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Five years after acquiring with partners the nearly century-old State Theatre building at 609 Congress St. in downtown Portland, Burlington, Vt., real estate investment company Redstone last month paid $10 million for a 167,154-square-foot industrial building at 203 Read St. in Portland.
The seller was Brockway-Smith Co., also known as BROSCO, which occupied the building since 1963 and is relocating to a larger facility elsewhere in Portland. Tom Dunham, Greg Hastings, Sylas Hatch and TC Haffenreffer from NAI The Dunham Group brokered the sale. Hatch has listed the building for lease, either in part or in whole.
Redstone has been well established in the development, brokerage and management of properties in Vermont for nearly 30 years. Wondering what brought the company to Maine and about Redstone's plans for the state, Mainebiz turned to Joe Engelken, a Redstone associate leading the Maine efforts.
Mainebiz: Why was 203 Read St. attractive to Redstone?
Joe Engelken: The property was attractive for a few reasons. First, we are big believers in the industrial sector in Portland. Demand for industrial/warehouse space has been strong and should continue to grow as e-commerce, shipping and other industries continue to expand. Second, the property is well-located. Being minutes from downtown, I-295, and the airport make it an excellent location for almost any business in need of warehouse space in this market. Third, the building is in great condition. BROSCO has been there for more than 50 years, but you wouldn’t know it. They’ve taken excellent care of the space.
MB: Why is Maine real estate in general attractive to Redstone?
JE: If you look at it purely on paper, Maine has some very attractive characteristics for any real estate investor: strong performance metrics, high barriers-to-entry for new development, and more compelling cap rates when compared to bigger markets like Boston. In addition to that, Portland is a well-established northern New England market and shares many cultural similarities with our home market of Burlington, Vt., where we’ve been active investors for 30 years. It’s a natural progression for us to grow our footprint in Maine.
MB: The space is up for lease. Do you have any other plans for the property?
JE: Nothing extreme. Right now our focus is finding the right tenant to replace BROSCO when they move out. The building is in great shape and is already set up to easily accommodate anywhere from one to four tenants.
MB: Do you have other acquisitions in mind for Maine?
JE: Always! Before we even got to the closing table I was bugging Sylas [Hatch] to find me another deal. As I mentioned, we’re focused on growing our portfolio in Maine. Having a good relationship with brokers like Sylas and the NAI Dunham team is going to help us do that.
MB: How did Redstone and its partners come to purchase the State Theatre building?
JE:The opportunity to purchase the building came to us in 2015 through the company that operates the theater. One of the partners in the theater has operated in Vermont for over 20 years, so we’ve known him for quite a while. We knew that he was involved in the State and in some other ventures in Portland. We let him know that we had an interest in getting involved in the Portland market on the real estate side. The potential of the State Theatre building and the chance to own something iconic in downtown Portland was the perfect opportunity to jump into the peninsula head-first.
MB: In 2018, you and your partners completed the restoration of the theater’s marquee. Have you done other improvements there?
JE: The marquee is certainly the most obvious improvement we’ve made, but there’s a lot going on inside as well. We’ve replaced all the common area lighting with new LED fixtures, added digital directories in the lobbies, repainted all the common space, updated unused retail space on High Street, updated a variety of other tenant spaces inside the building, and more. Presently we’re underway with major improvements to the heating system and are working on new designs to improve the aesthetic of all the bathroom facilities in the building. Our investment into improving the building will be ongoing.
MB: Given the two very different types of properties you’ve bought so far in Maine, what is Redstone’s overall real estate investment approach?
JE: Even though Redstone is relatively new to the Portland market, we’ve been well established in Vermont for almost 30 years. Over that period we’ve accumulated a portfolio of more than 1 million square feet of commercial space and nearly 900 residential tenants. The mix of property types in our portfolio runs the gamut: apartments, student housing, industrial/warehouse, office, mixed-use, hotels, etc. Our approach focuses less on the property type and more on the circumstances surrounding the property and the market. As long-term investors, do we believe this asset can perform well for 10 years and beyond? Can we use our expertise to add value in some way? Are market fundamentals trending in the right direction? For 203 Read St., all those boxes are checked.
MB: Will you be sticking with Portland, or going further afield in Maine?
JE: We love Portland and we’re certainly open to expanding our footprint to other areas. South Portland, Scarborough, Saco, Biddeford and Westbrook have all been on our radar. With the acquisition of 203 Read St., we’ve grown our Maine portfolio to just over 250,000 square feet. In our eyes, this is just the start of what will be an ongoing, long-term investment in the state of Maine.