The MEREDA Index, a key measure of the Maine real estate market’s health, has increased by 25 percent since early 2014 to a record high of 110, a group of industry professionals said Tuesday.
The index, created by former University of Southern Maine economist Charles Colgan for the Maine Real Estate & Development Association, or MEREDA, shot upward in the first quarter as a result of two major commercial real estate sales in Portland that totaled more than $100 million, the group said.
MEREDA presented the latest index during its annual spring conference Tuesday at the Holiday Inn by the Bay in Portland.
The index is a composite of three areas of the state’s real estate economy: commercial real estate, the housing market and construction employment. It uses the first quarter of 2006, which predates the collapse of the housing industry, as its baseline of 100.
The housing market, which comprises homebuilding and new and existing home sales, has been relatively flat for the past six months, with a slight increase in median price being offset by a drop in new home construction, according to MEREDA member Nathan Bateman, owner of Portland-based property management firm Bateman Partners LLC.
Still, Bateman said the lack of construction activity likely was related to harsh winter weather, and that an upturn in demand among first-time homebuyers in Maine bodes well for the future. “The first-time homebuyer market is strong and growing,” he said.
Similarly, construction employment has remained flat, according to MEREDA member Matthew Tonello, project executive at Portland-based Consigli Construction.
The MEREDA index for construction employment is down about 20 percent from the benchmark of early 2006 and has barely moved in more than two years, Tonello said. But as with home construction, he said the continued stagnation over the past six months was mostly weather-related, and that construction activity in general has been getting stronger.
A shortage of skilled workers in the construction field is likely to drive up the price of future projects, Tonello said.
Where Maine’s real estate market really shined in the first quarter was in the area of commercial real estate sales, said MEREDA member Kimberly Twitchell, senior vice president and Maine commercial team leader at NBT Bank in Portland.
Twitchell said some commercial properties in Portland, particularly those with further development potential, have been receiving multiple bids from prospective buyers. Some commercial real estate investors even have been flipping properties and making quick profits, typically a sign of market strength.
The largest commercial real estate sale on record in Portland closed in April, when the Portland Square office and retail development was sold for $66 million to North River Co., a New York-based commercial real estate development firm and an affiliate of Waterfront Maine.
“This is indicative of where the market is going on a broader scale,” Twitchell said.