A partially vacant strip mall in Kittery will be razed to make way for a mixed-use development that will bring apartments to a stretch of Route 1 famous for its outlet malls.

Two International Group, a New Hampshire-based commercial development firm, received final approval last week from the Kittery Planning Board to replace The Outlets at Kittery with a 119-room hotel, five-story apartment building with 107 units and a 6,000-square-foot commercial building. Eleven of the apartments will be affordable housing units.

The project is the first of its kind near the outlets, but the town has been exploring for years how to convert dying retail space into mixed-uses, said Dutch Dunkelberger, chair of the planning board. He sees this project as “the first step in the right direction.”

“Ever since Amazon came along, bricks-and-mortar stores have been struggling,” he said. “Kittery used to be the most productive retail mile in America, but it has been struggling.”

This project helps Kittery by creating much-needed housing within walking distance of stores and a hotel where employees from the Portsmouth Naval Shipyard and other industrial workers can stay while in the area, Dunkelberger said. It should also help the long-term viability of retailers by providing a more consistent customer base, he said.

“In my mind, there are a lot of advantages to a development like this,” he said.


Kittery requires developers proposing projects with more than five units in that part of town to rent at least 10% of them at affordable rates or pay a fee to the housing reserve fund. The affordable units at 283 U.S. Route 1 will be tied to 80% of the area median income, according to project plans.

Ryan Plummer, director of development and construction at Two International Group, could not be reached Wednesday to discuss the project.

The developer has committed to honoring the leases of the businesses in the strip mall. Details about the length of the leases were not included in planning documents filed with the town.

The project will be done in three phases, starting with the hotel. The hotel construction is expected to have minimal impact on the stores while they continue to operate. Plummer told the planning board that the hotel was designed to accommodate extended-stay guests, including shipyard workers.

The strip mall will be demolished and apartment building constructed during the second phase of construction. It will sit at the back of the large lot, near Interstate 95. The third phase will focus on the commercial space, which is expected to include a restaurant.

The developer expects new buildings will be occupied in 2025, according to planning documents.

Dunkelberger said there is retail space available in other outlet malls along Route 1 if the businesses from The Outlets at Kittery want to relocate when their leases expire.

According to property records, the Outlets at Kittery property at 283 Route 1 has an appraised value of $7 million, about $4 million of which is the value of the land.

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