The Boulos Company predicts 2020 will be another strong year in the greater Portland commercial real estate market. Michael Kelley / The Forecaster

PORTLAND — With a wave of new construction of office, condominium and hotel projects on the Portland peninsula and large mixed use projects planned at Rock Row in Westbrook and The Downs in Scarborough, the Boulos Company expects 2020 to be another active year in the greater Portland real estate market.

“While history tells us that this real estate cycle should be coming to an end, we expect 2020 to be another strong year,” Boulos Company Managing Director Drew Sigfridson wrote in the company’s 2020 Greater Portland Outlook, a 32-page document that looks at market trends, vacancy rates, areas of economic opportunity and other items related to the area’s commercial real estate scene.

The commercial real estate company has authored the Greater Portland Outlook since 2014 and it “continues to be the most comprehensive report produced on Maine’s commercial real estate market,” Marketing Manager Abigail Henderson said.

Market trends last year included a rise in office vacancy rates in greater Portland for the first time in a decade, a decline in vacancy for medical office space for the sixth straight year and major investment in commercial areas outside Portland city limits.

According to the Boulos Company’s survey of more than 12 million square feet of office space in greater Portland for 2019, the vacancy rate in greater Portland was 6.7%, a climb from 4.2% in 2018 and 4.6 in 2017. This, Boulos Partner Nate Stevens said, can be attributed in part to Unum consolidating from three buildings on outer Congress Street to two and WEX moving from space near the Maine Mall to a newly constructed building by Ocean Gateway in Portland.

The demand for downtown office space, however, tells a different story. Last year, the vacancy rate in the downtown area decreased again, with just 10,000 square feet of Class A office space being available, the tightest Class A market since 2001, Stevens said. The 10 largest commercial buildings in downtown Portland – One Canal Plaza, One City Center, 511 Congress St., 1 Portland Square, 2 Portland Square, 1 Monument Square, 2 Monument Square, 84 Marginal Way, 100 Middle East Tower and 100 Middle West Tower – all report near 100% occupancy rates.

As investment in buildings around Monument Square has increased, the vacancy rate of the area has decreased. Michael Kelley / The Forecaster

One area of downtown that has particularly seen an uptick in investment, according to the report, is Monument Square. The vacancy rate in Monument Square, Boulos Associate Samantha Marinko said, is roughly half what it was just five years ago and the three large office buildings around Monument Square were purchased in the last year. One Monument Square sold in April for $7.25 million, 465 Congress St. in June for $7 million and 15 Monument Square in October for $2.2 million.

“Despite its undeniable charm, Monument Square has fluxed in and out of popularity with investors in recent years,” Marinko wrote in the report. “The most recent recession hit this area hardest as downtown tenants migrated toward the waterfront, leaving Monument Square with a reputation for outdated, inexpensive commercial space. In recent years, the immediate Monument Square buildings account for roughly 80% of the overall downtown vacancy. Once an area devoid of growth or investment, times have changed – its popularity is now peaking and landlords are investing here.”

Bill Stauffer is one of those landlords. Stauffer said his building, 22 Monument Square, which he purchased two years ago, was a “tired building” in need of work and had a number of vacant spaces. The building, constructed in 1913, houses David’s Restaurant/Opus 10 and Burke’s Perks coffee shop on the first floor and offices on the second through sixth floors.

“We went in and updated flooring, painting, lighting and ceiling and redid the lobby to bring it back to exposed brick,” Stauffer said. “Once we did all that work, it wasn’t hard to find tenants. It’s a great location. I think a lot of people like being in a building with character.”

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