Business growth expected for L-A

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PORTLAND – Michael Miller, a broker with Dunham Group in Portland, likes to make his clients happy. But the ones who are looking for big industrial tracts with all the amenities are tough to please – at least in greater Portland.

“I see L-A as the recipient of some of that,” said Miller, a presenter at the annual Maine Real Estate and Development Association’s forecasting conference Thursday. “A lot of Portland companies are looking in that direction.”

Although he declined to say specifically who, he noted there are good reasons. Lewiston-Auburn has laid out the welcome mat for industrial development, he said, underscoring a presentation by Paul Badeau, marketing director for the L-A Economic Growth Council who preceded Miller.

According to Badeau’s analysis, industrial space in L-A rents in the $2.75 to $8 per square foot range; in Portland, it’s $3.95 to $6.50. The difference is even more striking when it comes to buying property. Miller said industrial land prices are hovering between $100,000 and $200,000 per acre in Portland, where only five years ago they were averaging between $60,000 and $75,000. In L-A today, the price is between $45,000-$65,000 per acre.

“We are expecting an explosive growth in distribution/logistics and warehousing space,” Badeau told an audience of about 500 in the ballroom of the Holiday Inn By the Bay. He cited the new industrial park in Auburn and its related amenities: tax credits through the Pine Tree and Foreign Trade zones, ready infrastructure, access to the Maine Turnpike, Auburn-Lewiston Municipal Airport and St. Lawrence and Atlantic Railroad.

“Businesses see the advantages,” he said, encouraging people who hadn’t seen L-A recently to come take a look.

“If you only know the L-A of five to 10 years ago, you need a refresher,” he said.

This is the first time L-A had a presence on the podium of the annual MEREDA conference, a nod to both the growing prominence of L-A in the real estate market and the wider focus of the statewide association. MEREDA offers an annual forecasting conference to give real estate agents, brokers and developers a bird’s-eye view of markets in Portland, southern Maine, L-A and Bangor.

Overall, Maine remains a stable and steadily growing market, especially when compared with the nation and New England. Population gains have been modest, but steady enough to move Maine into the No. 5 slot in the nation for in-migration. Unemployment remains below the national average.

In some sectors, Maine is well positioned to benefit from the decline in other states. For office space, the national vacancy rate is about 13 percent; in Portland it’s about 5 percent and in L-A, 11 percent. For premium office space, Bostonians are paying $46 per square foot whereas Portlanders are paying $20.25. In L-A, premium office space commands between $11 and $14 per square foot, with more on the way as development of the Bates Mill complex and other mill space continues.

“The demand for companies to establish office space in Lewiston-Auburn will continue,” said Badeau, especially in the health care and financial services markets.

It wasn’t all rosy, though. Miller pointed out that increasing state regulations take their toll in added development costs and longer timetables. The result is fewer new construction projects.

“People are finding it is quick and cost efficient to retrofit rather than build new,” Miller said.

Gov. John Baldacci also addressed the crowd, taking the opportunity to draw the parallel between development and the state’s tax base, and the crucial need for tax relief.

“We’ve been studied to death; we need action,” said Baldacci noting his controversial plan to shrink school administration statewide and a call to freeze property valuations for year-round, permanent residents, will offer tax relief.

And, freed from re-election worries, the governor said he is ready to shoulder the state’s fiscal well-being personally, despite his capable second lieutenants.

“I’m looking to be out front in economic development myself,” he said.

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