🔒Commercial development in Ellsworth is booming

Dozens of tradespeople are hard at work — floors, drywall, paint, cabinetry and much more — on a three-story, 72-unit building going up at 377 High St., a main drag in Ellsworth.

Originally conceived as an apartment building, the developer, Jonathan Bates, switched gear to add short-term stays to alleviate a May-to-October housing crunch that occurs during the peak tourism season.

“We’ll probably have 26 to 30 units for year-round leasing and the other units will lend themselves to May-to-October leasing, which is in massive demand,” Bates says. “We’ll also have weekly units and short-term units for, say, two-night stays.”

The May-to-October market includes professionals on temporary assignment with local labs and health care organizations, and seasonal tourism employees. Bates says he intends to offer reasonable rates compared with skyrocketing short-term rentals.

“No one is adding new supply and demand continues to grow,” he says.

On a recent tour, he shows Mainebiz a partially finished two-room unit fitted with granite countertops and windowsills, porcelain wall tiles and architectural post and beams. Points of pride include recessed spots for 65-inch TVs, full kitchens, built-in desks, and substantial soundproofing between units. Amenities include a gym and in-ground pool.

Born and raised in neighboring Dedham, Bates identified residential development as an opportunity early in his career 12 years ago.

“It was always my passion,” he says. “If you locked me in a dungeon, I’d probably be designing buildings for free.”

Growing the numbers

Bates’s company, Stone Park Properties, has developed over 100 units of apartments and short-term rental units, primarily in Ellsworth. He scaled from single-family rentals to duplexes and up. The High Street project is his largest, with 50,000 square feet on three stories, costing about $10 million. The target opening is May 1.

“I saw the amazing amount of demand,” he says. “And I said, ‘Okay, that’s where I’m going to add supply.’ So we kept growing the numbers.”

“Growing the numbers” about sums up commercial investment activity in Ellsworth over the past year.

Bates’s project is one of quite a few underway or recently completed in the Hancock County city, which saw a substantial uptick in 2023, with investment of $85.5 million into 570,000 square feet of projects that spanned new builds, expansions, improvements and renovations, says Janna Richards, the city’s economic development director.

The previous four years, construction ranged from $9.4 million to $18.7 million invested into 63,000 square feet to 124,000 square feet, with 2020 as the low.

The previous high was 2018, when $30.52 million went into 346,265 square feet. At today’s building cost averaging $150 per square foot, the 2018 figure would be $54 million — still below the 2023 figure.

“Much of the commercial investment we have seen has been in renovations or expansions of existing commercial businesses, or new businesses taking over the previously occupied space of a business that has vacated,” says Richards.

Much of that investment has been in the Ellsworth urban core, on water and sewer infrastructure and on infill. There’s been conversion of office space into residential and some conversion or demolition and new-build of single-family homes into multi-family.

Many developers are local or regional and/or smaller-scale. In the downtown, an uptick in businesses owning their own properties has meant less commercial leasing and more ownership-investment.

A deeper dive

Ellsworth’s business attraction plan identifies commercial and housing development among the city’s top priorities. It’s expected a housing needs study will be completed by August.

The plan looks to expand financing incentives and other development-friendly policies.

“We know this is something that needs to be worked on,” says Richards, whose office will work with the city’s code enforcement and planning offices to look at how the city can better facilitate the permitting of large and small projects.

The city hosted conversations about eight years ago with local developers and contractors to discuss issues around the permitting process.

“We want to touch back in with them and continue to have those conversations,” says Richards. “We know we need to do a deeper dive.”

An actionable plan will likely take one to three years.

Bates agrees the city could do more to facilitate development and cites what he says was a four-year permitting process since he bought the High Street parcel.

“It’s become harder and harder to get any project at scale done,” he says.

Concrete market

Still, others see plenty of opportunity. Hughes Brothers Inc., a concrete and earthwork contracting business in Hampden, recently completed phase-one construction of a ready-mix concrete manufacturing plant at 22 McMullin Way in Ellsworth, to expand concrete production supplied to Greater Bangor by its Hampden plant, to the Greater Ellsworth market. At capacity, the Ellsworth plant will produce over 120 cubic yards per hour, says Larry Langille, the company’s president.

The facility is one of the first new plants in the region for quite some time, he says. What’s driving the need? More construction and not enough supply.

“Customers started calling about their inability to get concrete due to changes in the marketplace,” Langille says. “That’s when I started looking into where we could build a plant.”

The goal is to operate summers the first year or two, then winterize the facility for year-round operation. Customers are mainly professional concrete contractors. The market is growing in sync with overall development trends.

“It looks to me like Ellsworth and the coastal areas have been growing significantly,” Langille says. “We get calls all the time from people looking for concrete, waiting for concrete, not able to get concrete. The market’s there.”

Tenant waitlist

Coastal Maine General Contracting Inc. in Ellsworth recently completed the redevelopments for a new police station at 416 High St. and two commercial buildings at 10 Buttermilk Road and 14 Toothaker Lane. The company’s development arm, Gurney Investment Properties, owns the properties and leases to tenants, including local sausage-maker Colvard & Co. and vacation rental and property management firm Salt Air Properties.

“We’ve got a list of people looking for space and we’re working on projects in the pipeline now, either redeveloping property for someone else or developing property ourselves and leasing it to others,” says Matthew Gurney, the company’s president.

Gurney saw interest from prospective tenants from the get-to. “At first, we bought 416 High St. with the intent of having our own office there,” he says. “Before we moved in, there was so much interest in leasing that space from us that we decided to take it more seriously.”

Why the interest? “I feel like Ellsworth is and has been a hub for a lot of smaller Downeast communities that use the city for their shopping and for work,” Gurney says. “We also have a lot of big businesses here, like Jackson Lab and the hospital, which leads to Ellsworth being a service location where people want to set up a new business.”

He continued, “The downside is that we have a lot of buildings that are old and need to be renovated. That’s where we fit that niche of being able to renovate those spaces and make them nicer.”

Project costs vary from several hundred thousand to nearly a million dollars. Gurney typically looks for tired or unutilized properties. There are a lot, he says.

“We’re working on commercial developments now that will put more businesses into Ellsworth over the next year or two,” Gurney says.

Treehouse rentals

At 30 Old Mill Road on Ellsworth’s outskirts, three couples — Tim and Rachel Stone, Matt and Laura Krivonen, and Scott and Emily Bradshaw — established a subdivision called Arbor Camp in 2022 on 30 forested acres along the Union River.

Tim Stone is a builder who lives in Otter Creek, a village of Bar Harbor. Matt Krivonen is a structural engineer who lives in Billings, Mont. Scott Bradshaw is a civil and environmental engineer in Bozeman, Mont.

In development are 14 treehouses and two small cabins, with the plan to make them available for short-term rentals on a year-round basis. The units will be winterized and the year-round aspect leverages increased wintertime travel to the area, says Stone.

“We think it’s a different experience that we hope will attract enough people throughout the winter,” he says.

Stone notes that, unlike conversions of existing housing stock into short-term rentals — a sore spot for many communities — Arbor Camp is building new.

“We didn’t want to come into Ellsworth and buy houses and fix them up and rent them out for short-term rentals,” he says. “There’s a housing shortage in Ellsworth. We didn’t want to contribute to that problem. We wanted to build them from scratch.”

The couples are long-time friends. The Stones were teachers on Long Island, N.Y., and wanted to shift gears. They summered many years in Maine and decided to relocate.

Stone has built treehouses since he was a kid; Krivonen and Bradshaw’s experience as engineers was key.

Construction of two cabins and one treehouse is underway, with the goal of having them operational this July with water and sewer, heating and insulation, and conventional spaces such as kitchen, bathroom and living areas. The project includes clearing brush and creating walking trails.

The cost is estimated at $5 million, with a five-year buildout expected.

As a hub for Acadia National Park, the Downeast coast and other attractions, the location is ideal, says Stone.

“One of the things that goes together with the project is trying to encourage people to come to Maine and see how beautiful it is in the wintertime,” Stone says.

“We think Ellsworth is a better location in the winter than anything on the island, because it doesn’t shut down and it’s a place where people live — the restaurants and shops are open, people are here, it has a great little downtown, it’s growing.”