Spring 2019 MEREDA Index Commentary – INTRODUCTION – Tim Soley, East Brown Cow Management, Inc.

Tim Soley, President of East Brown Cow Management, Inc. recently provided insight for the Spring 2019 Edition of the MEREDA Index by sharing his perspective on the markets overall. 

I’ve always found the MEREDA Index to be an extremely valuable tool. Not only is it a great source for measuring changes in our industry over time, but it is also a wellspring of information from industry leaders sharing their insights. The Spring Index provides us with
a full look at 2018 and allows us a peek at how 2019 is setting up.

Having grown up in mid-coast Maine and been active in commercial real estate in southern Maine over the last 30 years, I have never seen such a broad-based, diverse, and robust expansion. From industrial to flex, to development land, to residential condominiums and rentals, to large companies’ office space and hospitality—the growth is unprecedented in modern times. While mostly concentrated in southern Maine, it is late in the current market cycle and the growth is demonstrating weakness. During the 3 economic cycles I have experienced in my career, people always say that “this time is different” – it never is.

Lateness is sometimes measured in years, and sometimes in frothy activity which does not
mirror the underlined fundamentals. I believe that both conditions apply now.

Maine is following a nationally choreographed path now affected by increased interest rates, international trade tensions, post tax stimulus let-down, and market cycle expansion fatigue.

For example, in Portland I see this represented by stagnant office demand from the typical
1,000 to 3,000 square foot office tenant. We also see residential condominium demand
begin to slow.

Having said all that, and having no crystal ball telling me when the recession will occur, I have never been more excited about the fundamental and foundational potential of the real estate economy focused in southern Maine. I see unprecedented opportunity in elevating the level of design and construction quality in Portland’s built environment.

There are geographic locations of strengths in specific industries or businesses, but nothing broad-based. One of the differences about this expansionary period is that Maine has not seen uniform growth statewide.

Quality of life, a mantra heard here for a couple of decades, is bringing young workers and
older retirees to live here. Tourism has never been greater or as seasonally diverse, and
provides possibilities. Tourism is one of Maine’s largest industries, therefore most important exports. In our relatively rural, economically disadvantaged state, tourism provides our best opportunity to export our tax burden. Finally, large, growing companies are either expanding outposts here, or are willing to call Portland, Maine their home. I see opportunity in the cyclical dark clouds ahead.

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