Old challenges, new plans

REGION — The Greater Portland Economic Development Corp. (GPEDC), founded in January, may this week get the funding it needs to achieve its ends. 

That goal, of course, is to attract, grow and retain business development across a swath of six Casco Bay communities. But, while the plan is to attract business to the region, each town brings something different to the table. And, the way the economy is pointed, somebody is going to get to belly up to the buffet first.

Most people agree, it’s got to start in South Portland.

Harvey Rosenfeld, president of the Scarborough Economic Development Corp. (SEDCO), said economies of scale are such that, for very large companies, it may be cheaper to build an entirely new facility.  That’s a strength his town has to offer. Despite Scarborough’s rapid growth in recent years, it still has plenty of open tracts ready to take new tenants.

But, as both he and Westbrook’s economic development director, Keith Luke, point out, the big dogs are sitting on their cash right now.

That leaves medium and small companies. For these firms, said Rosenfeld, the most cost-efficient thing to do is to try and fill an existing building with vacant space.  And that’s where South Portland comes in, and Westbrook, too.

“We’re pretty well built out,” said South Portland’s assistant city manager, Erik Carson. “We’re not making any new space. We’re faced with having to fill in what we have. Our challenge, for the most part, is adaptive re-use of existing infrastructure.”

South Portland, Carson said, has about a 15 percent vacancy rate on commercial space. Rosenfeld said that puts South Portland at the front of the line.

“It’s one of those catch-22s,” he said. “On the one hand, I don’t want a lot of empty buildings. But, on the other hand, we are kind of surrounded by people with empty spaces that they are willing to make very good deals on. It’s very hard to build and lease in Scarborough right now for what you can rent space for in the surrounding communities.

“The advantage we have,” said Rosenfeld, “is that once that space fills up, we will be in a very good position, because right now we are about the only Greater Portland community with open space.”

Cape Elizabeth has open space, of course, but has at least three town committees, and as many subcommittees, dedicated to keeping it that way. Cape’s niche, it seems, is as a rural, residential suburb.

That’s’ important, said Luke, because places like Cape, where he lives, are needed for what he calls “discreet development.” In other words, the goal is not to simply attract a business, but to also land the executive team. Because, he said, if the decision makers make a home here, they’re more likely to grow their firm locally, rather than pick up stakes whenever the wind shifts.

Luke also points out that, while it may seem counterintuitive, now is a good time to invest in business development.

“If you have your money tied up in paper investments, and things implode, that money’s gone,” he said. “It’s just gone. But, if you invest in a building or a business, at least you have that tangible asset. You’ve still got something.”

That may be why some things in South Portland are starting to shake. The building at 100 Waterman Drive has begun to fill up after standing empty since the start of the recession. The Fore River Soundstage looks to become a centerpiece of the creative economy, thanks, Carson said, to a great idea. Spaces also are filling up in the Knightville neighborhood, where people are flocking to the new farmers market, a new food store is reportedly coming on Ocean Street and a bank is building on Broadway.

But, then, Carson notes, things get trickier, despite available space and willing investors.

“All of the easy locations have been done,” he said. “Now we are on to the tough ones.”

What makes it tough, said Rosenfeld, is that if you want to invest these days, you really need to have, as Luke intimates, your own resources.

“One of the issues right now is that banks are making more money by investing in things like treasury bonds than in making loans to businesses,” said Rosenfeld. “That’s an issue.  It’s very hard to borrow money right now. Even though interest rates are low, banks don’t want to take any chances.”

So, said Carson, while South Portland has a lot of ready space, a lot of it is too small, or too encumbered for those who don’t need a bank loan.

For example, there are long-vacant buildings in Cash Corner (across from Willow’s Pizza) and on Main Street (the old Irving Station) that would appear to be in prime locations for a small business.

“There are a lot of little spaces,” said Carson. “But, one of the challenges is that, in many places, it’s a ground lease. And with that, the owner of the lot says, you can’t put in anything that will compete with me.”

That necessarily limits options.

In other cases, said Carson, the job is simply too big to do without a bank. An example is the Portland Valve Co., on Madison Street. The company recently announced that it would leave South Portland, taking about 40 jobs with it.

The building might require a company large enough that it might just as soon build new somewhere else. However, the area offers a stunning view of the Munjoy Hill/Eastern Prom area of Portland, seen between Portland Bug Light and the Portland Pipeline storage tanks.

A 60-story hotel was proposed for the area only a few years ago. Now, it seems, only someone with pockets that deep could rehabilitate the overgrown, industrial lots. 

“That area is just woefully underdeveloped,” said Carson, a bit wistfully. “It’s just a prime development opportunity.”