PORTLAND – Maine’s real estate industry is slowly recovering from the recession and showing some bright spots, but will continue to face challenges in 2012, speakers told Maine’s largest gathering of real estate professionals Thursday.
“I believe the worst is over,” said Karen Rich, a commercial broker at Cardente Real Estate in Portland.
Rich presented her outlook for southern Maine’s retail sector during the Maine Real Estate & Development Association’s annual forecast conference. The sold-out event drew a record crowd of 650 to the Holiday Inn by the Bay.
Nationally, the economic recovery is making gradual progress, but home prices and real incomes continue to decline. That hurts affordability, said Charles Colgan, an economic forecaster from the University of Southern Maine, and will keep the market from improving significantly before 2013.
In an economy driven by consumer spending, the retail sector is an important indicator, and Rich said she sees encouraging trends in Greater Portland. The area’s retail vacancy rate, which peaked at nearly 11 percent in 2009, is falling. The rate last year was just above 6 percent, Rich said.
Windham has emerged as the region’s healthiest retail area, with a 3.7 percent vacancy rate.
Some big holes remain, such as the former Shaw’s Supermarket space in Falmouth and the former Filene’s department store at the Maine Mall. But new franchises have filled some empty spaces, including Books-a-Million, which replaced Borders at the Maine Mall, and Urban Outfitters, which occupies a once-empty building on Middle Street in Portland’s Old Port.
Several restaurants, including Five Guys and Elevation Burger, have opened. “Mainers love their restaurants,” Rich said.
Looking ahead, Rich said, more big-box stores could close, as the Lowe’s Home Improvement store in Biddeford did last year. But she also expects more expansion by banks and credit unions, Starbucks and thrift stores.
Greater Portland’s office market also is recovering. Buyers and tenants can still find favorable deals, but the overall vacancy rate has basically stopped climbing. It hung last year at just under 13 percent, said James Harnden of Malone Commercial Brokers. The office market absorbed 90,000 square feet of net space last year, the first positive number since 2008.
Conditions will remain essentially flat this year, Harnden indicated. But the mood is more optimistic and a handful of projects are being proposed, including those at Thompson’s Point and on West Commercial Street in Portland.
On the housing front, the multi-family market is a mixed bag, said John Graham of Sullivan Multi-Family Realty. Short sales and bank-owned properties continue to make up a substantial portion of the market. Condominium conversion is flat.
But the picture is very area-specific. Portland rentals are stable, with some rent increases. A recent survey of landlords in the city revealed two-bedroom apartments averaging $1,021 a month with heat, $897 without.
By contrast, more than half of the sales in Biddeford-Saco are short sales or bank-owned. Sale prices there are expected to continue their decline.
For single-family homes, 44 percent of buyers last year were first-time buyers and 15 percent of sellers offered incentives, said Nicholas Dambrie, a broker for Re/Max by the Bay. Elements that will influence sales this year include foreclosures, bank-owned properties and short sales, the job market and the ongoing migration to the city from the suburbs.
Trends are pointing to a stabilizing housing market. Sales of existing single-family homes in Maine were up nearly 7 percent last fall from 2010, contributing to six months of positive figures. But median prices continue to slide, off nearly 3 percent last fall to $165,000, according to the Maine Real Estate Information System.
David Banks, who owns Re/Max by the Bay, said median prices will stabilize when sellers set asking prices closer to what today’s buyers will pay. While some asking prices remain unrealistic, Banks said, he’s seeing stability around Portland.
“Anything I sold six months ago, I’d get the same price today,” he said.
Staff Writer Tux Turkel can be contacted at 791-6462 or at: