Please do not leave this page until complete. This can take a few moments.
Abbott Diagnostics in Scarborough just completed two transactions that will add nearly 200,000 square feet in Scarborough and Westbrook.
Also in Westbrook, American Roots is expanding by 6,547 square feet, for a total of 20,000 square feet in the Dana Warp Mill.
The expansions, both driven by manufacturing responses to the COVID-19 pandemic, are notable but not alone, symbolic of a southern Maine industrial market that's holding its own during the economic crisis caused by the pandemic.
"There's a lot of action going on," said Greg Boulos, of the Boulos Co. He represented Abbott in both of its transactions. In general, commercial leasing isn't at the volume it was before March, "but I'm very surprised at what is going on," he said.
Most of the action is in the industrial market, which has been tight the past couple years, but has recently loosened up.
Justin Lamontagne, of NAI The Dunham Group, said, "No question March and April were quiet months. There was a lot of confusion as to what was happening, which inhibited long-term planning."
He calls it the Great Pause — "We were all just trying to get our bearings." In the last three to four weeks, things have picked up. "It is, however, sector, location and industry specific."
The Abbott expansion is spurred largely by the ramped-up production of its rapid test for COVID-19, which was given the go-ahead by the FDA in April. The Scarborough location is the only place in the world making the rapid tests, company said. Abbott also makes tests for a variety of other viruses and other biologic elements.
Abbott leased 126,072 square feet of industrial space at 5 Bradley Drive, in Westbrook's 5 Star Industrial Park, and another 68,818 and 16 acres at 7 Manson Libby Road, in Scarborough. Boulos and Samantha Marinko represented Abbott, and Robert Weber, of CBRE, represented the owner.
The Westbrook space was previously a warehouse for Olympia Sports before JackRabbit, a running shoe and apparel company, bought Olympia last year. In a joint transaction, 5 Bradley Drive Westbrook LLC recently bought the building, and leased it to Abbott at the same time. Boulos said quick deals like that happen, but rarely.
While no one from Abbott was available to talk about the transactions, the company has said the increased production of its tests made expansion necessary. Abbott officials said in April that with the increased production, they hoped to increase their workforce, but hasn't said by how many.
The Scarborough space is a former parking area and industrial building near Abbott headquarters on Southgate Drive owned by Fair Terminal Corp. Up until last year, the warehouse was used by New England Motor Freight. That space is in addition to another 20,000 square feet Abbott is adding in Scarborough, constructed by Landry/French.
Boulos has worked with Abbott for several years, and said while the company is a pleasure to work with, it's been eye-opening to see how quickly it's responded and been able to ramp up production to meet the needs of the pandemic.
"It's amazing how quickly this came about," he said.
Apparel and blanket-maker American Roots, too, responded quickly, adding to its Dana Warp Mill space on 90 Bridge St. in Westbrook as it produces personal protective equipment.
"We're racing against the clock to retool our factory, so that we can help the state of Maine and the broader community, and the country," owner Ben Waxman told Mainebiz earlier this month.
The company earlier this month leased 6,547 square feet from Dana Warp Mill LLC, part of Chinburg Properties, which owns the mill. Lamontagne and Cheri Bonawitz, of Malone Commercial Brokers, were brokers.
"The American Roots deal is a good example of a manufacturer pivoting and expanding for PPE," said Lamontagne. "I’ve been thrilled to see how successfully several small manufacturers in our area have pivoted to producing PPE. Talk about entrepreneurial spirit and Maine grit."
When Lamontagne gave his 2020 industrial market forecast at the MEREDA Real Estate Forecast Conference in January, there was a 1.84% vacancy rate in the greater Portland areas.
Five months and one pandemic later, he said the market is still strong, though like every other market, there are still some "painful effects" of the pandemic.
"Warehousing, distribution and even manufacturing activity has picked up throughout this pandemic," he said. "Manufacturing, especially, is interesting to me as we are predicting offshore jobs coming back home. There could be a great opportunity for Maine, post-pandemic, to add jobs in the manufacturing field."
He said, too, that deals that were already underway are moving ahead.
For instance, marine systems engineering firm Navatek leased 25,000 square feet on Commercial Street in Portland. In February the firm also leased 6,242 square feet at 80 Exchange St., in Bangor. Lamontagne represented Navatek in both transactions, and Boulos Co. represented the landlords.
"That's a big deal that made it through COVID," Lamontagne said.
Boulos said that the cannabis industry is driving a lot of the industrial activity he sees, as growers look for space. New laws took effect in September, opening up the market, and earlier this month the state dropped the requirement that those opening a marijuana business be Maine resident for five years or more.
In other markets, it's no surprise that restaurant and retail markets have taken a big hit.
"They're hanging on by a thread," Lamontagne said. "And as a result, most calls we’re getting in these sectors are from our landlord property owner clients wondering what to do about impending vacancies."
But office space is moving, at least a little.
Boulos said that many who own or lease office space are waiting to see what the "new normal" will bring. "Things are pretty much on hold."
"Office is proving to be a mixed bag," Lamontagne said. "I’m working with several office tenants who provide services for 'essential' businesses that are very busy and growing.
"There are a lot of people suggesting the end of office space as we know it," he added. "I don’t buy that. I think office space will be reimagined."
The industry buzzword is the new "dynamic office," built around more flexible hours, a mix of office and remote work, larger spaces to account for social distancing and that type of thing, Lamontagne said. "I firmly believe the physical office space footprint won’t be as dramatically hurt by this as you’d think. It’ll just look different. Interoffice collisions and collaborations are too valuable to leave to Zoom and conference calls."
But right now, it's difficult to say what will happen.
Boulos said he's getting calls from people looking for bargains, not only for office space, but other commercial space. "But it's too early," he said. "Any real change isn't going to come until four to six months down the road."