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March 12, 2019

Saco Lofts development taps appeal of Saco-Biddeford's 'hip, cool market'

Courtesy / Dirigo Capital Partners Saco Lofts, developed by Saco Island West LLC, a development arm of Dirigo Capital Partners of Topsham and offering 22 “micro” residential rental units, is expected to be operational by May 1.
Courtesy / Dirigo Capital Partners Run of The Mill Public House & Brewery, seen here on the deck, was the first development on Saco Island that helped transform the island from abandoned to thriving.

Saco Island West LLC, a development arm of Dirigo Capital Partners of Topsham, is wrapping up the redevelopment of Building 3, at 100 Main St. in the Saco Mill Complex in Saco, introducing 22 “micro” residential rental units on the upper stories above the Run of the Mill Public House & Brewery.

The units average 470 square feet. The general range of “all in” rents, which will include utilities like power, heat and hot water, is expected to be $1,150 to $1,250. Some units are expected to be under $1,000.

The developer expects to open the residential units on May 1.

“We are in the very end of the inspection period with the city,” Dirigo Capital Advisors CEO Kevin Mattson told Mainebiz. “We’re just about to start taking applications. Our goal is to place the project in service May 1. It’s come along very nicely. It’s just the finishing touches now.”

Dirigo Capital Advisors is a real estate development and investment group that controls or manages more than $200 million in commercial properties.

Dirigo purchased almost all of Saco Island, except for two buildings, in 2007, “which was an inauspicious time to purchase real estate,” said Mattson. The firm’s first project was redevelopment of ground-floor space in Building 3 for Run of the Mill.

“Since then, we’ve sold individual buildings to four different parties, who have gone on to develop them,” he said. “The face of that island has changed from an abandoned facility of empty buildings and blown-out windows to a thriving community. There’s almost nothing left to develop on the entire island. Which, given where we started, is remarkable.”

Why did he retain Building 3?

“It’s a great little building,” he said. “It’s right on the river. It’s a building that, long-term, we decided we’d like to keep. Building 3 is our first residential foray in a long time, and it was small and manageable.”

The size of the units sounds small, he said, “until you get within the space and you start to design around it. The idea was to create a size people need. It’s not a Murphy-bed, New York City type of apartment. It’s possible to make smaller units that are more affordable and still retain plenty of space to live in.”

Features include high ceilings, original beams, exposed brick and new appliances, according to the Saco Lofts website.

The core market is expected to be millennials, and some eventual tenants might come from customers of the first-floor pub, he said.

“We’ll start marketing through Run of the Mill this week,” he added.

Millennials are a growing tenant market in Saco and Biddeford, he continued.

“Part of it is that people are locating in Saco and Biddeford from Portland,” he said. Saco-Biddeford is “a pretty hip, cool market now. And it tends to be less expensive.”

In January, Saco Island West LLC received a $4 million bridge loan to complete its redevelopment of Building 3, in a deal facilitated by GenX Capital Partners LLC, a Miami-based direct lender for commercial real estate transactions.

Completion of the Saco Lofts project follows 150 new residential apartments in Saco Mill 4, and 36 units at Saco Island Apartments on Saco Island, formerly known as Building 108.

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