Mainebiz.biz (January 17, 2020) – Despite snow throughout the state, more than 900 real estate agents, property developers and other industry representatives attended the Maine Real Estate and Development Association’s 2020 forecast and conference. According to Shelly Clark, MEREDA’s Vice President of Operations, this number came from 985 people who registered.
“The forecast conference is a must,” said MEREDA President Gary Vogel in his opening speeches at the conference at the Holiday Inn by the Bay in Portland. Vogel noted that the conversations and connections are as important as what takes place on the stage.
Vogel, a lawyer at Drummond Woodsum in Portland, later told Mainebiz: “I have attended almost every one of these conferences since MEREDA has hosted them, and I was amazed at how effective this event is and has been for everyone Estate.
“From the quality of the excellent presentations to the connections that come about, we can all start the year with a shared understanding of the real estate market in so many segments and the underlying business drivers in many areas.
Industry insiders discussed last year’s trends and their forecasts for the coming year, as the exhibition hall on the ground floor was a beehive full of activities. More than 65 exhibitors were represented in the exhibition hall, who advertised their products and services and offered branded goods from whoopie pies and chocolates to measuring tapes and golf balls.
Optimistic economic outlook
Leslie Preston, senior economist at TD Bank in Toronto, was generally optimistic about the US economy in 2020 and afterwards, despite a slowdown in global growth.
“We have no recession in our forecast for the next few years,” she said.
She also sees that the slowdown in production continues, which is called the painful area. “Manufacturing is slumping,” she said. “You could call it a recession in manufacturing.”
It is positive to note that the service sector is expanding and that the US labor markets are doing “quite well”.
In Maine, with an “incredibly low” unemployment rate of 2.8%, she found that employment growth could continue as the state attracts immigrants. She showed a chart of strong growth over the past four years and called it an “incredible story”.
She later replied to a question that immigration came primarily from other countries, although the data may not necessarily reflect immigrants who moved from another US entry point.
Heather Johnson Keynote
Keynote speaker Heather Johnson, commissioner for the Department of Economic and Local Development in Maine, said one goal of the state’s new 10-year economic plan was to stimulate innovation and economic diversification, which in turn would stabilize supply chains and labor markets across Maine the State.
“If we can diversify our economy, we will have a broader commercial base,” she said.
Sectors in which she sees opportunities for Maine include fish and agriculture related to food traceability, and forest products where it is now possible to make “all kinds of new things” from parts of the tree, from wood fiber insulation to towards clothing fabrics made of nanocellulose. “Now lumberjacks have a lot more options. How can we get people to log in again?” She said.
Johnson also noted that the business plan is “not magic”, but a roadmap. As in the plan itself, the state will collect cross-sector contributions for implementation.
She assured the participants that when prioritizing the areas, the state would make sure that “your priorities were also taken into account”.
Southern Maine industry forecast
In the Portland metropolitan area, “prices are rising, yields are falling,” said Justin Lamontagne of NAI The Dunham Group. “I don’t expect that to change.”
In December, there were 593 industrial buildings in the greater Portland area covering more than 19 million square feet, but the vacancy rate was 1.84%. “This is clearly a market for landlords and sellers,” he said.
Vacancy rates in the southern Maine market range from a 5.2% high in Biddeford to a flat zero in Gorham. “Gorham is now completely sold out,” he said. “There is not a single square foot of commercial space in the city of Gorham.”
In the meantime, the average number of square meters for sales has risen steadily, from $ 40 per square meter in 2011 to $ 70 per square meter in 2019. Rents fluctuated somewhat more, but rose from around $ 5.50 per square meter in 2011 to just under including $ 7 last year.
Due to the “critically low” inventory, commercial landlords can very selectively decide what to let into their building
One of Lamontagne’s forecasts for 2020 is that the cannabis industrial market, which spurred much of its activity two years ago, is back as new retail laws come into force. He said vacancy rates will increase as construction begins.
He advised those looking for industrial property: “Be aggressive, talk to your realtor, do whatever you need to do to make room.”
Each year Lamontagne ends its forecast with a New England Patriots playoff prediction. Since the team isn’t running this year, he instead made a prediction about quarterback Tom Brady, whose contract expires in March. “I don’t know how to handle it, but I’ll say this guy will be back in 2020.”
York County market forecast
York County’s economy is booming. 6,622 companies were founded in 2017, compared to 5,300 in 2001.
However, according to Will Armitage of the Southern Maine Finance Agency, the number of employees has not increased at the same pace. In 2008, 112,858 people were employed. By 2017, there were only 113,381.
Unemployment rates for Maine and York County have dropped from 8% in 2010 to an average of 2.5% in 2019.
The development in the region ranges from the reinvention of the Biddeford mill complex to the introduction of Ready Seafood in Saco. There are still opportunities in terms of factors such as available acreage and availability of mill space. In Sanford alone, 660,000 square meters of mill space are available.
Armitage predicted that the region’s challenges this year will continue to include a tight labor market, low vacancy rates, and rising construction costs.
Encouragingly, he said that with more than 1,900 acres of industrial land in York County, “there is enough room to build new projects.” These include more than 1,600 acres in Sanford and more than 135 acres in Saco, more than 90 acres in Kittery, more than 33 acres in Kennebunk, more than 10 acres in Berwick and more than 8 acres in Biddeford.
South Maine Housing Forecast – Apartment Building
The multi-family housing market in Portland will remain stable and strong, said Brit Vitalius of the Vitalius Real Estate Group.
In Portland, sales decreased 14% between 2018 and 2019, mainly due to a lack of inventory. However, they increased in other markets. They rose 33% in South Portland, 28% in Biddeford-Saco, 19% in Westbrook and 17% in Lewiston-Auburn.
He also said that the 1031 stock exchange, which allows capital gains to be invested in home renovation for tax relief, is driving the activity.
In Portland, prices for three- and four-family homes, which had risen steadily, fell slightly this year due to a lack of inventory, while prices for two-unit units continued to rise.
The average price for two units was $ 457,000, an increase of 4% over the previous year. Three units were $ 555,000 and the average selling price for four units was $ 612,000. Both decreased by 6%. Meanwhile, rents in the Portland market generally remained unchanged. The average rent for a studio was $ 1,000 per month and the average rent for a three-bedroom studio was $ 1,600.
There is continued demand for updated units in the Portland market, and there is still the opportunity to upgrade older units and bring rents to market, he said.
One example was the $ 20 million sale of Bayside Village in Portland, in which Porta & Co. carried out $ 11 million renovation work on 196 units to bring them to market.
The Saco and Biddeford market, where apartment buildings are more available and affordable, will continue to be very active as affordability and the gaps between the “old market” and the “new market” for redeveloped mills in the city attract investors.
Things will also continue in Lewiston and Auburn, where there are many new developments. However, prices and rents will not rise due to the new inventory, which will meet the demand for high quality rental properties, said Vitalius
South Maine Housing Forecast – Single Family Home
According to Dava Davin of the Portside Real Estate Group, the price for single-family homes in 2019 was $ 225,000. However, the transactions remained practically unchanged at 18,313 compared to 18,022 in 2018. The price peak ends after five years, the first since the continuing price increase from 1999 to 2005.
York and Cumberland accounted for 40% of 2019 sales, and the median price of $ 312,000 for the two counties combined drove government growth. The average price for the other 14 counties in Maine was $ 169,000.
Some high-priced homes contributed to the record median – 11% of single-family homes in the state’s two southernmost counties sold for more than $ 600,000, and 17.4% were between $ 400,000 and $ 600,000. More than half – 57.2% – ranged from $ 200,000 to $ 400,000.
Days in the market are declining – single-family homes for sale in York and Cumberland were on the market 15 days before sale on average. This has been a steady decline since 2015, when homes were on the market for almost 60 days on average.
The majority of buyers are still from Mainern, of which 75% are from Germany. Of the remaining 25%, most were Massachusetts, New Hampshire, Florida, New York, and California.
New buildings accounted for only 8% of sales in the York and Cumberland counties with an average price of $ 375,000, and the rest of the existing properties with an average price of $ 306,000.
Davin predicted that prices would continue to rise in 2020, but more slowly, and there will be a hot market this spring, with many struggles for houses fueled by low inventory levels.
Central and coastal market forecast for Maine
Economy drivers in Lewiston and Auburn are a sizable population of 500,000 within 30 miles, as well as robust health care, manufacturing and distribution, higher education and leisure options. These cities are the linchpin for cities in western Maine, said Mac Simpson and Tim Millett of Porta & Co.
This resulted in a strong portfolio of property sales, including the $ 16.8 million sale of a 25,000-square-meter retail building at 730 Center St. in Auburn.
- Continuation of multi-family development
- Considerable solar development
- Expansion of the Auburn agricultural zone
- Downtown Lewiston growth at Bates I, Continental and Hill Mills.
Waterville has seen significant economic development, particularly through Colby College’s campus and downtown projects, as well as other downtown developments that are expected to continue this year. Augusta is also being developed in the city, particularly along the Western Avenue shopping district.
In Brunswick, development and new business activity are still strong at Brunswick Landing, where 2,000 jobs have been created since 2011. The Landing TechPlace incubator is 90% staffed by 38 companies.
Simpson and Millett predict further investment in residential properties in Bath, Brunswick and Topsham in 2020, as well as continued demand for tenants and businesses in the region. Bath Iron Works remains dependent on national policies and the continued signing of defense contracts.
Market forecast for Bangor
Unique spaces and experiences are in demand in downtown Bangor. Venues such as Top of the Nine, which have joined the Bangor Arts Exchange, as well as the Tarratine Club and Queen City Cinema Club, provide more pedestrian traffic for restaurant and retail experiences, said Tanya Emery, director of community and economic development at the city of Bangor.
This in turn led to continued strong growth in the restaurant and retail sector, which included tea and tarts, Pompeii Pizza, Portland Pie Co., Pure and Simple Apothecary, Highbrow Studio and The Noble Root Aveda Salon.
Demand is also growing on the office market. Vacancies have dropped below 8%. Key activities include the sale and renovation of 1 Merchants Plaza by a local developer who causes CES Inc. to move its headquarters to Bangor. and Thompson-Hamel’s move to the first floor of historic Nichols Block.
The development in the waterfront is also strong, as the new Bangor Savings Bank campus and the continued success of Waterfront Concerts, which are now rented until 2032, and an option for another 25 years after that show. In 2020 and 2021, USD 7 million will be invested in the development of the waterfront.
Critical needs are industrial rooms and residential units. With the increase in commercial space, the vacancy rate in the region has dropped to around 2% and no single municipality has more than 3%. Limited possibilities remain without a new building.
Still, there are significant projects of regional importance, including Fiberight’s $ 70 million waste incinerator in Hampden and two large fish farms in Bucksport and Belfast.
According to Emery, Bangor welcomes the construction of new industrial and residential buildings, and the development of existing properties along the waterfront will continue in 2020. Even in the heart of downtown, there are still some great options for developers or owners.
Maine’s vacation / hospitality forecast
The Maine hotel industry has strong numbers – better than the national average. Nationwide, the average daily room rate in 2019 was $ 131.53. Compared to Maine’s average price of $ 145.16. Sean Riley, president and CEO of Maine Course Hospitality Group, said the average price in the Portland market is $ 140.
By the third quarter of 2019, the Maine construction pipeline – which is under construction and is expected to begin in the next 12 months or in the planning phase – comprised 13 hotels, most of which are in the greater Portland area, but also two each in the south and in the middle of the Coast.
Nevertheless, room occupancy is expected to decrease somewhat in 2020 and 2021. Among the national chains, occupancy at Marriott and Hilton is expected to increase sharply over the next three years.
The industry is changing, said Riley. To the trends:
- Digitally changes the experience of guests, both in terms of entertainment in the guest rooms and the ability to do everything by cell phone, from finding a hotel and reserving a room to checking in by phone.
- The new guest technology includes plans by Marriott and Hilton to offer guests the ability to control TV, sun protection, music and lights on their phones. and use personal data for services such as adjusting room heating before arrival.
- Hotels also focus on sustainability and focus on direct bookings – and they struggle with the fact that Airbnb stays here.
Retail forecast for Southern Maine
Retail apocalypse. Experience. Immersive shopping experience. Blurred lines.
These were the buzzwords that prevailed in retail until 2019, said Karen Rich from Malone Commercial Brokers.
During the retail sector, an apocalypse for citizens such as Payless Shoe Source, Forever 21, A.C. Having experienced Moore Arts & Crafts and Olympia Sports, a number of small, independent retailers have sprung up throughout southern Maine.
New restaurants on the Portland Peninsula include Flood’s, Sticky Sweet, Nura, Blue Spoon and Quiero Café. New breweries, distilleries and wineries such as Lone Pine Brewing Co., Grippy Tannins and Three of Strong Spirits are on the program.
New retailers in the old port and downtown Portland include Jill McGowan and Toad & Co. The Maine Mall attracts traditional tenants like Jordan’s furniture and alternative uses like the Maine Warrior Gym.
This diversification is also pronounced in Freeport among retailers such as Gypsy Rags and Skordo.
The entire retail market tends to diversify, in local hands, not traditionally and experience-oriented. This is associated with new investments in art and festivals in the community, which help to strengthen customer interest in retail.
Southern Maine Office Forecast
According to Nate Stevens, a partner of Boulos Co., large vacancies shaped the office market in South Maine in 2019.
The demand for inner-city space is still high and the demand is stable. The transaction volume increases and asking rents continue to rise accordingly. But suburban vacancy rates are increasing.
Significant transactions in the city center included Sun Lifes renting 77,000 square meters in Portland Foreside; Certify rented 38,072 square feet at 21-39 Commercial St. in Portland.
But there are also significant vacancies in downtown, ranging from 10,000 to 40,000 square feet in Portland.
In the suburbs, the major leases for companies such as Goodwill Industries and LogistiCare ranged from 9,000 to 20,000 square feet. But there is still plenty of space for the tenants. That is in the 2211 Congress St. in Portland’s outskirts as large as 16,000 square feet. South Portland has a number of large vacancies ranging from 16,000 to 72,000 square feet.
Overall, the vacancy rate in the Portland office market has risen from 1.64% in 1999 to a high of 10% in 2010 and is now falling to 7%.
Steven’s forecast vacancy rates this year will weaken, possibly with a slight increase over the next year or two. Given the continued demand in the city center, leasing rates are expected to increase.
The suburban market will see a slight decrease or possibly a flattening of the average leasing rates. Stevens expects the new office building to slow down.
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