With few exceptions, the market for industrial, office and retail real estate continues to have stable growth in Bangor. According to Bev Uhlenhake, a broker at Epstein Commercial Real Estate in Bangor, there are quite a few factors slowing down growth of the market.
Some of these factors include vacancies at the Bangor Mall and Kmart, as well as the former Verizon call center and former University of Maine System building. Uhlenhake also pointed to a shortage of industrial space as another explanation for the slower growth.
Uhlenhake is optimistic of the future of the Bangor Market.
“Exciting developments on the waterfront and downtown will continue to spur growth,” she said at an annual meeting of the Maine Real Estate and Development Association, MEREDA, in Portland on Jan. 18 according to the Bangor Daily News (BDN). “We’re starting to see expansion beyond Main Street, especially the development of the Nichols Block, plus the Hollywood Casino, Cross Insurance Center, Darling’s Waterfront Pavilion and the new Bangor Savings headquarters.”
With her optimistic view of the future market comes concern when Uhlenhake considers the lack of industrial space in the area. Among the towns of Bangor, Hermon, Hampden and Brewer, there are only 7.4 million square feet of existing industrial real estate space.
As of Oct. 31, according to Epstein’s data for 2017 on the Greater Bangor market, 4.5 percent of industrial space is vacant. This number is down 10 percent since Epstein’s last compilation of data in 2014.
“The prices for leases don’t yet justify new construction,” Uhlenhake said. She pointed to tendencies among Bangor tenants for reasons why the costs of leases are low.
Tenants in Bangor are more sensitive when it comes to the prices of their lease than tenants in the Portland area, Uhlenhake says. As a result, lease rates in Portland have risen at a much faster rate than lease rates in the Bangor area. Tenants in Bangor tend not to buy on speculation and wait until they plan to immediately use any property they buy.
According to Uhlenhake, the Bangor Mall, which she is expecting to be redeveloped and repurposed in the upcoming years, along with Kmart, are important vacancies in the retail market. With the Macy’s store in the mall closing in spring of 2017 and Kmart closing in mid-April of 2017, the two former stores are hurting the current vacancy rate around the mall.
“When you remove them, the overall vacancy rate around the mall is 5.8 percent, which is healthy,” Uhlenhake said to the BDN.
The Bangor Mall area takes up about half of the total retail space, or 3.17 million square feet of the 6.38 million square feet in total.
Downtown Bangor has 432,220 square feet of retail space with a vacancy rate of 6.4 percent, which is down from 12.3 percent in 2014.
With Sears closing its doors in April and the leases of J.C. Penney and Dick’s Sporting Goods ending in a couple of years, change may be on its way for the Bangor Mall
Closings also have an effect on office space vacancies in downtown Bangor. The vacancy rate is about 9.7 percent, which is up from 8.6 percent in 2014. The high vacancy rate is mainly due to three buildings, which according to Uhlenhake, include the former University of Maine System office.
Outside downtown Bangor, in the suburban market, office space has a vacancy rate of 9.3 percent which is up from 3.9 percent in 2014. Uhlenhake blames vacancies in two buildings, including the former Verizon call center.
“Without the two buildings, it was 1.9 percent in 2017,” she said to the BDN.