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MEREDA Index: State’s real estate activity hits 10-year high

The MEREDA Index, a quarterly measure of real estate activity in Maine, hit a 10-year peak through the third quarter of 2017, reaching 96 overall in a composite measurement covering new development, transactions involving existing properties, residential and commercial development.

“The chief takeaway is that the commercial and residential real estate markets, as well as construction employment, are continuing to be very strong,” Paul Peck, an attorney at Drummond & Drummond who serves as president of the Maine Real Estate and Development Association’s board, told Mainebiz in a telephone interview prior to the unveiling of the index at MEREDA’s annual real estate forecast conference today in Portland that was attended by more than 800 people. “It’s the highest level we’ve been at since the index began in the first quarter of 2006 — so that’s good news for Maine.”

Peck, who also is a principal at LWS Development, said the real estate sector has become the second-most-important driver of Maine’s GDP, behind only health care, according to the U.S. Bureau of Economic Analysis.

Peck pointed out that construction employment posted a 6.7% increase during the past six months, which is one of the strongest six-month periods for that indicator since 2010.

“That’s significant,” he said. “Those a very good-paying jobs.”

In his written comments within the MEREDA Index report, Peck acknowledged that the flip side of the positive growth trend in construction employment — which includes both development and redevelopment in both the residential and commercial sectors — is the continuing challenge Maine contractors and subcontractors face in finding the workers they need.

“Growing capacity on the construction side of our industry will be the key to maintaining our economic trajectory,” Peck stated. “The demand exists, and this segment would likely grow more robustly if more skilled workers were available.”

Peck said MEREDA will be devoting more time and attention to workforce development in the construction trades during 2018. He said innovation and taking advantage of new building technologies involving offsite construction of modular units, which accelerate onsite construction and allow for fewer onsite workers, are two potential answers to the workforce problem that MEREDA and its members will be looking at more closely.

Commercial component

Shelly Clark, MEREDA’s vice president of operations, in her written comments reported that the MEREDA index — which is a composite of nine seasonally adjusted measures — showed a 1.5% gain over the six months from March to September 2017 and a 1.2% gain over the 12 months between September 2016 and September 2017.

The commercial component, which comprises 50% of the composite index, posted a modest retraction from the prior year, with the overall market declining by 1.6% in the six months ending in September.

“The commercial component overall still stands above the pre-recession levels (on all measures except square footage),” reported Shawn McKenna, vice president of commercial banking at Bangor Savings Bank. “This reflects the overall state of the Maine economy, which has also reached pre-recession levels of employment but is growing at a very slow pace, indicating relatively weak demand for commercial space.”

McKenna said much of the financing activity seen over the past year has been tied to “new construction projects still in the works, not yet ‘shovel ready,” and so would not dramatically impact economic indicators for another six months.

“Looking forward, there are some possible headwinds in the commercial market, primarily in the form of rising interest rates,” McKenna reported. “However, any dampening that higher interest rates may have is likely to be offset by the recent passage of the tax reform bill and continued competition among banks and other lending institutions for quality real estate transactions.”

Residential component

The residential component, which comprises 40% of the composite index, saw 5.8% growth between March and September 2017 and 5.2% for the year-to-year period that ended in September 2017. Permits for new single- and multi-family construction posted more than 20% growth on a seasonally adjusted basis from March to September.

“Demand for housing in urban centers continues to build,” reported Erin Cooperrider, development director of Community Housing of Maine and a principal of The NewHeight Group. “This was dramatically evident in Portland, with more than a dozen construction projects underway in 2017. Many of these were market-rate projects, and the ongoing need for affordable housing is acute in Portland, where 71% of renters have low incomes and 74% of local home owners were unable to afford the median home price.”

Looking ahead, Cooperrider cited worker shortages as a concern that is likely to continue in 2018. “In combination with rising interest rates, this will start to slow production,” she stated.

Construction component

The construction component, which comprises 10% of the composite index, rose 6.7% over the past six months — the strongest six-month period since 2010.

Joe Picoraro, vice president of PC Construction Co., reported that PC’s tracking and pursuit of projects mirrors the MEREDA Index’s finding that “the residential market has recently shown stronger growth metrics as compared with commercial markets.”

Picoraro reported that residential, commercial and industrial market sectors are likely to see “some level of continued growth” into 2018.

Land For Sale – Lot 14 North Trail, Brunswick, Maine 04011

About Lot 14 North Trail, Brunswick, Maine 04011

Excellent 3.41 acres building lot in the popular Otter Trace subdivision. Located in a quiet, rural setting yet minutes to downtown Brunswick and all its amenities.

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Home For Sale – 11 Tiger Lily Lane, Cape Elizabeth, Maine 04107

About 11 Tiger Lily Lane, Cape Elizabeth, Maine 04107

This custom designed home is stunning in its detail, appointments and layout. The transitional style of the home blends contemporary clean lines and finishes with the traditional attention to detail and craftsmanship for a timeless and sophisticated look. Built in 2016, this home offers a gourmet kitchen with high end appliances, expansive island, and exquisite tile and stone. The custom trim and mill work in every room from the family room built ins and mantle to the moldings to the built-ins in closets and pantry is breathtaking. Offering inviting living spaces for everyone, and expansion opportunities in the walk out radiant heated lower level, this home has it all.

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Home For Sale – 134 Brindle Circle, South Portland, Maine 04106

About 134 Brindle Circle, South Portland, Maine 04106

Natural light pours into this meticulously maintained and inviting 3 bedroom, 2 bath classic cape located just 10 minutes to downtown Portland, Crescent Beach and Interstate 295. Finishes and appointments include birch floors throughout the living area, a custom vanity in the first floor bath, and an updated kitchen including new counters, new cabinet doors & pulls, pull-out shelves, and drawers. Elegant gardens and natural stone hardscaping surround the front of the home. Seller can’t close prior to March 22nd 2018.

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Home For Sale – 142 Royall Point Road, Yarmouth, Maine 04096

About 142 Royall Point Road, Yarmouth, Maine 04096

Exceptional home with outstanding attention to detail! Located in Yarmouth’s highly desirable Royall Point neighborhood, this sunny home boasts: gorgeous water views from private back yard, 2 sun rooms, 4 bedrooms/4.5 bathrooms, gourmet kitchen, 2 fireplaces, cathedral ceilings, pantry with wet bar, generator, sound system and more! Accented by extensive landscape and hardscape, this is truly an enchanting property!

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Home For Sale – 4 Lupine Lane, Rockport, Maine 04856

About 4 Lupine Lane, Rockport, Maine 04856

Perfect! Adorable! Cottage! Newly built energy efficient ranch with 8 inch walls, air exchangers and heat pumps supplying heat, air conditioning, fans and dehumidifiers all in one. Open design with lots of light. Quality construction and materials throughout. All nestled privately on a pretty 1.5 acre landscaped lot with some mountain views, and conservation land across the street. Plenty of room for gardening, garage, sheds etc. This is a house you will want to see!

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Land For Sale – 265 Glenmere Road, St. George, Maine 04860

About 265 Glenmere Road, St. George, Maine 04860

Waterfront property on coveted Deep Cove minutes from Port Clyde village. Westerly views to Caldwell, Monhegan & Teel islands. Installed driveway, buried utilities, 3 bedroom leach field, 22×30 foundation. Stonewalls & some open pasture; some wooded. Incredible opportunity to create a private waterfront dream house. Possible deep water anchorage in coveted cove for docks, boating and moorings.

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Home For Sale – 26 Little Island Lane, Owls Head, Maine 04854

About 26 Little Island Lane, Owls Head, Maine 04854

Charming home with beautiful views of the Mussel Ridge Channel in Owls Head. Located just minutes from downtown Rockland this property is the perfect place to relax and enjoy the ever changing scenery out your window.

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Home For Sale – 48 Kindred Way, Yarmouth, Maine 04096

About 48 Kindred Way, Yarmouth, Maine 04096

Exceptional level of finish and attention to detail! This sunny home, built in 2016, has 4-5 bedrooms,3 full baths and a welcoming wrap around front porch! Details include built-in closets, bookcases, plantation shutters, AC, finished basement, library, gourmet kitchen, dining room with outside patio & fire pit, living room with gas fireplace. Convenient Village location – sidewalks to schools, shops and more!

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Home For Sale – 0 Lois Lane, Westport Island, Maine 04578

About 0 Lois Lane, Westport Island, Maine 04578

Exclusive waterfront home imagined by Midcoast Home Designs and to be built by highly regarded Frohmiller Construction Inc. Enjoy sunrise over the Sheepscot River with expansive eastern facing views. Deepwater frontage provides easy access to Boothbay Harbor, Wiscasset and Five Islands. The 11 acre lot is part of the McCarty Cove Association, with rights to an association deepwater dock a short walk from the site. The property can be subdivided into two parcels, both with association and dock rights.

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