The vacancy rate for industrial real estate in Greater Portland has fallen below 1% for the first time since 2011, according to a study issued last week by the Dunham Group.
“This critical lack of inventory is inhibiting businesses’ ability to grow and, therefore, add jobs,” said Justin Lamontagne, the group’s designated broker and managing partner.
For its annual Southern Maine Industrial Market Survey, the Dunham Group expanded its geographical area. Dunham inventoried an additional 9.4 million square feet and 309 buildings in seven towns and cities, which grew the inventory to 990 buildings and over 30 million square feet.
The increased scope includes what are considered industrial “sub-regions” — Lewiston-Auburn-Gray, Greater Portland and northern York County — and provides a closer look at different niches, nuances and opportunities within each sub-region.Â
The firm said it plans to continue to expand the report to southern York County, the midcoast, Gardiner and Bangor.
Despite a slowdown in the cannabis cultivation industry, traditional demand remains strong, particularly from businesses in light industry, health care and home improvement.Â
“The inventory list and tour schedule are so limited that it now includes raw land, office buildings, and properties 30 miles from the preferred location,” said Lamontagne.
Of 19 million square feet of industrial space in Greater Portland, only 125,000 square feet is vacant. Sublet opportunities add another 112,000 square feet, making the total available rate just 1.25%.
Expanding the geography to other parts of southern Maine revealed that the supply-demand imbalance pervades the region, from York County to Androscoggin County. Only Lewiston, among the 15 towns and cities, has what could be considered a “healthy” industrial market, where tenants might have some leverage, said Lamontagne.
“However, even there, the numbers are somewhat misleading, with virtually all inventory accounted for by five to six very large empty buildings,” he said.
With new construction and land development remaining costly, “I predict we’ll see more creative repurposing of office and retail spaces” to accommodate industrial users, said Lamontagne. “This trend has already begun with some small success stories.”
He continued, “This concept’s success will depend on several factors falling into place, not the least of which is zoning. But for lower-impact tenants not requiring traditional taller ceilings and multiple loading docks, a single-story office building could serve as a decent warehouse with the right modifications.”
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