Total office space vacancies in Greater Portland rose to more than 11 percent last year, the highest rate since commercial Realtors began tracking the sector in the 1990s.

The empty desks were largely the result of companies consolidating to survive the recession, not of major business closures, experts say. As 2011 unfolds, there’s a sense that the market is bottoming out, although the normal lag in business cycles and data-gathering masks some encouraging signs.

Those are some of the conclusions in the latest office market survey by CBRE/The Boulos Co. They come as more than 500 real estate professionals meet today for the annual Maine Real Estate and Development Association conference in Portland, a widely anticipated look-ahead event for the industry.

In many respects, the survey’s findings aren’t a surprise as the nation attempts to recover from a deep and lingering recession. Portland’s market hasn’t had so much empty space since the early 1990s, in the wake of the banking bust.

“This is just indicative of the times,” said Justin Lamontagne, a CBRE/Boulos broker. “It’s going to be a two- to three-year window.”

Greater Portland has about 11.5 million square feet of office space. The overall vacancy rate rose from 9.15 percent in 2009 to 11.2 percent last year, according to the survey. Peeling back the numbers shows some distinct differences in how the market is holding up in certain areas.

Downtown Portland typically is among the strongest areas, home to banks, law offices and other professional services. But vacancy rates for the best space, known as Class A, shot up downtown, from a healthy 4.17 percent in 2008 to 6.24 percent in 2009 and 10.72 percent last year.

Combined with Class B space, the overall vacancy rate downtown jumped from 6.9 percent in 2009 to 12.53 percent last year.

Downsizing and relocations contributed to the trend. Big holes exist at Two Portland Square, where TD Bank vacated offices, although some of that space recently went under contract.

The move by MaineToday Media, owner of The Portland Press Herald/Maine Sunday Telegram, to One City Center left 61,000 square feet at 390 Congress St.

MaineHealth moved to 85,000 square feet of renovated space on Free Street but left various empty offices at 465 and 443 Congress St. All told, 262,000 square feet are available downtown.

Not captured by the figures, but on the minds of commercial Realtors, is the pending move by the Pierce Atwood law firm from One Monument Square to a renovated building on Portland’s waterfront. That will leave nearly 80,000 square feet of additional vacant space downtown.

“Downtown and Monument Square are among the most difficult areas now,” Lamontagne said. “The fact that Pierce Atwood is leaving is pretty alarming.”

While downtown is struggling, the suburbs are doing better. Vacancy rates there leveled off last year at 9.3 percent. Newer buildings with attractive lease rates and cheaper parking contribute to the trend, Lamontagne said.

“Downtown still has an appeal,” he said. “But when times are tough, money is going to trump everything.”

The lag between economic recovery and business hiring decisions suggests that the vacancy rate may continue to rise early this year before turning a corner, said Jim Harnden, a partner in Malone Commercial Brokers. One indicator he notices is that businesses are starting to sign longer-term leases, a psychological shift that indicates cautious optimism.

“Attitudes are significantly better than 15 months ago, when people only wanted to do a one-year lease,” Harnden said.

Taking a broader view, Portland’s vacancy rates continue to track well below those of bigger cities in the region, such as Boston, Providence and Hartford, where the downtown vacancy rate hit 25 percent last year. But recovery in those markets is important to Portland, to the extent that Maine is tied to the regional economy.

Ultimately, a stabilization of vacancy rates depends on jobs. Real estate professionals are beginning to see early signs of more hiring.

Roxane Cole of Roxane Cole Real Estate in Portland said she has been getting more inquiries recently on property she has listed, as owners think about rehiring and the need for more space.

“I think people are looking around, which is a reason to be optimistic,” she said. “The next step is to put it into action.” 

Staff Writer Tux Turkel can be contacted at 791-6462 or at: [email protected]