No fewer than 10 office building projects are now in some stage of planning, permitting or construction in or near downtown Portland, thanks to the market’s continued ultra-low vacancy rates.
The latest project to be submitted to the city’s planning division for site plan approval is a proposed mixed-use development at 151 Washington Ave. that would include a four-story structure featuring retail space on the ground floor and office space on the upper three floors.
Developer Diving Rock LLC told city officials in its written application, filed Dec. 5, that the project would include nearly 11,000 square feet of total floor space and be consistent with the property’s current zoning.
The proposed 151 Washington project brings the total number of Portland office construction projects in the pipeline to 10. Three already are under construction: a 100,000-square-foot headquarters for Wex Inc. at 0 Hancock St.; a three-story, 12,000-square-foot office building add-on to Ocean Gateway Garage at 167 Fore St.; and a three-story, 18,000-square-foot office building on Widgery Wharf at 230 Commercial St.
Other projects still in the planning stage include about 100,000 square feet of office space at the former Portland Co. complex at 58 Fore St., now known as Portland Foreside; 60,000 square feet of office space at Thompson’s Point; a 48,000-square-foot building at 170 Fore St.; a 22,050-square-foot building at 266 Commercial St.; and two other mixed-use projects on Union Wharf and Fisherman’s Wharf.
Not everyone is happy about the recent surge in proposed development on the Portland waterfront, which includes hotel and retail in addition to office projects.
Commercial fishermen who have unloaded lobster and groundfish on Portland’s wharves for decades have said they see the changes as the next step in a long process to change the face of the waterfront to their detriment. They are also worried about rising parking costs, traffic congestion on Commercial Street and the loss of berths for recreational vessels.
In July, more than 90 lobstermen, fishermen and waterfront business owners signed a petition submitted to the Portland Planning Board arguing that new developments planned for Commercial Street would put the entire working waterfront in jeopardy.
Still, it’s highly unlikely that all of the projects being proposed will actually begin construction in 2018, said Nate Stevens, associate broker at commercial real estate firm CBRE | The Boulos Co. in Portland.
“I don’t see all of those happening next year,” he said last week, referring to 2018. “I see maybe one or two.”
Stevens said some of those projects’ developers have yet to receive city approval, and others that do have approval are still waiting on an interested tenant or tenants to justify breaking ground.
“You have all these projects that are slated,” he said. “They’ve been permitted and approved, but you can’t break ground without a tenant.”
Stevens said downtown Portland doesn’t have the sort of hot office market in which developers would be willing to risk building something without a significant portion of space already committed to specific tenants.
Despite the vacancy rate for top-tier “Class A” office space in downtown Portland falling from about 14 percent in 2011 to less than 3 percent in 2017, Stevens said demand for new space is also relatively weak, with few large tenants entering the market.
“There’s a very, very low supply, but there isn’t a huge demand,” he said.
Stevens cited as an example 16 Middle St., the most recently completed office building in downtown Portland. The five-story, 55,000-square-foot office building, which opened in 2017, still contains about 15,000 square feet of unoccupied space as a result of low demand, he said.
The best bet for one of the larger proposed office projects would be to lure another big employer such as Wex to the downtown area from a neighboring city or town, Stevens said. He expects at least one such relocation to be announced in 2018.
“There are a handful of very large companies that would like to be downtown,” he said.
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