NORTHEAST SNAPSHOT, JANUARY 2005
Maine Industrial Market
The industrial market in Maine remains healthy, particularly
in the sale and leasing of facilities of less than 50,000
square feet. Development in southern and central Maine has
been on the rise, due to low vacancies in smaller facilities.
There have been several industrial parks developed over the
past few years that have proven to be very successful. Due
to the increased cost of construction nationwide, and the
low vacancy levels locally, existing buildings for sale or
lease have appreciated greatly in value the past 18 to 24
months and prices are at record highs.
While no statewide report has been compiled on vacancy rates
for industrial property, specific markets such as Greater
Portland, Biddeford/Saco and Auburn/Lewiston are enjoying
low vacancy levels of 3 to 5 percent for facilities under
30,000 square feet. Larger facilities those facilities
greater than 50,000 square feet have a higher vacancy
level and are remaining on the market longer.
The majority of industrial development is taking place in
southern and central Maine in the new industrial growth areas
of the state including the towns of Saco, Biddeford, and Scarborough
to the south, and Auburn, Lewiston, and Augusta to the north.
Each of these municipalities has opened new industrial parks
in recent years. Generally, these areas have seen increased
growth due to their population base for employers and wealth
of available land. Previously sought after industrial markets
such a Portland and Westbrook have a very limited supply of
industrial land remaining.
One significant industrial development is the new super-regional
distribution center for Wal-Mart in Lewiston. The 500,000-square-foot
facility expandable to 800,000 square feet is
under construction and scheduled to be complete in 2006. It
has also recently been announced that the U.S. Post Office
will move forward with the development of a new regional processing
center that will exceed 500,000 square feet. The project will
be built in South Portland along the Scarborough town line.
Most industrial properties throughout the state are smaller
There is no single major tenant absorbing a majority of space,
but rather an overall trend of local businesses expanding
and moving from the leasing market to the owned-and-occupied
market. The predominant property uses in Maine continue to
be manufacturing and distribution. There is an ever-growing
trend towards high-tech and biotechnology. Rental rates have
been strong as vacancy rates have dropped and demand has increased.
Rental rates in Maine vary, largely based on the location
of the warehouse property, as well as the age and utilization
of the facility. Newer properties are leasing from $7 to $8
per square foot, triple-net, due in large part to the cost
of construction. Older, non-specialty properties in good condition
continue to lease from $6 to $7 per square foot, triple-net.
Lesser rates are available for larger, older facilities ranging
from $3 to $4 per square foot, triple-net.
With the cost of construction remaining high and interest
rates on the rise, new construction should stay on balance
with demand and continue to push existing inventories upward
in both the leasing and sales markets. The southern part of
the state will continue to grow its industrial market as cities
expand existing industrial parks and provide low cost land
alternatives to the more established areas.
Craig S. Young, Partner, CBRE/The Boulos Company
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