MEREDA: Maine real estate markets on the upswing
Greater Portland's retail vacancy rate continues to beat the national average, spurred by the recent openings of Bon Ton and Nordstrom Rack in the Maine Mall area, and Market Basket in Biddeford.
More than 700 people crowded the conference space and exhibition hall of the annual Maine Real Estate and Development Association's forecasting conference, held Jan. 23. Most presenters saw encouraging trends within the residential, industrial and commercial markets. Here are a few of the highlights:
Industrial
Justin Lamontagne, a broker with NAI Dunham Group, reported that 2013 was a very strong year for industrial market sales and leasing in southern Maine, especially in the under-10,000 square feet sector, which saw several properties sold within a week of being listed.
Breweries such as Allagash Brewing, Bissell Brothers, Banded Horn, New England Distillery, Austrin Street Brewing, Foundation Brewing and Baxter Brewing and a new market for medical marijuana cultivation centers helped drive some of 2013’s industrial market growth, Lamontagne said. He characterized the medical marijuana cultivation centers in Yarmouth, Gorham, Biddeford, Saco, Windham and Westbrook as being “great tenants” from a landlord’s perspective, being a well-funded and regulated industry that’s “quiet and secure.”
His survey of 496 industrial properties shows vacancy rates ranging from 2% in Saco and Scarborough, 2.4% in South Portland, 4.3% in Gorham and 5.3% in Westbrook to a high of 8.2% in Portland. “It’s clear we have an indus trial inventory crunch right now in the greater Portland market,” he said. “Lewiston-Auburn and Biddeford are starting to take advantage of that.”
Looking ahead to 2014, Lamontagne expects to see a continued rise in lease rates, stabilization of vacancy rates and increased competition among investors seeking to purchase industrial buildings.
Residential
Single-family homes:
Single-family homes Closed sales of singlefamily homes in Maine rose 16% in the first three quarters of 2013 over year before figures for the same periods, according to Mike LePage, an agent at RE/MAX Heritage in Yarmouth. Median prices in the third quarter of 2013 rose 5% from the prior year’s figure.
He expects mortgage rates to top 5% by the end of 2014, dampening national existing home sales and making home ownership less affordable. However, Maine’s housing market recovered more slowly than elsewhere in the nation, and LePage considered it still to be recovering.
He predicted, however, that the market will stabilize in 2014, with existing home sales rising 3% to 5% and prices rising 2% to 4%. New construction of singlefamily homes and condos also was expected to nudge up, and he anticipated a continued resurgence in the high end of the market. Newly constructed home inventory has been near a 50year low. “Baby boomers are trying to find their way into Portland,” he said of the condo growth. “It will be a trend.”
Multi-family homes
Multi-family sales in southern Maine continued a strong rise in key markets like Portland and Saco/Biddeford over the past year, while Lewiston-Auburn saw flats sales volume, transactions and median prices, according to Brit Vitalius, principal at Vitalius Real Estate Group in Portland and president of the Southern Maine Landlord Association.
Sales volume for multi-family units rose 8% from 2012 to 2013 in Portland, 14% in South Portland, 20% in Saco/Biddeford and were flat in Lewiston-Auburn. The median price rose by the same percentages in each of those areas.
In Portland, three-unit commercial buildings were in high demand, with the average price rising 18% over 2012. Notably, South Portland saw a 40% rise in the number of transactions.
“South Portland had an incredible year,” he said, noting that Westbrook also was up a strong 28% in transactions. Half of the properties that sold in Portland went under contract from March to May. “In the spring it felt like there was a mini bubble,” he said.
Notably, 2-to-4-unit sales saw a rebound. “For the first time in a bunch of years we’re finally get ting back some of the value we’ve lost,” he said. “It’s the first significant increase since 2007.” One interesting development in Portland’s tight rental market is short-term rentals with services like AirBnB and VRBO.
Vitalius said landlords are discovering this relatively new market and competing with hotels for guests. He forecasted that multi-family building sales will remain active in 2014 in Portland, but prices will level out. Rising interest rates will be countered by a continued rise in rents, which could go up as much as 5% in the most desirable units. Commercial inventory in Portland will remain extremely tight. He advised watching the East Bayside area for more activity
Hospitality
The forecast for hospitality is brightening as Maine hotels saw an increase in revenue per available room and average daily rates in 2013, compared with 2012 figures. While occupancy rates remained relatively flat statewide, Portland area hotels saw a 5.3% increase in daily rates to $114.10 and revenue per available room of 10.3% to $70.51, according to an analysis by Matthew Arrants of Pinnacle Advisory Group.
That RevPAR increase is “quite strong,” according to Arrants.
Hotels in the Augusta market saw a RevPAR increase of 5.5%, while Bangor’s dropped 1.8% over 2012 revenues. Bangor’s numbers could change dramatically since a new TownePlace Suites is expected to open in July and a proposed Residence Inn is on the drawing board for 2015.
“The Cross Insurance Center is still ramping up,” said Arrants of the new destination venue. Even so, he expects some erosion in revenue performance in the Bangor metro area as the growth in demand won’t be enough to compensate for the increased supply of hotel rooms.
The Portland market is also expected to undergo the most change as the new Westin Eastland opened its doors last December and the new Marriott Courtyard and Hyatt Place are expected to open in May with the hotel in the former Portland Press Herald building set to open in 2015. Across all regions, group travel is expected to bring more visitors to the state, said Arrants. Through October, there’s been an 8.4% increase in booked rooms for group travel compared with the same period last year
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