Interesting developments | MEREDA's new board president sees movement in Maine's real estate landscape
Photo/Tim Greenway
Tom Lea assumes the help of MEREDA with an eye toward invigorating its membership
If Tom Lea ever needs inspiration, he can look on his office wall where a signed photo of Presidents Eisenhower, Hoover and Truman hangs. The black-and-white candid, shot in 1954 at a Princeton University reception, landed in the hands of Lea’s dad, an advertising executive who mailed the print successively to each of the presidents’ secretaries requesting an autograph. Eisenhower, Truman and Hoover complied.
“It’s amazing isn’t it?” says Lea. “Not just the photo itself, but that my dad was able to get it signed by three presidents in such a simple and straightforward way.”
The photo serves not only as a reminder in the lesson of nothing ventured, nothing gained, but also as a testament to how leadership styles can vary based on circumstances and personality.
Lea’s own leadership will be on display as he assumes the presidency of the Maine Real Estate and Development Association, a coalition of people in the building trades and the professionals who support them. Since 1984, real estate brokers and developers have rubbed elbows with architects, engineers, accountants, contractors, housing authority executives, lawyers, bankers and others to educate and advocate for its 240-plus members.
Lea, 62, falls into the financing category of professional support. A senior vice president with People’s United Bank in Portland (formerly Maine Bank & Trust), Lea is in his third decade in commercial real estate lending, getting his start with Casco Northern Bank in 1988 at roughly the same time he joined MEREDA. A graduate of Bowdoin College who holds an MBA from the University of Southern Maine, Lea this month succeeds Ray Cota Jr., vice president of Webber Oil Co. in Bangor, as MEREDA president.
On the day he opened a box of his new Peoples United Bank business cards, Mainebiz sat down with Lea to chat about his plans for MEREDA, trends he’s seeing in the commercial real estate market and how he describes his own leadership style. The following is an edited transcript.
Mainebiz: How do you view your presidency of MEREDA?
Lea: I choose to look at it as a two-year stewardship, that’s what I call it. The president has the ability to be very authoritarian, but I’ll probably be more consensus driven and rely on the board. We have a very experienced, smart and knowledgeable board.
There is great representation on the board among the industries we serve, as well as geography. We try very hard not be considered a Portland organization. While the center of gravity is the Portland area real estate market, we try to be statewide in our focus and mission. One of things I hope we have shaken off is the notion that we’re a Portland organization. We are not that at all. We try not to be local.
Do you have specific goals for your presidency?
One thing I’ve noticed for years, and haven’t really been vocal about it, is the composition of our board … they’ll all retire in the next five to 10 years. And many have been with MEREDA for decades, as I have. So one of my initiatives is to recruit organizationally. To approach some of the larger companies who have members who probably won’t be around in two or three years and ask, “Who in the organization would you like to loan us for a few hours here and there?” So far, that’s taken quite well.
Does the board come up with an annual set of goals?
It changes, and we do, but it isn’t necessarily an annual event. I think we’ve been a very effective and dynamic organization. But you can’t stay the same. I think we may take up a discussion about where we see ourselves five years from now. One of the things we see bubbling to the surface is that we’re better known in Augusta than on Main Street.
Why’s that?
Well, we don’t run to the camera, we don’t advertise. We didn’t call you up for this interview; you called us (laughs). We may be looking at putting ourselves out more into the mainstream. How much, and how, is under discussion.
Our founding members were a loose band of developers who realized some laws were being passed in Augusta that were detrimental. MEREDA started as an advocacy group for developers, but that has changed quite a bit since then. Now I’d say we’re strong advocates for responsible development — that’s really our mission. We have discussions with lawmakers about certain bills that are relevant to our membership. Interestingly, because we have a divergent membership, not all people view a bill in the same way. We’re not a monolith, if you will.
I think we’ve gained some credibility with the lawmakers in Augusta, a testament to the hard work of my predecessors. We’re gaining ground.
So do you advocate for particular positions?
We do, but we’re more general. We don’t get project specific. Our focus is really a statewide focus.
Is there anything on your radar right now that MEREDA will be assessing for a position?
The thing that got our attention this spring was the site location law changes. The DEP staff did a major redraft of old statutes. But we felt a large number of the changes were more than just updating, and represented policy changes that we felt should be run through the Legislature.
Can you give an example?
I don’t want to get too specific, but the new regulations were lean almost to the extreme. More coercive rather than encouraging. These are very far-reaching changes, much more technical and many more barriers to development. We’ve written a long letter to the DEP detailing our concerns. … I think the next Legislature will take it up.
What are you seeing now in commercial real estate markets?
Real estate is local, so if we stick mainly to Maine, we could have a long discussion about how Portland, Bangor, Lewiston and some midcoast towns are doing better than other places that are losing population and have high unemployment. I talk to brokers a lot — they’re the ones in the trenches. If you talk to enough of them you get a sense of what’s happening now. I would say Portland has evaded a major downturn that many other cities experienced, largely as a result of the stable employment picture and, secondly, we don’t add new buildings until we know who will occupy them.
I did get some feeling, though, that brokers are feeling a little more comfort. Tenants are signing leases, or buyers are stepping forward to buy property. There is that sort of feeling that we have hit bottom and gone past it, whereas a year ago we didn’t know how far down we would go. That affected the whole psyche of people in real estate development.
That means we’re seeing situations where a tenant is considering a five-year lease rather than a series of one-year leases. Although it’s still a buyer’s market, tenant negotiations have more leverage than the owners. For instance, a tenant will come to a landlord and say, “I have one year left on my lease and I’ll sign for another five years if you drop the price $2 or $3 per foot.” That’s painful.
On the other hand, there are a number of brokers who’ve reported this year a decent amount of increase in activity. It’s a mixed bag.
What are the expectations on capitalization rates?
Cap rates rose last year quite a bit, in some cases 200 basis points. That means investors were expecting a higher return on cash equity. More on the national market … cap rates are doing fairly well in Boston, they’ve come back down. I was surprised the other day that there was a large apartment transaction with a cap rate below six … it absolutely floored me.
What about lending?
During the boom times, the lending standards become looser. This time, it went too far. What we’re seeing now is a correction. We need to have that for a good credit culture.
I have 14 [commercial lending] competitors here in Portland … and that doesn’t even include the credit unions, REITS, insurance companies and other lenders. There are trillions of dollars of loans coming to a 10-year maturity that may not get refinanced. But there’s no shortage of investors wanting to buy property.
Carol Coultas, Mainebiz editor, can be reached at ccoultas@mainebiz.biz.
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