NORTHEAST SNAPSHOT, OCTOBER 2004

Portland Office Market

In recent years, many Northeast markets have encountered highs and lows within the office sector of the real estate community. Yet, the office market throughout Maine has remained strong. At 3.5 percent, the vacancy rates for Class A space in the greater Portland area have averaged far below national rates, and rental rates are holding strong. Construction throughout the area has been steady, where there has been an average level of new development, according to David Caron, associate broker with Portland-based Malone Commercial Brokers.

The suburban areas enveloping Portland are currently experiencing the majority of development. One Riverfront Plaza has just been completed in Westbrook, just west of Portland, with CORE Inc. leasing 80 percent of the building.

In general, the Scarborough and South Portland suburban markets have seen the bulk of Maine’s office development of late. However, Caron notes that the Portland market is an area to watch for upcoming development. One new building in downtown Portland is 280 Fore St. The 70,000-square-foot office building should be complete by the end of the year and is already approximately 70 percent leased. The major tenant in 280 Fore St. will be the accounting firm Baker, Newman & Noyes, and the company is planning to occupy approximately 32,000 square feet when it moves in.

Caron adds, “The Marginal Way area, along Interstate 295, and the East End of the waterfront in Portland are the areas that could see significant development in the near future.”

According to Caron, most of the properties being built are by local developers. However, there has been an increase in the number of out-of-state investors entering the market and buying existing product of late. With rental rates ranging from $17 to $21 per square foot, there is reason for the substantial interest from investors.

The vacancy rates for both Portland and suburban Class A properties are currently at a low 3.5 percent, while rates are a little higher for Class B properties. Caron notes that because there is little space to absorb, “recent trends show a lot of owners purchasing buildings for their own use.” Though the vacancy rates are low, most new development is build-to-suit, with limited speculative activity. The market looks strong, however, and should continue to improve.

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