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Updated: September 11, 2019

Reversing course, Greater Portland office vacancy rate is up

Courtesy / Malone Commercial Brokers Class A and Class B office space in downtown Portland has become increasingly tight in recent years. But vacancy rates appear to be trending up slightly, according to a mid-2019 report.
By Staff

Large Class A office spaces are going vacant in the Portland suburbs, but steady demand downtown could eat up the excess supply.

That’s according to the “2019 Greater Portland Mid-Year Office Market Survey” issued this week by Malone Commercial Brokers.

Overall vacancy as of mid-year (combining lease and sublease) increased to 7.82%, with the report citing large vacancies in the suburban Class A market. The overall rate compares with 4.9% in 2018.

The suburban market was affected by the move of the corporate headquarters of WEX Inc., Maine's third-largest publicly traded company. WEX moved its headquarters from 72,336 square feet of space at 225 Gorham Road in South Portland to 1 Hancock St. in Portland.

In downtown Portland, Class A office space remains tight. With the downtown space crunch and lack of parking, the report said it was likely some companies will flee the downtown market.

Overall downtown office vacancies increased slightly to 5.38%, from 4.9% in 2018. But “the devil is in the details,” according to the report. In 2018, an unnamed company master-leased 42,000 square feet for its anticipated expansion needs. Until all that space is needed, they are subletting some of the space. The sublet space is likely not an option for tenants looking for long-term deals. Finding downtown Class A space over 8,000 square feet continues to be rare. 

Looking ahead

Construction of office buildings as part of larger mixed-use projects is on the rise in Greater Portland. 

“We are seeing most new office construction take place in the downtown market through a number of new and upcoming projects,” the report says.

That includes 12 Mountfort St., a mixed-use redevelopment includes the new headquarters for Covetrus Inc., with 140,000 square feet of office space. Development at 100 Fore St. is set to add 70,000 square feet of office space to the market. Mixed-use redevelopment of 385 Congress St. is set to potentially include 100,000 square feet of new Class A office space. 

Parking dilemma 

Parking remains a concern when it comes to tenants searching for or renewing downtown office space. Most office tenants have at least 10 to 20 employees who commute to work and need eight-hour parking five days a week. 

“Downtown parking availability can sometimes make or break a deal,” the report says. “The scarcity of parking is driving some tenants to look toward the suburbs for office space.”

COURTESY / PORTA & CO.
Cianchette Family LLC purchased One Monument Way in Portland from East End Corp. for $7.25 million in a transaction that closed last April. The building includes upper-story Class A office space, which remains in hot demand, although vacancies are trending up slightly.

Significant office transactions this year included:

• Cross Realty LLC bought a 52,644-square-foot office complex at 34 and 41 Hutchins Dr. in Portland.

• Cianchette Family LLC acquired a 45,378-square-foot office/retail building at One Monument Way in Portland. 

• Dayton 59 LLC’s purchase of a 30,000-square-foot office condo at 75 Washington Ave. in Portland.

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