Greater Portland vacancy rates steady amid shifts in market
Courtesy / The Dunham Group
New construction is easing a tight industrial inventory, while tenants are looking to get back into office space.
The Greater Portland industrial vacancy rate rose slightly in the last six months, while the vacancy rate for the downtown Class A office market is declining, according to a mid-year review of the sectors from the Dunham Group.
Industrial
The Greater Portland industrial vacancy rate rose in the last six months to 2.28%, up from 1.69% at the close of 2021, said Justin Lamontagne, a partner and broker with the firm.
The statistics as of July 1 reflect a strong landlord's market. But the slight uptick suggests some opportunity for end-user tenants and buyers, he said.
“Our total inventory pool continues to grow, albeit slightly,” Lamontagne wrote.
The increase in vacancies can be attributed to new construction, not a slowdown in demand, he said.
“The Innovation District at Scarborough Downs, for example, has added over 250,000 square feet of new buildings and there are some vacancies in the speculative projects that are going up,” he wrote.
But with steady demand, he said, “I don’t expect those vacancies to last long.”
Demand is coming from several industries, including manufacturing, shipping and warehousing.
However, he added, “One area that we are beginning to sense some trouble is the recreational and medical cannabis sector. There are several smaller grow operations that have recently closed or looking to downsize. And, anecdotally, we are simply getting less calls for the industry than we used to.”
Office
In the office market, said Sam LeGeyt, an associate broker, some tenants have decided that working from home will be the new normal.
But many are returning to the office.
“The downtown market is continually strong, as we have seen the vacancy rate drop below 5% again in the Class A market with only a few options for tenants looking for 25,000 square feet or more,” LeGeyt wrote.
The suburban market has seen an increase in spaces available for sublease and in vacancy rates.
“Coupled with high construction costs and increasing vacancy rates, several landlords and owners have taken the opportunity to look at adaptive reuse of existing office space,” he said. Several concepts are being considered, from residential apartments to self-storage conversions across the entire Greater Portland office market, both downtown and suburban.”
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