Real estate market holds up despite downturn
Bangor-area developers often take a long view of investments, a tendency that bodes well for the local real estate market as it struggles to recover from a downturn, according to Bev Uhlenhake, a broker with Epstein Commercial Real Estate in Bangor.
"People here tend to buy and hold, so they don't panic when there's a slump," Uhlenhake told Mainebiz. A longtime broker in the Bangor market, Uhlenhake presented a forecast of regional commercial real estate activity at the annual Maine Real Estate and Development Association's forecasting conference in Portland earlier today.
Uhlenhake says she's still seeing plenty of activity in office space as some businesses change addresses to take advantage of lower lease rates. Medical offices in particular seem to be on the move. The area's office vacancy rate has remained relatively unchanged since 2007, coming in at 6.2% at the end of 2009.
But there have been some dramatic departures in the industrial sector, which in Bangor nearly doubled the vacancy rate from 7.0% in 2007 to 13.1% in 2009.
"There are not a lot more vacancies, but there have been a couple of big vacancies," says Uhlenhake. Unisource's departure freed up 71,000 square feet of space and Old Town Canoe's move from its historic downtown space to a new address in Old Town left 104,000 square feet of industrial space vacant. Bangor has 4.2 million square feet of industrial space. But it's Brewer that will show the most dramatic change when ZF Lemforder, a precision auto parts manufacturer, closes this summer and leaves its 176,000-square-foot property.
"That will take Brewer's vacancy rate from 5.4% to over 21%," says Uhlenhake. ZF Lemforder owns a more than 125,000-square-foot manufacturing facility at 55 Baker Blvd. and a 54,000-square-foot warehouse at 12 Stevens Road. The properties are being sold separately for $3.5 million and $1.8 million, respectively.
The area's retail sector is a mixed bag. The Bangor Mall complex has been suffering from the closure of national big box chains Linens ‘N Things, Circuit City and the departure of Home Depot into a new building on Stillwater Avenue. But there's a new Lowe's being built in Bangor, and the city's Broadway area has seen six new retail operations go up in the last year.
"The strip malls are also doing very well," says Uhlenhake. Outside of the mall area, strip malls have remained at a steady 7% vacancy rate since 2007. "That says volumes about small businesses really being nimble and able to change business plans to match the economy."
She says it's hard to predict what will happen with the larger, unoccupied spaces. The recent online auction of the Home Depot store did not meet the reserve price. And there are national competitions to lure new businesses into vacant industrial buildings, she says, including paying companies to relocate in them as Detroit is doing. The Bangor area will need to present enticement packages - available, skilled work force; tax incentives; low employee costs - to compete.
"In the case of the Lemforder building, that will be competing, not with other properties in Bangor, but with other precision manufacturing plants across the country," says Uhlenhake , who holds the listing. "It will be hard. I think the collaboration among the city and state and Lemforder is a good model, but I'm not optimistic we'll find a buyer before July."
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