Marijuana boom is 1 reason Bangor has almost no industrial real estate available

Bangor is poised for a rebirth of industrial construction, with vacancy rates for existing buildings below 1 percent, as demand for warehouses alongside adult marijuana grow spaces increases.

The urgent need for industrial and flexible space in the Bangor region is driving companies to build new space for the first time in a long time and increase sales of vacant land, said Tanya Emery, Bangor’s director of community and economic development a real estate conference on Thursday. Many existing rooms date from the 1970s.

“Zoning will be extended in shopping areas for light industrial use,” she said. “But without new construction, the options for industrial space are limited.”

It’s part of a trend that reached Bangor later than other areas of Maine. The Portland, Brunswick and Topsham metro area and the Lewiston-Auburn areas are also seeing new construction and escalating industrial lease and purchase prices. This segment of the real estate market hasn’t been affected by the pandemic, as cannabis operations and the demand for warehousing have emerged as two major factors eating up space.

“There seems to be no amount that cannabis companies would not pay to acquire real estate,” said Justin Lamontagne, a broker at The Dunham Group.

Marcus Sibley is President of Sibley Transportation Inc. of Bangor. His company stores and transports goods across the country for customers. Credit: Sawyer Lofrus/BDN

Sibley Transportation Inc. of Bangor is looking to add another warehouse to the four 250,000-square-foot warehouses it already owns or leases in the city, including the Galt Block Warehouse Co. building on Miller Street that it opened last year bought. The company stocks a variety of commodities including paper for mills.

If an existing warehouse became available, it likely wouldn’t meet Sibley’s storage needs because many industrial buildings are older and ceilings are too low for the goods stored inside, said President Marcus Sibley, who is now considering building from scratch.

“Marijuana producers have taken up every available square foot of space in the greater Bangor area,” said Sibley, who is the fourth generation to run the shipping and warehousing company.

But marijuana companies can operate in places with lower ceilings, said David Hughes, an industrial real estate agent at Epstein Commercial Real Estate in Bangor.

He had no estimates for the total acreage of marijuana businesses in the Bangor area, but state licensing records list several businesses with outskirts cultivation facilities on Hildreth Street near Hermon and Bomarc Road near Glenburn.

A truck pulls into Sibley Transportation Inc. in Bangor on Friday January 21, 2022 to load goods. Credit: Sawyer Loftus/BDN

The increased demand for storage space in Bangor began around 2017 when St. Croix Tissue in Baileyville took up hundreds of thousands of square feet and recent demand from marijuana companies, Hughes said. There is also greater demand for materials for infrastructure projects and solar farms.

Commercial vacancy rates in Bangor, Brewer, Hampden and Hermon fell by half from 10 per cent in 2014 to 5 per cent in 2017, then to less than 2 per cent by 2020 and now to less than 1 per cent.

While investors in other markets are building industrial space to lease, tenants in Bangor would need to get them $11 to $13 per square foot to see a return on their investment. That’s happening in Portland and Lewiston-Auburn, but not yet in Bangor, he said.

But owners who build to use the structure take on the new construction. One example is HVAC wholesaler Johnstone Supply, which is building a 30,000-square-foot warehouse at Hampden Business and Commerce Park.

A large area of ​​need is smaller industrial spaces of 5,000 square feet or less. Hughes said at least a dozen companies looking to move to the Bangor area contacted him during the pandemic, but he didn’t have space to show them.

The situation isn’t much better for larger spaces, which is why he keeps a close watch when a tenant is about to end their lease.

“I feel like I’m playing in musical chairs,” Hughes said. “I fill the space before it’s empty.”