Job growth and rock-bottom unemployment in southern Maine kept office vacancies low in 2016 and created pent-up demand for more premium office space in downtown Portland, according to presenters at the annual Maine Real Estate and Development Association conference Thursday.

“After several years of little to no new product added, we are finally seeing new construction on Middle Street in downtown Portland,” said Drew Sigfridson, managing director of CBRE|The Boulos Co. in Portland. “Our ‘Class A’ downtown market in Portland continues to be especially tight, with very few large office moves happening in 2016. Businesses continue to add jobs and signs of increased employment are everywhere – from the long wait list for parking garages downtown to an increase in traffic counts on main commuter routes.”

Office vacancy rates in Portland decreased in both downtown and suburban areas in 2016, as well as in Westbrook, Falmouth, Cumberland and Yarmouth, according to Nate Stevens, associate broker at CBRE|Boulos. However, he said vacancies increased in Scarborough and South Portland, particularly around the Maine Mall area.

The area’s overall vacancy rate in 2016 was about 6.2 percent, with a slightly higher rate of 6.8 percent when subleasing space is included, Stevens said. Seven consecutive years of declining vacancies have led to a landlord’s market in which asking lease rates are up and tenants are faced with relatively limited options, particularly for prime office space downtown. He said those conditions are likely to persist throughout 2017.

However, there are several new projects in the pipeline that could help alleviate the shortage, Stevens said. They include three office buildings already under construction: 55,000 square feet at 16 Middle St. in Portland; 94,500 square feet at 1 Tyler Drive in Yarmouth; and 34,500 square feet at 705 U.S. Route One, also in Yarmouth.

Three additional projects, all in Portland, are in the planning phase, according to Stevens: 48,000 square feet at 20 Fore St., 18,000 square feet at Union Wharf, and 22,050 square feet at 266 Commercial St.


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