It hasn't been difficult finding tenants eager to revitalize one of the city's oldest and most unique spaces, according to Drew Sigfridson with CBRE|The Boulos Co. Finding the right tenants, however, has proved the challenge.
As broker for the five-story,100,000-square-foot Merrill's Wharf building, Sigfridson has seen the usual lineup of Portland office space occupants move in since extensive renovations were completed at the end of last summer. Law offices, health care companies and a yoga studio have relocated to the former Cumberland Cold Storage building, anchored by tenant Pierce Atwood.
The renovation was made possible thanks to a 2010 zoning change passed by the city in an effort to stimulate non-marine commercial activity along Portland's waterfront central zone. That zoning change came with a caveat: the ground floor of any building along the zone could rent up to 45% of its space to non-marine businesses, but must keep the rest available for marine-related businesses.
"We've had quite a few interested parties, but as you can imagine a lot of these types of marine-related businesses are unable to pay a lot of rent," Sigfridson says.
Almost a year later, that business has yet to materialize at Merrill's Wharf, forcing the broker to steadily sweeten the pot. "We've quoted rates as low as $12 per square foot," says Sigfridson. With rent in the rest of the Merrill's Wharf building hovering around $22 per square foot, the discounted rate is a steal, he says.
"To be able to be in a building that is like a Class-A office building at below market rates is a pretty tremendous opportunity," he says.
In wooing a marine industries tenant, Sigfridson has had to aggressively market the space with direct advertising and maintain a line of communication with the city's zoning officials.
"We're trying to find these [clients] through marine trade organizations, sending mailers, calling those types and talking with the city on a pretty regular basis on what constitutes a marine-related use," he says.
While the zoning change carries no penalty for waterfront central zone buildings who can't find marine related clients for their ground floors, Sigfridson says that keeping 55% of a floor empty is its own penalty, "and it's a pretty big penalty," he says.
Of course, not every marine-related use would be welcome at the site given the current clientele of business professionals and yogi masters. "It would be hard to put in users who are too noisy, and we can't really have a fish processing facility there," says Sigfridson. "The balance we need to strike is finding marine-related users that conform with the zoning and also fit in with the building's other tenants."
Some in the marine industry say that both cost and functionality have kept them from seriously exploring a move to the Merrill's Wharf facility, which is owned by Brunswick-based Waterfront Maine and assessed at $4.5 million as of April 2011.
John Leavitt with life raft retailer/repair company Chase Leavitt & Co. briefly considered the wharf during a recent move, but says it was not a feasible location for the labor-intensive company. "It had no loading dock and it was chopped up in a way we wouldn't be able to use," he says.
Chase Leavitt & Co. salesman Chris Harrison says he balked at the rental price -- "it was far too expensive" -- and the facilities. "We needed a concrete floor we wouldn't have to worry about denting up and we required a high ceiling. I don't think those parameters were available," says Harrison.
"They said the rent was definitely negotiable to get a marine business in there, but I think they are going to have a hard time finding someone," says Leavitt.
Ideally, Sigfridson sees a nonprofit focused on marine-related issues as a perfect candidate for the site. "Ideally it would be like marine-related office type users, maybe those doing research or labs that need close proximity to the working waterfront," says Sigfridson.
Don Perkins, president of the neighboring Gulf of Maine Research Institute, has been working with Sigfridson to bring tenants to waterfront despite the fact that the two buildings are trying to lure the same marine-industry clientele.
"We've referred people to him, he's referred people to us; there's already a kind of back and forth happening," says Perkins. "I think Drew Sigfridson has done a nice job reaching out to waterfront folks."
Perkins sees the positive in any propagation of the waterfront zone's use as a marine-industries hub. "There is a market for tenants whose business is ocean driven. This waterfront is going to test the idea of bringing together traditional marine uses and new marine uses over the next 20 years," Perkins says.
Already, the wharf building has satisfied tenants.
Having spearheaded the building's adaptive reuse with by occupying the top two floors, law firm Pierce Atwood is happy at home in the 150-year-old building. "Everyone is very excited to be here, it's really invigorated and recharged everybody," says Dennis Keeler, a firm partner who spent a year overseeing the renovation of 70,000 square feet on the building's fourth and fifth floors.
"The space is not going to make the law firm, but it's certainly nice to have a cutting-edge space while preserving the look and feel of the waterfront," Keeler says, who recalls looking out on the wharf from the firm's previous office in Monument Square. "It was an eyesore, so it's been nice to see the building come back to life and be part of that."
Joseph Satlak, who owns Stillwater Yoga with his wife, Candace, says the waterfront location and unique space was a real draw for couple, who recently relocated their studio from Boston.
"I think what drew us to that location was the diverse mix of businesses in that section of Commercial Street, and that even though we are in the center of a very busy area, the space itself is quiet and peaceful," says Satlak. "I think the building itself and the location is really extraordinary and unusual for the Portland market."
After a long search for the perfect location, Satlak says he wasn't about to be scared off by the rent, which he thinks is reasonably priced. "It's so difficult to determine what the price of anything is in a dynamic market, but having been experienced business owners in the Boston area for a number of years, I really felt that the rental rate was competitive," he says.