Report: Portland housing squeeze drives investors to Lewiston/Auburn
COURTESY / INDOVINA ASSOCIATES ARCHITECTS, A.R. BUILDING CO.
Pennsylvania-based A.R. Building Co. plans to build market-rate rental units in Auburn.
Investors who might have overlooked Lewiston/Auburn for multifamily development opportunities are beginning to look at the market with fresh eyes, according to a new report by Noah Stebbins, an associate broker with the Boulos Co.
Increasing demand in the apartment rental market has benefited multifamily owners by driving up valuations through increased rents as prospective homebuyers get squeezed out of the housing market, he said.
“Lewiston/Auburn is no exception to these market conditions,” said Stebbins, who cited Vitalius Real Estate Group’s 2022 “Multifamily Forecast for Southern Maine.”
The Vitalius analysis found that Lewiston/Auburn has had 25% rent increases over the last couple of years, while multifamily sale prices increased by nearly 35% from 2020-21.
At the same time, Stebbins writes, investors have been stymied by regulations and growth limitations in some southern Maine spots, including Kittery and Portland.
Portland's inclusionary zoning provision and stricter rent control measures have frustrated housing developers, "leading to higher price points, fewer buyers, and less affordable residential housing," Stebbins wrote.
"Further down the coast," he added, "Kittery officials blocked a proposed $300 million housing development earlier in July. The Dennett Landing development would have brought 900 new housing units with 10% of the units being classified as affordable housing along with over $3 million a year in tax revenue to the town."
Fewer barriers in L/A
Investors have taken note of the affordability of Lewiston and Auburn combined with having fewer barriers to development.
“There are several new multifamily projects in the pipeline, and investors who traditionally avoided the twin cities are now beginning to look at the L/A market with fresh eyes,” Stebbins wrote.
Compared with NIMBY cities and towns across the state and the country, the city of Auburn has taken a YIMBY approach.
“Auburn has goals to increase its population by more than a quarter over the next few years while they construct 2,000 new housing units by 2025," he said.
In 2022, permitted construction projects in the works include single-family homes, duplexes and apartment projects. Auburn offers incentives aimed at increasing new housing developments. And Lewiston aims to revitalize its Tree Street neighborhoods with housing development.
“The time has never been better for investors to consider expanding their portfolios into the Lewiston-Auburn market as there are deals to be had, and the competition pool is limited compared to other areas of the state,” Stebbins wrote.
For the full report, click here.
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