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July 9, 2018 Focus: Southern Maine

Kittery and Freeport take different paths in era of shifting retail trends

Photo / Jim Neuger Shoppers at Kittery Premium Outlets.
Photo / Tim Greenway Mackenzie Simpson, a partner at Porta & Co., is the listing broker for the empty 4,750-square-foot property that once housed the Baby Gap in Freeport.
Photo / Tim Greenway Keith McBride, Freeport economic development director, in downtown Freeport.
Photo / Jim Neuger Shoppers pass a vacant storefront in Freeport.
Photo / Jim Neuger Gregory Gosselin, owner of the York-based Gosselin Realty Group, shown on a bench outside the public library in Kittery Foreside.
Photo / Jim Neuger Sam Ostrow, chef-owner of the newly opened Festina Lente restaurant in Kittery Foreside.
Photo / Jim Neuger Lil’s Café in Kittery Foreside.

Sam Ostrow is Kittery's newest business owner, after finding the perfect spot for an Italian restaurant called Festina Lente that serves rustic pasta and vegetable dishes, seats 26, and doesn't take reservations.

“It's a small space in a growing region,” the chef-owner says of Kittery Foreside, an up-and-coming neighborhood near the Portsmouth Naval Shipyard and about two miles from the Route 1 outlet shops.

“I like that a lot of people don't know about it and when they come down here they're surprised,” he says in the midst of making lunch preparations. “At night there's a line at every restaurant.”

That same afternoon, the Kittery Premium Outlets are eerily quiet except for determined bargain hunters like an older South Carolina couple taking advantage of a lower sales tax to stock up at Jockey for him while lamenting that there's no J.Jill for her. There, are, in fact, several blackened windows with signs touting “Another Premium Outlet opening soon,” but nothing about what's coming and who — save for a Kate Spade Outlet promised for this summer.

“Reebok left and it's been empty for years,” notes one shopkeeper.

A 'shift in the way we shop'

Store vacancies are more striking in Freeport, Kittery's main retail-outlet rival about 65 miles north. Slightly smaller in population and area but with more square feet of commercial real estate (see 'Facts and Figures' box), Freeport is also seeing retail-property churn, driven in part by an industry-wide upheaval. Around the country, national retailers trying to ride the e-commerce wave led by Amazon are shifting their attention from physical stores to online sales.

“If I told you 10 years ago the Maine Mall would have some vacancies, you would have said, 'You're crazy,” says Greg Boulos of CBRE | The Boulos Co. in Portland, which currently has six vacancies in Freeport available for lease. “It's a fundamental shift in the way we shop, and the retailers who know how to adjust survive, and those who don't, won't.”

The towns are responding in different ways. Freeport is tackling its long-standing problem of pricey parking, which is subsidized by property and business owners so that visitors can park for free, as Kittery seeks to shed its shop-till-you-drop image. How they fare will matter for retail tourism expenditures in Maine, which came to around $1.5 billion in 2017, according to the Maine Office of Tourism. In a survey, half of overnight visitors cited shopping as an attraction, as did 59% of day-trippers. More than half of shopping fans (55%) spent money at outlets.

Freeport, anchored by L.L.Bean, gets a lot of shoppers from Portland and nearby areas, while Kittery, anchored by Kittery Trading Post, lures more out-of-state visitors, including day-trippers from other parts of New England.

Three million visitors a year in Freeport

Less than half an hour's drive from Portland and half an hour by Amtrak Downeaster train, Freeport gets more than three million visitors a year. While there are more than 200 stores, the biggest draw by far is is L.L.Bean's flagship campus, which is open 24/7 and was a beehive of morning activity this past Father's Day. Many start their trip with a photo at the giant Bean Boot outside the front door. They leave their cars in L.L.Bean's lot as they check out other stores all within walking distance in what feels like a quiet New England village, with some buildings going back to the 18th century.

While shops closest to L.L.Bean are most desirable, with heavier foot traffic, there are nevertheless plenty of empty storefronts. That's especially true on Lower Main Street, which has a vacancy rate of close to 16%, nearly twice the 8.82% for the town as a whole, according to the Freeport Economic Development Corp. (See chart.)

Empty spots include the former Tommy Hilfiger, in a corner space at 100 Main St. and listed by Lerner Real Estate Group, and what had been a two-story Baby Gap off the main drag. Retail space sandwiched between a Gap Factory Store and American Eagle Outfitters — on Howard Place, at the lower end of the retail district — has sat empty for several years. It's 4,750 square feet and listed at $20 a square foot.

Mackenzie Simpson, a broker, developer and attorney with Portland's Porta & Co., took over the listing in December “because the landlord liked my energy and positivity about Freeport,” he says.

So far he's gotten no offers for what he sees as an ideal spot for an eatery, craft brewer or clothing retailer.

“I've worked hard to get the word out about the space and Freeport,” at both regional and national real estate conferences, Simpson says.

With Greater Freeport Chamber of Commerce, Simpson also hosted a kind of social brainstorming event where attendees shared ideas for the space, from yoga studio to juice bar — but still no tenant for the spot off the main drag.

“The biggest obstacles are the seasonality and tenants wanting their storefronts on Main Street,” he says, adding: “I always try to think outside the box when I have a difficult listing.”

Boulos has had to do the same on pricing, saying, “Ten years ago we were maybe getting $50 a square foot and now it's down to $25 a square foot.”

On the plus side, Boulos says that there's now an opportunity for local retailers to get into downtown Freeport as national retailers clear out, and sees the current readjustment as healthy.

“It's not all doom and gloom,” he says.

Kevin Fletcher, president of Northeast Commercial Brokers at Keller Williams Realty in Portland and president of the Maine Commercial Association of Realtors, takes a similar view.

“Maybe there are some landlords that are worried,” he says, “but what we're seeing is a cycle that can be healthy for everybody.”

Why so many vacancies now? Keith McBride, executive director of the Freeport Economic Development Corp., says that while his office can do nothing to offset macroeconomic trends affecting retail, it is working with Freeport Planning Board to update and improve the parking ordinance. The topic was discussed at the June 27 planning board meeting.

“We're getting close to a proposal,” he says, explaining that supply is not a problem but rather the hefty expense for business and property owners.

McBride also says that while vacancies are never good, he's encouraged by new businesses starting to pop up downtown, like Homage Restaurant at 9 Mechanic St., Grand Gourmet Food & Gifts at 32 Main St. and a new clothing shop called Bella coming to 32 Main St. in a space previously occupied by The Body Shop.

“People are going to take advantage of the chance to jump in when rents go down,” McBride says. “We're seeing smaller local retailers capitalize on the opportunity to be in Freeport, which remains to be a premier place for shopping in Maine.”

Three million cars a year on Kittery's Route 1

It's a different scene in Kittery. There is ample parking for the estimated three million cars a year that pass the outlets on Route 1. Yet there is a handful of empty stores at the Kittery Premium Outlets, which is owned by Simon Property Group of Indianapolis.

Existing stores include Lindt chocolate, Coach, J.Crew Factory, Aeropostale and Nike Factory Store. In an emailed response to Mainebiz, Simon Property Group underscored that investment in Kittery is for the long term.

“We have been invested in Kittery Premium Outlets since the early 2000s and the property has performed very well during our tenure,” it said. “We are committed to Kittery over the long term and are confident it will remain a strong destination for consumers.”

Adam Causey, the town's director of planning and development, is also not bothered by the vacancies along Route 1.

“Retail is changing, but we have a good group of property and business owners there,” he says.

In the longer term, town officials would prefer to see less of a shopping-centered mindset and more of a focus on development in the Foreside area and the creation of affordable housing, as laid out in a five-year action plan set to go to voters this November.

“Kittery is already shifting its identify to more of a destination for people who enjoy good food, want to be on the waterfront and want to be in open spaces,” says town manager Kendra Amaral. “That's important. We can't just be the outlet location.”

That jibes with recommendations from consultant Daphne Politis, a Massachusetts-based town planner with Community Circle who worked on Kittery's comprehensive and action plans. Recommendations called for making Route 1 more pedestrian-friendly, with open spaces and housing.

“Retail is being re-envisioned,” she says. “In order for it to survive it's more about being an experience.”

Back in Kittery Foreside, Gregory Gosselin of Gosselin Realty Group in York couldn't be more enthusiastic about that neighborhood, where he says the housing market is red-hot. “In the last five years this has become the new Portsmouth,” he says.

He's speaking over coffee at Lil's Café, in a building owned by Michael Landgarten who also owns Bob's Clam Hut on Route 1.

“We really focus on Lil's being for locals,” says Landgarten. “It's about Kittery neighbors meeting neighbors and networking and having fun together. It's always been a town that really cares about itself and the quality of life.”

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