NORTHEAST SNAPSHOT, MARCH 2005
Maine Retail Market
The Maine retail market is, by nature, a smaller market than one might find in other New England states. Like many northeast states, the lack of developable land and difficult barriers to entry create a tough environment for retail development. Unlike other states, this predicament has not hindered the retail real estate market in Maine in any way. Retailers new to the market include Stop & Shop, DSW Shoe Warehouse, Panera Bread, Cold Stone Creamery and Ruby Tuesday.
According to Peter Harrington, a broker with Malone Commercial Brokers in Portland, Maine, Portland and its surrounding markets will experience continued development and redevelopment throughout 2005. Maine boasts a strong existing market and many promising developments are in the pipeline for the coming year.
“In 2005, we expect continued strong demand for retail space with vacancies remaining in the low single digits. Lease rates should rise, but at a slower pace than in recent years,” says Harrington. “Our recent retail survey of approximately 4.6 million square feet of shopping center space in the greater Portland area showed a vacancy rate of 1.8 percent.”
Despite low vacancies and a dearth of suitable development sites, the current level of retail activity is surprising. Developers are finding ways to take advantage of the present economic conditions, Harrington explains. “Because of high land costs, site work expenses and resistance in some towns around Portland to large retail development, developers and retailers are focusing on redeveloping and expanding existing older centers.”
An example of an existing property being converted or upgraded for new retail use is the rehab and expansion of the former Bradlees Plaza at Exit 38 in Westbrook to 197,000 square feet. The center reopened in 2004 with one the first Kohl’s locations in Maine.
The renovation of three existing retail centers is also planned for this year. In Portland, the Pine Tree Shopping Center will undergo a face-lift and expansion. Portland’s first Lowe’s Home Improvement will anchor the new center. Also, the Falmouth Shopping Center on Route 1 in Falmouth will be renovated, with Shaw’s Supermarkets expanding to 80,000 square feet by absorbing a 30,000-square-foot space formerly occupied by Ames. Further south on Route 1 in Scarborough, The Orion Center will be converted back to retail space from flex office/industrial space when it is redeveloped into the 123,420-square-foot Scarborough Village Square.
It is in the greater Portland market that the majority of development is occurring, but some other markets in southern Maine are experiencing a surge in activity as well. “A majority of the retail development is taking place close to the Maine Turnpike exits. Years ago, the Maine Mall was the dominant retail area in southern Maine,” notes Harrington. “While it is still the largest retail area in Maine, other areas are eroding its dominance. New retail development in Biddeford and in Augusta, Lewiston and Bangor near turnpike exits has been where most of the activity has taken place.”
Though it is becoming easier to reuse existing properties for new retail projects, there are still some ground-up developments occurring in the greater Portland market. There are two distinct developments, one each in Portland and Scarborough, that are in motion. Construction of Morrill’s Crossing, which is off Forest Avenue in Portland, will start this year, and will include the first Stop & Shop store in Maine. In Scarborough, Scarborough Gallery, a 90-acre parcel of land, should receive approval for development this year. Phase I of the project will include a Wal-Mart Supercenter and a restaurant pad.
Harrington believes that the smaller markets in and around Portland will continue to have the majority of development. “The Scarborough Gallery in Scarborough, at 90 acres, is a submarket in and of itself,” he says. “Depending on its success and tenant mix, this development should have a major impact on Greater Portland’s retail sector.” Portland’s Bayside area is another submarket to keep an eye on. In recent years this once-industrial area has seen retailers like Wild Oats, Hollywood Video, Planet Dog, Gorham Savings Bank and Eastern Mountain Sports establish stores. Another grocery store in the 50,000-square-foot range is in the planning stage. This area is at the crossroads for many of Portland’s residents and commuters.
With increasing interest from developers and retailers alike, the retail real estate market in Maine should continue to experience low vacancies and significant growth throughout 2005.
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