PORTLAND, Maine — With large industrial vacancies and hits to papermakers in the region, Bangor’s top economic development official said Thursday that the city faces a challenge adapting those open industrial properties to suit smaller manufacturers.
Despite that challenge, Tanya Emery, Bangor’s economic and community development director, predicted a positive year ahead for commercial development in the city, based on recent trends and a local unemployment rate at a low last seen in 2002.
The forecast for the Bangor region mirrored some of the trends seen years ago in Greater Portland, which commercial broker Justin Lamontagne said is now dealing with extremely low industrial vacancy rates and a likelihood for new construction to meet demand in 2016.
“I would love to see some of the industrial activity that [Lamontagne] mentioned, but we’re just not there,” Emery said Thursday.
Emery said developers first will be faced with what to do with existing properties as lease rates are at levels that would make it difficult to compete with any new commercial construction, which she said is still “fairly rare.”
In the past year, the move of wholesaler BJ’s into a former Home Depot was one example of that kind of reuse, but there remain a few vacant industrial properties on the market, including the Garelick Farms facility, Old Town Canoe building, L.L. Bean’s call center and the 177,000-square-foot Galt Block Warehouse on Miller Street as signs of where the area’s real estate market stands.
“We have some new projects, but most are existing spaces and conversions,” Emery said.
The changes in and around Bangor stand to affect future prospects for people who have lost jobs at large manufacturers or their suppliers that shut down in the last year, largely tied to closures and job losses in the paper industry.
“Nothing’s going to replace those paper mill jobs, but we’re exploring other industries,” Emery said in an interview earlier this week.
The forecast for Bangor comes as the economic outlook for Maine and the rest of the country has improved, according to TD Bank senior economist James Marple.
Marple said 2016 will be a year to watch whether rising wages in Maine help more people return to work after recent declines in the number of Maine residents working or looking for work.
Statewide, real estate activity in the last year was fueled largely by growing residential sales as commercial activity fluctuated, according to an index developed by the Maine Real Estate & Development Association.
Emery said residential developments in the last year have shown strong interest in downtown Bangor, as indicated by going prices of apartment renovations downtown, showing photos inside the renovated units at 28 Broad St.
“If you would have showed me these pictures 10 years ago, I would not have thought that this would happen in Bangor,” Emery said.
In years ahead, Emery said she thinks Bangor will continue to grow as an entertainment destination, driven by concerts on the waterfront and events at the Cross Insurance Center that are now helped by having more hotel units.
“The hotel market has been red hot in Bangor,” Emery said, noting the Residence Inn completed last year was the sixth hotel the city added since 2006.
The hospitality industry does face some headwinds, particularly from the declining value of the Canadian dollar, which was at just less than 70 cents to the U.S. dollar Thursday.
Matthew Arrants, managing director at Pinnacle Advisory Group, said average daily rates for hotels in the Bangor market dropped 1 percent and revenue per available room dropped 8.2 percent, comparing the 12 months ending in November 2015 to the previous 12 months.
Arrants attributed that change to a drop in the value of the Canadian loonie and new supply of rooms on the market.
Emery said medical development will continue to remain strong in the Bangor region, as the population for the northern two-thirds of the state continues to age and demand for health care grows.