovered around only $20 million. “Bangor’s unprecedented commercial construction boom the past two years was driven by a multitude of large projects reflecting a diverse range of economic development including retail, hotel, gaming, public buildings, educational institutions, retail stores, banks, restaurants, office space, industrial and warehouse space,” McKay said.
Developing picture
The list of major developments ongoing or recently completed in Bangor is certainly impressive. Of note is the new Wal-Mart Supercenter that opened in July. This roughly 210,000-square-foot building sits on a 50-acre parcel on Stillwater Avenue. The project will ultimately include a bank site with drive-through, a 5,875-square-foot restaurant and a 14,000-square-foot retail building.
Within the last 12 months, four hotels have been built, are under construction or have undergone significant renovations. The Hilton Garden Inn is a five-story, 135-room, 85,668-square-foot facility that opened seven months ago. The Four Points by Sheraton completed a $9 million renovation to their hotel which included a redesigned lobby, a restaurant and lounge, an indoor pool, workout facility, state-of-the-art meeting space and improvements to all guest rooms. The Marriot Courtyard opened a 91-room, four-story hotel on Sylvan Road. And, with much fanfare, the $131 million Hollywood Slots Hotel and Raceway celebrated the completion of its first operational year in 2009.
Furthermore, a new 14,496-square-foot Walgreen’s is under construction on Oak Street, a construction permit has been issued for a new 19,695-square-foot Tractor Supply Co. store on Burleigh Road, the $37 million, four-story Penobscot County Judicial Center is under construction with a scheduled completion date of January 2010, and Lowe’s has plans to build a 139,216-square-foot store adjacent to the new Wal-Mart.
Clearly, there are positive signs for the Bangor market in terms of new construction and projects. I asked David Hughes and Charles Day to elaborate on specific commercial real estate sectors like office, retail and industrial in the greater Bangor market. “Like anywhere, Bangor is seeing increased vacancies and dropping lease rates across the board,” Day said. “I am encouraging the landlords I work with to offer flexible terms and really focus on tenant retention.” Hughes said the Bangor Mall retail area has been particularly hard hit and that landlords have to recognize that this is a tenant’s market. “Landlords are much more flexible on terms and we do not see this changing soon,” Hughes said.
That said, Hughes suggests that things could be turning. “There was a flurry of commercial foreclosure auctions, mostly troubled properties to begin with, in late winter or early spring. But that has slowed significantly in recent months,” he said. Day agreed that the market could be rebounding slightly. “It seems our phones are ringing more of late and users, retailers in particular, are regaining confidence in the market,” Day said.
For more information, visit www.choosebangor.com.
Justin Lamontagne, associate broker at CB Richard Ellis/The Boulos Co. in Portland, can be reached at jlamontagne@boulos.com.
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