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By TUX TURKEL
MaineToday Media, Inc. 01/25/2008

MaineToday Media, Inc.

Southern Maine home prices will bottom out later this year, demand for Portland office space will remain strong and a large inventory of industrial space will flatten lease rates, experts predicted Thursday at the Maine Real Estate & Development Association's annual forecast conference.

More than 500 developers, brokers, bankers and other professionals attended the daylong event in Portland, which presented outlooks for real estate markets in southern Maine, Lewiston-Auburn and Bangor.

Distinct segments and locations are influenced by specific forces, but overall, attendees were told, Maine will struggle with the national economic slowdown and fallout from the subprime mortgage crisis. The good news is that Maine's relatively stable real estate market will suffer less than many other parts of the country.

In southern Maine's residential market, inventories are roughly the same as last year. Prices, which began trending down late last year, are likely to bottom out in the second quarter of 2008, according to Anne Weigel, a Realtor with Coldwell Banker Residential Brokerage. The region will remain a buyers market this year, Weigel said, and sellers need to be realistic about pricing their homes.

Weigel's assessment reflected new home price figures released Thursday by the Maine Real Estate Information System.

In December, the statewide median sale price fell 4.6 percent compared with the same period last year. The volume of sales was off more than 23 percent.

The December figures contributed to the slowing down of home prices in 2007. The median sales price was up less than one percent for the year, to $194,000, according to the trade group.

The apartment market is a mixed bag, according to Brit Vitalius, a principle at Sullivan Multi Family Realty. Portland will stay strong, but selling prices in Lewiston-Auburn, Biddeford-Saco and other cities will drop as owner attempt to attract buyers. At the same time, landlords will try to raise rents to cover heat and other mounting expenses, Vitalius said. In Portland, non-subsidized rents for a two-bedroom apartment average $850 to $900, including utilities.

The office market in Portland will see stable rents and limited new construction, according to Drew Sigfridson, a broker at CBRE/The Boulos Co. Low vacancy rates and a lack of speculative building will continue to give investors favorable rates of return.

Lower interest rates may help the market for industrial properties, according to Michael Miller, a broker at NAI/The Dunham Group. But southern Maine's large inventory of lease space and slow demand will mean lower rents and other concessions for landlords.

The outlook for hospitality properties also is mixed, according to Sean Riley, chief operating officer of Maine Course Hospitality Group. At least 13 new hotels are expected to open in Maine over the next three years, but the overall economy, gasoline prices, occupancy rates and other factors will challenge the health of these properties.

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