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Portland, Maine Office Market Update- February, 2016

Tuesday, September 13th, 2016

The Greater Portland office market has sustained a robust rebound from the last recession that ended circa 2010. Here is a brief summary of current conditions:

  • Demand is exceeded by supply, but is near equilibrium.
  • Tenant market moving towards landlord market.
  • Vacancy rates continue slow decline.
  • Lease rates continue slow increase.
  • More new construction in downtown Portland as market approaches feasibility rent.
  • Supply will be pronounced in the larger SF categories.
  • Population, job creation, employee growth and need for space will grow slowly.
  • Occupancy rates will remain low for at least several years.
  • CBD office supply may increase but slowly due to development costs and land prices.
  • The exodus of workers to suburban offices may continue for convenience and cost.
  • Suburban office development will absorb demand due to less expensive project costs.
  • CBD and suburban rehabs will continue slowly for buildings having functional appeal.
  • Market rent in all size and geographical categories will rise slowly.
  • Lease terms will remain long for large space users requiring fit up and cost amortization.
  • Fit-up costs are still negotiated with fewer lessor contributions.
  • Renewal options are less difficult to negotiate.
  • Listings are on the market for shorter periods.
  • Owners are offering fewer lease-up incentives to tenants to maintain rent rates.
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