Proposals for new retail projects have effectively screeched to a halt in southern Maine.

After a building boom that added hundreds of thousands of square feet of retail space to the region in the past several years, new projects have dried up, according to industry watchers and building statistics. Developers are now focusing on filling the space they have by making deals on rent, renovating existing malls and reaching out to local merchants.

“New retail space has come to a standstill right now,” said Mark Malone, owner of Malone Commercial Brokers, whose company tracks retail activity in greater Portland.

Last month, contracts for future nonresidential construction in southern Maine plummeted 62 percent compared with September 2007, from $22 million to $8 million, according to McGraw-Hill Construction, which provides analysis to the construction industry. For the year, contracts for future nonresidential construction – which includes industrial and office construction, as well as retail – have dropped 12 percent from the year before, from $281 million to $247 million.

Malone said he expects the retail vacancy rate in greater Portland, which has hovered around 1 percent in recent years, to climb to 6 or 7 percent by year’s end. It’s all the result of a glut of new retail space, lackluster sales, the national credit crunch and the dismal national chain restaurant climate, said Malone and other industry watchers.

“The fast casual-restaurant category and sit-down restaurant are dead on the national level,” said Gene Beaudoin, a partner of New England Expeditions, which opened its Gateway at Scarborough mall, home to Cabela’s, at exit 42 this year.

The bulldozers are still busy on projects that were already approved. Super Wal-Mart stores, for instance, are going up in Sanford and Scarborough.

Other developers are using the slump to make long-term plans for an economic turnaround. Developers of a proposal for Stroudwater Place in Westbrook are forging ahead after Monday’s City Council vote to approve a zoning change for the plan, and the developers of the 70-acre Gateway at Scarborough are looking to develop more land around the town’s Haigis Parkway.

But for the near future, the market needs to digest the roughly 1 million square feet of new retail space that has opened up in the past year in greater Portland, Malone said.

The good news for merchants is that developers and mall owners are eager to make deals on leases and might give a short-term break on rent prices to retain their tenants. They also are reaching out to Maine-based businesses to fill empty space.

Biddeford Economic Development director Robert Dodge said that Packard Development, which built the 2-year-old Shops at Biddeford Crossing mall, is looking to fill space vacated by several chain restaurants.

New England Expeditions also is looking to the region, not the nation, to fill its retail shops.

“We have individual tenants who are extremely happy with sales levels to date,” said Beaudoin.

Among them are Jane St. Pierre of Scarborough, who with her husband, Wayne Smith, opened the Kitchen and Cork shop at the Gateway at Scarborough mall this May, their first venture into retail kitchen sales. They already are looking into expanding their space, St. Pierre said.

“We have exceeded our expectations every month,” said St. Pierre, whose store is adjacent to a bunch of vacant retail space.

Other developers are breathing new life into old malls.

Dodge said the 1960s-era Five Points Shopping Center in Biddeford, which was just overhauled by Atlantic Holdings, Kennebunk, has attracted new stores. The Westgate Plaza on Congress Street has been purchased by Charter Realty & Development Corp., a retail development company in Rye Brook, N.Y., that is in the midst of renovating the 49-year-old mall.

Judy Chong, spokeswoman for Shaw’s supermarkets, longtime tenant at the plaza, said the Westgate store is looking forward to an increase in foot traffic as a result, even though the renovations are purely external.

“It will become fresh and new and exciting for customers,” said Chong.


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