PORTLAND — Maine’s real-estate industry is slowly recovering from the recession and displaying some bright spots, but will continue to face challenges in 2012, speakers told the state’s largest gathering of real-estate professionals.

“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 at the Maine Real Estate & Development Association’s annual forecast conference here today. The sold-out event drew a record 650 attendees.

The conference took place against the backdrop of a national economic recovery that’s making gradual progress, but in which home prices and real incomes continue to decline. That hurts affordability, according to Charles Colgan, the University of Maine economic forecaster, 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 saw some encouraging trends in Greater Portland. The area’s vacancy rate, which had 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 in the area, 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 set up shop, filling 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 the Old Port. Several eating establishments, including Five Guys and Elevation Burger, have opened.


“Mainers love their restaurants,” she said.

Looking ahead, Rich said more big-box store closings are possible, as the Biddeford Lowe’s home improvement store did last year. But she also expects more expansion from 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 and hung last year at just under 13 percent, according to 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 new projects are being proposed, including those at Thompson’s Point and West Commercial Street.

On the housing front, the multi-family market is a mixed bag, according to 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 landlord survey in the city found two-bedroom apartments averaging $1,021 with heat, $897 without. By contrast, more than half 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 purchasers and 15 percent of sellers offered incentives, according to Nicholas Dambrie, a broker at 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 rose nearly 7 percent last fall compared to 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.

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