Workforce Shortage Among Factors Affecting Maine's Real Estate Market, Says Trade Group Head
Maine, like the nation, has now seen economic growth that's gone on unbroken for over a decade. That growth has been reflected in real estate development around the state. Will it continue? The question will be explored Thursday at an annual conference of the Maine Real Estate and Development Association, known as MEREDA. Maine Public's Morning Edition host Irwin Gratz talked with MEREDA President Gary Vogel, who said last year that Maine real estate might have been on a “precipice.”
GARY VOGEL: I don't know that I would characterize it as being on a precipice this year. A lot of factors last year that were uncertain have sort of stabilized, in terms of interest rates and the interest rate environment. Probably the biggest factor holding back real estate and also adding to costs is construction costs and a whole workforce shortage area, that has a big impact upon commercial real estate.
IRWIN GRATZ: So let's talk a little bit more about the issue of construction costs. Has this gotten worse in the last year? Is it about the same? Is it getting any better?
So there continue to be retirements of aging baby boomers in construction. You know, I'm a lawyer, it's easy for lawyers to work into their 70s. If I was a framer or roofer - not as easy for those folks to, you know, work in those jobs as they age. So obviously we're continuing to have people who are retiring. And there also continues to be not as many young people who are taking up the trades.
There are some things that are being done - a lot of panelization and manufactured building components take less labor and get delivered to job sites - things like roof trusses and wall panels and things like that that have been a trend that's been ongoing. And you could almost, you know, relate that to other automation trends in manufacturing as well.
There's also been a lot of effort with some of the construction trade organizations to reach out to the high schools' guidance counselors and to try to keep young people interested in looking at the construction trades compared to other careers that people might consider. So there's a lot of effort going on in that area. How successful it is, I think time will tell.
Around the country, we're hearing about a big demand for warehouse space, as Amazon and other such companies build up the infrastructure to do online retailing. Is that becoming a factor at all in the Maine market?
There's been a huge increase in the cost of warehouse space in Maine, but it's really being driven by the cannabis market. The cannabis producers are buying up and leasing industrial space at a very, very high rate. And as a result, the cost and the value of those spaces for rent has gone up considerably. So, if I'm in the manufacturing business and I need a warehouse, it's going to affect my costs because that has driven up the rate.
Are there any particular sectors of the real estate business that are - for lack of a better term - hotter than others this point?
So retail is undergoing great changes due to Amazon and, you know, online retailing. And so malls have vacancies - the Bangor Mall was recently sold in a foreclosure - or a distressed sale - and I think we're going to continue to see, you know, repurposing of retail space. Office space continues to thrive sort of with the economy. We will hear about the success of, you know, the relatively low vacancies in the office market, due to primarily the continued strong economy that has businesses increasing and needing more space.
And then I guess the other major area is residential.
There's a lot of work being done on housing affordability through Maine State Housing. The difficulty is there are some good programs that are producing affordable housing, specifically rental housing for low-income residents - not nearly as much as we need, but there's a certain number of units that get constructed every year. And Maine Housing just recently announced [the release of] the housing bond that was held up by Gov. LePage and that's going to produce something like 200-and-some new apartments throughout the state. And that helps. For folks who don't qualify for the affordable housing but, you know, are sort of looking for a starter home in some of the communities around Portland, the prices have gotten very high. And those are issues. And then they also sort of relate to things like transportation. So if people are going to live 20 minutes away from Portland, you know, what's the impact of their commute and the cost of that and parking and those sorts of things? So one of the things that many communities are sort of looking at is, you know, are we ready for more commuter rail, commuter bus routes and things like that, getting people into downtown Portland other than by automobile?
This interview has been edited for clarity.