Maine Commercial Real Estate: Is Augusta's Downtown Retail Sector a Recipe for Success or a Statement About the Augusta Market?

Downtown Augusta Cityscape

Retail space in the downtown area of Augusta has, in recent years, been something of a shadow of its former glory days when mills were vibrant throughout Maine. Today, Augusta is an example of how to begin to revitalize a downtown.

We took a look at the path from what Augusta's downtown looked like only a short time ago to the current state of the downtown.

Is Retail Demand Soaring in Augusta?

According to our latest commercial real estate data, the increase in activity in Augusta’s downtown is not a result of an increase in demand for retail space throughout the entire market, but a direct result of the efforts and attention paid to downtown.

Our transactional data suggests that the Augusta market overall is notably oversupplied in the retail sector. There are a number of large vacant spaces in more than one of the older-stock retail centers in the market. While efforts have been made to bring these spaces to a modern standard and attract occupants, it seems the pace of any demand increase is not fast enough to bring the retail sector into equilibrium in the near-term future.

Given the oversupply in the retail sector in the market, why is downtown retail space healthier than it has been in years? This is the result of many years of coordinated efforts between economic development, local developers along with a number of stakeholders in the market. The path to the current status of the market can be boiled down to a three-step process. While this sounds simple enough, there are any number of things that could go amiss and, ultimately, result in no revitalization at all.

It starts with Modernization

Between 2014-2016, developers began purchasing downtown properties for redevelopment generally to include updated retail on the ground level with some combination of apartment units in the upper stories. One of the key factors is the overarching modernization of all the apartment units developed. This created desirable living spaces in the downtown area.

Residential Demand

While redeveloped apartment units were occupied following the completion of the first few downtown redevelopment projects, demand surged in Augusta through the 2020-2022 years of the Covid-19 Pandemic as did demand in the majority of markets throughout the State.

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Residents Want Services

This is not rocket science. It's the logical conclusion to the trends in the downtown market. Once there are people living downtown, those people want services. Restaurants, bars, shops, etc. According to Keith Luke, with Augusta Economic Development Corporation, the majority of patrons in the downtown bars and restaurants live downtown.

Is that It?

The short answer is definitely not! There is so much that goes into each one of these steps that this breakdown amounts to a gross oversimplification at best. That said, even within this oversimplification, there is one more important element to discuss. Before any of this can even begin, a number of stakeholders need to believe it can work. The developer needs to believe there will be demand for renovated units in a somewhat depressed area, the planning board needs to buy in to grant approval and those very first residents within the first redeveloped property need to believe that downtown will become what they are hoping it would become in order to choose to move in.

It seems like, at least in Augusta, there was enough collective optimism to notably move the needle in the retail sector within the downtown area amid an oversupplied retail market.

For more in-depth analysis and future updates on Maine's commercial real estate markets, keep an eye on Core Market Advisors. Your trusted source for professional CRE insights.