After years of neglect and a foreclosure in 2016, the Time & Temperature Building in downtown Portland is being auctioned off.
Real estate brokerages Colliers International and Cardente Real Estate have issued a notice stating that the iconic office building, known for its 9-foot-high digital rooftop clock, will go up for auction on Oct. 9 with a minimum starting bid of $2.75 million. The auctioneer is Fisher Auction Co. of Pompano Beach, Florida.
The starting bid price is considerably lower than the property’s assessed value for tax purposes of $4.5 million, but Matt Cardente of Cardente Real Estate in Portland, the lead broker for the auction, expects the building to sell for significantly more than that.
“We’ve already had a significant amount of inquiries from very reputable Maine developers and investors,” Cardente said. “On the national platform, there’s a ton of people out of state that have expressed preliminary interest.”
He noted that the property also comes with a 340-space parking garage that generates additional revenue for its owner in addition to lease revenue from tenants.
The market for commercial real estate in downtown Portland is stronger than it has been in many years, Cardente said, which bodes well for the Time & Temperature Building’s prospects for a successful auction.
The 14-story office tower at 477 Congress St., which opened in 1924 as the 12-story Chapman Building, was seized by a collections agency in 2016 following years of neglect and a mass exodus of tenants. Marketing material for the auction says the building is about one-third occupied. The foreclosure placed the property in the hands of a Maryland-based “special servicer.” Special servicers are responsible for recovering assets on behalf of bondholders who purchased commercial mortgage-backed securities.
NEGOTIATIONS BREAK DOWN
The building’s prior owner, a subsidiary of New York City-based Kalmon Dolgin Affiliates LLC, had been negotiating with the special servicer, CWCapital Asset Management of Bethesda, to reduce the principal on the building’s $12 million mortgage.
Those negotiations broke down in April 2016, and CWCapital initiated foreclosure proceedings. CWCapital set up a limited liability company called 477-481 Congress Street Holdings LLC and granted it the right to collect leases and rents. Now, the company is selling the property.
A note from the special servicer to New York-based Trepp LLC indicates that it views the Time & Temperature Building as a likely site for redevelopment. Trepp is a research firm that follows the repayment progress and prospects of loans that have been pooled together and sold in pieces, or tranches, to investors in commercial mortgage-backed securities.
“As of July 2018, the property was 42 percent occupied, but occupancy is expected to drop toward 30 percent as tenants vacate,” CWCapital told Trepp. “Repairs are underway to remediate code violations, roof and elevator issues. Efforts are being made to improve the property’s curb appeal and reputation within its submarket with the expectation that it will be treated as a redevelopment prospect once brought to market.”
According to Trepp, more than one-third of the building’s roughly 100 tenants have leases that are set to expire within the next year.
TENANTS HOPEFUL
In November, Portland Fire Department inspectors found 19 fire safety violations in the Time & Temperature building during a surprise inspection that was triggered by an anonymous complaint.
Five floors in the 14-story building lacked sprinkler systems, and multiple floors did not have hard-wired smoke detectors, according to the inspection report. Inspectors also found multiple expired fire extinguishers, inoperative emergency lighting, missing exit signs, blocked fire exits and other problems.
Tenants of the property said they regard the upcoming auction as a positive development for the troubled office building.
“I think it’s good news that the bank wants to try and sell it, and hopefully somebody’s going to buy it who’s interested in Portland and has some sort of connection to it and wants to revitalize it,” said Mary Zarate, owner of Z Fabrics, which has a storefront on the building’s first floor. “I think that would be a wonderful thing.”
Zarate said that aside from regular upkeep, she has not noticed any major improvements to the property lately. At the same time, the current owners have not made any recent efforts to bring in new tenants, she said.
“They haven’t been trying to rent out any of these vacant spaces,” Zarate said. “I was under the impression that the reason why they were doing that was because they wanted to wait until they had a buyer, and to let the buyer make those decisions.”
OPTIONS ABOUND
Bowen Depke, a business owner who has been leasing offices in the Time & Temperature Building for 15 years, agreed that the upcoming auction is good news for tenants.
“Hopefully they will find an investor who has the deep pockets necessary to bring back the building to its rightful place as one of the best in Portland,” said Depke, president of internet marketing firm Spire Express. “I hope it is someone local, who appreciates the history of the building and has local management to keep on top of the improvements.”
Depke said there has been talk about the office building being converted into condominiums, but that he is hoping it will end up a mixed-use property with retail, office and residential space.
“I hope the original shopping arcade on the first two floors, which I think was the first of its kind in Maine, is invested in and opened up, that the next six floors are kept business, and then the top floors are residential,” he said. “My understanding is that historic tax credits will probably be used, and therefore it could not be converted to condos for another five years, but I’m not an expert in that space.”
Cardente, the auction’s lead broker, said it’s possible that the buyer could renovate the property and leave it as an office building, restore the former retail arcade on the ground floor to attract boutique stores and restaurants, or convert some or all of the property to residential units with city approval.
Cardente said he would like to see a mixed-use renovation project that incorporates retail, office and residential components.
“Everyone’s got their own vision for what they want to do,” he said. “This particular property lends itself to various types of redevelopment.”
J. Craig Anderson can be contacted at 791-6390 or at:
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