The developer of Portland Harbor Hotel has started the conversion of a neighboring office building to create another hotel that will connect via a skyway.
A limited liability corporation, 245 Commercial Street LLC, bought 245-253 Commercial St. in Portland’s Old Port neighborhood from Casco View Holdings LLC for $10 million.
245 Commercial Street LLC is owned by Portland commercial real estate developer Bateman Partners LLC and Casco View Holdings LLC is owned by Portland-based insurer MEMIC.
Gregory Boulos and Drew Sigfridson of the Boulos Co. represented the seller.
The 44,316-square-foot, five-story building, called the Nathan Winslow Block, dates back to 1860.
Conversion trend
The conversion from office to hotel or residential use is on trend for the downtown area, noted Boulos. Another example is the creation in recent years of a hospitality portfolio from former office buildings by Portland real estate management, investment and development firm East Brown Cow and Kentucky-based Commonwealth Hotels.
And Portland is still seeing demand for hotels, he said.
“This deal is a textbook example of converting excess office space into alternative use,” Boulos said.
Shifting office needs
The seller, MEMIC, was founded in 1993 and is today the nation’s third-largest workers’ compensation specialist.
MEMIC is headquartered at 261 Commercial St. The address includes a parking lot that’s next door to 245-253 Commercial St., with the MEMIC building set back from the road.
MEMIC bought 245-253 Commercial St. in the mid-2000s and rented it out as an income property for a few years, said Michael Bourque, the company’s president. MEMIC eventually began to take upper-story office space there as it became available, taking on interior renovations.
In 2020, the two buildings provided a fair amount of social distancing. Afterward, MEMIC went to a hybrid work environment.
The company has roughly 700 employees, with about 300 in Maine and the rest in other states. It became apparent that both buildings weren’t needed. Property values were increasing and hotels were springing up.
MEMIC had a long relationship with the Bateman Partners LLC.
“They recognized we weren’t using this property optimally,” Bourque said of 245-253 Commercial St.
Of the hotel conversion, he added, “I think it’s good for Portland and it’s good for Commercial Street.”
Historic features
Over the past four decades, Bateman Partners has built commercial and residential projects worth over $210 million in Maine and New Hampshire.
Hotel projects include the Inn at Diamond Cove on Great Diamond Island off Portland, the Cambria Hotel that opened in the city’s East End in 2022 and the 102-room Portland Harbor Hotel at 468 Fore St., across an alley from 245-253 Commercial St.
In 2021, New Hampshire-based XSS Hotels acquired a controlling interest in the Portland Harbor Hotel and the Inn at Diamond Cove, with Bateman Partners retaining a minority ownership.
The new hotel will be called the Nathan at Portland Harbor Hotel, in honor of the building’s origin as the Nathan Winslow Block. The project includes building a skybridge to connect the sister hotels, said Nathan Bateman, vice president of Bateman Partners
Amenities at the Nathan will include a fitness room and conference rooms on the first floor. The second-floor lobby will intersect with the skybridge.
Features of the historic building will be preserved, such as exposed beams and bricks and high ceilings; color and décor will be suitable for the vernacular, said Bateman. A restaurant and bar area are planned for the fifth floor, with expanded deck space.
Non-guests will be able to come off Commercial Street and take an elevator to the top floor. Guests from both hotels will be able to intermingle and use amenities in the other.
Renovations
The project includes disassembling office partitions and cubicle space down to the stud walls and building out 50 guest rooms plus amenity spaces. Demolition is in the works. Installations include plumbing, heating and cooling systems.
“The shell is in perfect shape,” said Bateman.
The project team includes Portland architecture firm Archetype and principal Mike Coyne and PC Construction, headquartered in Vermont with an office in Portland. It’s expected the hotel will be open by this August.
Total investment into the project, including the purchase price, is $27 million, financed in part by Bangor Savings Bank.
Ground-floor retail tenants, including Muse Paint Bar, will remain.
“It was a natural opportunity to expand the Portland Harbor Hotel,” Bateman said.