PORTLAND – Lewiston-Auburn’s industrial market – which last year recorded the biggest lease transaction in south/central Maine – continues to be the biggest producer for real estate developers and brokers.

“The bright spot is the industrial sector,” said Daren Hebold, a broker with Ram Harnden, who presented a market study of L-A’s industrial, office and mill markets at the annual forecast conference of the Maine Real Estate and Development Association Thursday. Like most of the rest of the state, L-A’s commercial real estate market has been in a holding pattern for the past year or so, stymied by a sluggish economy.

Hebold noted that in 2006, 200,000 square feet of available industrial space was leased in L-A, with that number dipping slightly to 178,000 square feet in 2007, a lot of it new construction.

Michael Miller, broker with the NAI Dunham Group, who specializes in industrial leases, said L-A could claim the title of the biggest deal in 2007 through the lease of a 103,000-square-foot building in the Auburn Industrial Park to Bisson Transportation.

“This is beautiful, functional space,” said Miller, noting the entire park, when built out, will offer 450,000 square feet of industrial space.

Perhaps by then the industrial market will have rebounded somewhat. Miller said the first half of 2007 was the slowest in industrial leases and sales throughout the state that he’s seen in 10 years.

“In the time I’ve been doing this, I’ve never seen a market stagnating like this,” he said. For example, industrial land prices in the Portland area that were selling for $40,000-$50,000 per acre a few years ago shot up to $100,000 to $200,000 and settled there. Sale and lease prices for industrial property were essentially unchanged between 2006 and 2007.

Hebold said there was a similar mixed bag in L-A’s office market. While he noted a remarkable amount of sales of occupied office properties to out-of-state investors, he said the more somber news was that there were few new tenants going into available office space.

“It was basically a net zero office absorption,” said Hebold. “I saw smaller tenants considering 4,000 square feet and below playing musical chairs. Mid-to-large size tenants didn’t do much either,” although he noted a Lewiston call center did renew its lease for 23,000 square feet of space.

Overall, L-A’s office market vacancy remained at about 12 percent, said Hebold, resulting in a corresponding drop in lease rates. In 2006, the high end of office leases hit $14 per square foot with the average at $10. In 2007, that high-end rate dropped to $12 per square foot with an average rate of $9.

Industrial leases remained stable, with a high end of $6.50 per square foot and an average of $5. Hebold’s analysis showed a vacancy rate in that sector of 5.7 percent.

The mill market was also quiet. The total supply of L-A mill space is roughly 2 million square feet, with about 60 percent vacant. The demolition of the Libbey Mill in October paves the way for Phase 1 of the Island Point project, he noted.

As available mill space is redeveloped, such as the projects in the Bates Mill complex, they will move from the mill sector into other sectors, such as office or residential, he said.

In summary, L-A is poised for growth due its available workforce, geographic accessibility and turnpike access, said Hebold. He expects the industrial sector will continue to shine.

“They are slathering on economic incentives,” he said, ticking off the Foreign Trade Zone, Pine Tree Zone, rebates and other lures. “The industrial sector is extremely healthy and I expect it will continue to grow.”