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June 19, 2017

In tight industrial market, even unlisted properties sell

Courtesy / Google Earth
Courtesy / Google Earth
A warehouse-storage building at 360 Civic Center Drive in Augusta sold for $1.75 million.

AUGUSTA — A 42,000-square-foot warehouse/storage building, at 360 Civic Center Drive in Augusta, was never listed.

"The owner did not want to list it for sale," said broker Chris Paszyc of CBRE|The Boulos Co., who represented the seller. "However, I knew it could be purchased and kept it in mind as industrial users surfaced in Augusta."

In a deal that closed May 24, Norman L. Allen sold the property to Cronies LLC for $1.75 million. Paszyc represented the seller and Marc Fishman of Fishman Realty Group of KW Commercial represented the buyer.

Built in 1978, the building, on two acres, is occupied by Allen's Transfer & Storage, founded in 1950 in Augusta and today offering nationwide and international moving services, according to the company's website.

It's an investment property for the buyer, who is leasing back a portion of the building to Allen. It's a short-term lease until Allen finds a place to relocate his business, says Fishman. The buyer will lease 17,000 square feet to a medical cannabis dispensary. When Allen leaves, the tenant will possibly expand into that space to grow medical cannabis, Fishman says.

The buyer, who prefers to remains anonymous beyond the name of the LLC, lives in the greater Portland area, but decided on the Augusta property because he liked its size and condition.

"It's very well maintained by the past owner," Fishman says. "The buyer saw there would be more value purchasing real estate in central Maine versus the greater Portland area. And the location, off I-295, is very attractive to him."

Space crunch hits Augusta industrial market

Fishman is seeing a space crunch in the Augusta industrial real estate market.

"The Class A industrial properties are very hard to find," he says. "They've been absorbed into the market. So it's a challenge throughout both southern and central Maine. And new construction just isn't keeping up because it's so expensive to build and the engineering and permitting process takes so long."

Who's taking up the industrial space? Fishman is seeing a big push of craft brewers and, over the last five years, medical cannabis caregiver growers and dispensaries. In addition, existing businesses are expanding due to strong market conditions — everything from contractors to light manufacturing and basic warehousing.

"The market is vibrant and we've seen a lot of organic growth," he says.

The construction problem might be changing, he says. The issue in the past, he says, is that industrial lease rates of $4 to $6 per square foot haven't supported the cost of new construction.

"Now that industrial is creeping up to $6 and in some cases $8 to $10 per square foot, we're starting to see new construction in the industrial market," Fishman says. "But it takes time to get approvals. There's a need for industrial space now, not in 14 months. It's classic supply and demand which is pushing industrial rates higher ."

For his part, Paszyc says that, while Augusta doesn't have a deep supply of industrial product, until recently there also wasn't much demand. That's changing, he says, as users surface who have unmet needs in the greater Augusta market. Paszyc cites another recent sale — Harvey Building Products' 33,000-square-foot warehouse building at 80 Anthony Ave. — as another example of the brisk industrial market.

"[The seller] had multiple offers, and the buyer purchased it for $1.9 million and closed in less than 30 days, all cash," he says.

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