Lurking just below the surface of the Real Estate Recovery

by Josh Fifield, Account Executive at Clark Insurance


With all the positive energy and robust investment in Maine’s real estate markets, there is reason to be optimistic if not jubilant about your prospects for success as a developer, vendor or lender, etc. That’s all above the surface of the cyber world where black hat crackers, master hackers, firewall bombers, phishing engineers, and war-driving sleuths are plotting your demise or already are picking your pockets.   Their work has made headlines, forced Presidents of Fortune 500 companies to resign, and helped compromise hundreds of millions of records.    Your success is their opportunity.

We’re talking about cyber liability and cyber crime. Gratefully, they are often not successful but, like a flood or fire, it can devastate your business and most importantly your reputation.

In researching statistics for this article, one web site (sourced through a normal Google search) attempted to install malware on our computers – in less than a minute. Our new software defenses thwarted the attempt.

What are the top line risks as you project your bottom line? These are facts according to

  1. The median cost per record to comply with notification regulations for a lost, identifiable data record is $13 but with an average cost of $964. Imagine discovering that you’ve lost 1,000 records. Without the right cyber liability coverage, you and your company are exposed to $13,000 to $964,000 of money straight off your bottom line.
  2. The median claim for cyber liability is $76,984 and the average cyber liability claim is $673,767
  3. Thirty-two percent of data breaches had insider involvement (

Let’s focus again on what needs to be revealed to be considered identifiable information:

A name PLUS one of the following

  • Address
  • Email address
  • Financial information
  • Social Security number
  • Driver’s license
  • Medical record

If you possess any of this data (e.g. rental agreements, tenant information, copies of checks, deposit records, emails, etc.), you need to have strong loss control measures and procedures in place AND you need to be properly insured.

The cost centers of a cyber claim are notification compliance for each state from which a record originated, forensic investigation to determine the extent of a loss or breach, crisis management services to communicate to all who care about your breach, credit monitoring and legal services.

The other category to be mindful of is Cyber crime and Cyber deception where you experience an actual loss of money, intellectual property or other proprietary information.   Cyber deception also known as “social engineering” is when someone pretending to be you via dishonest misrepresentation, directs another within your organization to pay funds to third party under false pretenses.

To remain successful, it is in our best self-interest and the interest of others (tenants, partners, investors and employees) to help protect and defend them against cyber attacks and identity fraud.

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SAVE THE DATE: Office of the Future to be unveiled May 17

Spring Conf Save the Date.pngThe Maine Real Estate & Development Association (MEREDA), the trade association for commercial real estate in Maine, will host a half-day conference about the “Office of the Future” on Tue., May 17 in Portland.

“These so-called ‘new offices’, without cube-farms and, instead, conferencing and meeting spaces that look more like living rooms, offer positive impacts for companies,” said Bruce Jones, a MEREDA board member and executive with Creative Office Pavilion. “Place and technology work together to improve employee engagement, performance and well-being. MEREDA is excited to bring this conversation to Maine.”

Motivated by the rapid changes to work styles, expectations of younger generations and accelerating technological advances that have disrupted conventional notions of the office, workers have abandoned the cubicle, first introduced 50 years ago, for buildings which require less square footage, demand more open, flexible and adaptable environments, and pay dividends on the bottom line.

The event takes place on Tue., May 17 at the Holiday Inn by the Bay in Portland, beginning at 12 noon. Registration and additional details are available at The early bird deadline ends May 11.

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New England Market Overview

Courtesy of CBRE | New England

After a slow and steady recovery it is time to officially say goodbye to the effects of The Great Recession. At this time two years ago the national economy experienced stabilizing capital markets, increasing consumer confidence and improving national labor conditions. These trends continued throughout 2015 and in many cases gained traction.

Reflecting back on 2015, the U.S. economy continued to build on the growth felt throughout 2014. At the beginning of the year, the national unemployment rate stood at 5.7 percent, and by November the metric had dropped 70 basis points to 5.0 percent, its lowest level in almost 8 years. U.S. GDP growth continued to expand in the third quarter of 2015 growing by 2.0% with household spending and fixed investments remaining robust but inventories growing slightly less than expected. 2015 ended up as one of the best years of job growth since 1999, adding on average more than 200,000 jobs per month through November. Looking ahead the Bureau of Labor Statistics (BLS) continues to predict the U.S. will return to full employment by 2020 (indicating a 4-5% unemployment rate) with the strongest job growth in healthcare and social assistance.

The New England Economic Project (NEEP) projects an average annual rate of growth for the New England economy of 2.4% through 2018, a rate slightly below the projected national average of 2.7% for the same period. Growth of the regional economy is expected to peak in 2015 at 2.9% and then level off and remain at 2.7 through 2016.

The venture capital investment market spiked in the third quarter of 2015 across the New England region, rising 39% to $2.1 billion across 125 deals according to the latest Money-Tree survey by PricewaterhouseCoopers. This increase in activity allowed the New England region to surge ahead of the NY Metro area by over $300 million in the third quarter. Leading areas on investment in the New England market were once again the biotechnology and software sectors. While the New England region and the NY Metro region remain competitive with each other across this metric, the Silicon Valley region remains the clear front runner, receiving $7.9 billion for the third quarter of 2015 across 337 deals.

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Multi-Family Market Update

By Brit Vitalius, Principal, Designated Broker, Vitalius Real Estate Group

The multi-family market is at or near the top of hot real estate sectors in Southern Maine. The dramatic price increases are driven by strong buyer demand, low inventory and rising rents. In 2015, the total sales volume in Portland, Westbrook and Saco/Biddeford was up more than 20% in each area. This activity is particularly good news for Westbrook and the Saco/Biddeford area. I’ve been predicting Westbrooks resurgence for years and it may be finally happening – the number of sales were up 30%. Likewise, Saco/Biddeford has been slow to get back in the game, but in 2015 median prices jumped an astounding 27%.

Portland has launched into its own orbit for both sales volume and values. First, it was an extremely active year for sales as there were more large-portfolio transactions than any year in recent memory. The cap rates on these sales continued to push down to around 7%. This is a dramatic drop after many years with cap rates around 9%. Today’s buyers are driven by several factors: 1) The desire to place capital a cap rates above Boston and other metro regions, 2) The opportunity to reposition existing units to capture a higher end market with higher rents and 3) The security of a stable asset with an eye toward future appreciation.

The attraction of Portland to owner occupants and smaller multi-unit investors is also extremely high and inventory is the limiting factor. The median price of Portland 2 and 3 units were up 13% from the previous year while East and West End prices became almost stratospheric – $550k – $750k for 3 unit buildings. These sales were driven primarily by owner occupants of two different types: 1) Young first time owners who can live with imperfection and realize the cost of ownership is the same as the rent they were paying (even at these prices) and 2) Mature buyers who have the wealth to make the improvements needed and are willing to pay to live in the location they chose.

Finally, the Portland “rental crisis” was a dynamic covered extensively by the Portland Press Herald. While the rental market has tightened and rents have increased, the numbers in the press appear to be higher than the reality. Rents in Portland increased about 8-9%* rather than the 17.4% reported Zillow. In addition, the average 2 bedroom is probably closer to $1,300/month rather than $1,450 repeatedly quoted by the Press Herald.

March 29 2016 graphThe current market strength is driving the development of new market rate apartments in Portland’s downtown and outside the city. What effect will these new units have on the existing market? An increase in rental inventory could soften rents and bring about an abrupt halt to the exuberant optimism currently driving up sale prices. Watch the spring rental market to see which way the market is headed for the short term. Watch the market next spring to see how the new units are absorbed.

*Based on my 2016 Multi Family Forecast Report and a recent Comprehensive Housing Market Analysis by HUD.

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MEREDA’s Annual Real Estate Spring Conference: “The Office of the Future & the Future is Now”

Spring Conference PicToday, rapid changes to work styles, expectations of younger generations, and accelerating technological advances are disrupting conventional notions of the office. Workers are abandoning the cubicle, first introduced 50 years ago, for “the new office,” which requires less square footage than a decade ago, demands more open, flexible, and adaptable environments, and pays dividends on the bottom line. MEREDA is pleased to welcome two nationally renowned architects for a discussion about this tipping point, with real world examples of how place and technology work together to improve employee engagement, performance, and well-being. The conversation will be augmented by a panel of executives from three Maine companies that have embraced the tremendous business opportunity that comes with providing choice to today’s enlightened worker. Attendees will learn how to put these ideas into action, deal with resistance to change, and measure the benefits of this new way of working. Additionally, attendees will learn about the reverberations for commercial real estate, the spaces we build, own, and lease and how the Maine market is changing as a result.

Panelists Include:

Dean Strombom, AIA, LEED AP BD+C. Principal, Gensler, Houston, TX
Sven Govaars, MCR, SLCR, Strategist, Houston,
Kathy Shafer, Sr. Director, Worldwide Facilities, IDEXX
Paul Larkins, Director, Corporate Planning and Construction, Unum
Brett Austin, President, Kepware Technologies

About the Event:

MEREDA’s Annual Real Estate Spring Conference: “The Office of the Future & the Future is Now”

May 17, 2016 – 12:00PM to 6:00PM

Holiday Inn By the Bay
88 Spring Street
Portland, ME

12:00 – 1:00: Registration | Exhibits
1:00 – 5:00 Program
5:00 – 6:00 Networking Reception

Registering For This Event:

Registration Fees (per person): Members: $85.00*

Non-Members: $105.00*
Non-Profit Rate: $55.00
Students: FREE*

Municipal Officials & Employees: FREE**
Legislators & Agency Employees:  FREE**

Your RSVP is requested by May 11, 2016. Payment is expected at the time of registration. No refunds will be granted to anyone who registers, but fails to attend or who cancels after May 11th.

* Member and Non-Member prices increase by $15 after May 11th

** MEREDA is pleased to provide subsidized admission for students and municipal officials. Call MEREDA at (207) 874-0801 for details.

Visit for more information and to register.

This Course has been APPROVED for 3.0 Hours of Real Estate Broker, Appraiser & Legal Continuing Education Credits. Approval for Architect credits is Pending.

This MEREDA Event is Sponsored by NBT Bank,  Verrill Dana, Commercial Properties Management, Mainebiz, Lavallee Brensinger Architects, Sevee & Maher Engineers, Inc., Pierce Atwood LLP, Office Resources, AAA Energy Service, PDT Architects, ReVision Energy & Gawron Turgeon Architects.

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MEREDA’s Morning Menu: Energy Islanding: Creating Microgrids for Grid Resiliency and On Site Generation

Breakfast Logo for Press Releases & Social MediaMicrogrids are a localized grouping of electricity sources that operate and connect to the centralized grid but can also disconnect and function autonomously. Microgrids serve several functions, they provide continuous electricity for buildings that cannot lose power, they serve as emergency shelters for municipalities preparing for resiliency in the face of increasingly severe weather patterns, and they support a flexible and efficient electric grid, by enabling the integration of renewable sources.

Join the Maine Real Estate & Development Association (MEREDA) for breakfast on April 14, 2016 from 7:30 – 9:00 AM at the DoubleTree by Hilton in South Portland to learn from local energy experts as they discuss what microgrids are, how they function, and how they work with on site generation. They will also show examples of microgrids being used in major cities today.

About our Presenters

Dan Kelley is Sr. Vice President & Service Line Leader for Energy & Power Engineering at Woodard & Curran.  Dan provides consulting and engineering services to meet the energy generation, conservation, and resiliency needs of clients across all markets. He has over two decades of project management, multidiscipline engineering, and process controls experience.

Geoff Sparrow is Director of Engineering at ReVision Energy.  Since joining ReVision Energy in 2006, Geoff has become NABCEP certified in both photovoltaics and solar thermal. Geoff is also a licensed Professional Engineer in the state of Maine, and practices both mechanical and electrical engineering.

About the Event:

MEREDA’s Morning Menu Breakfast Event:  Energy Islanding: Creating Microgrids for Grid Resiliency and On Site Generation

7:30AM to 9:00AM

Doubletree by Hilton
363 Maine Mall Road, South Portland, ME
Buffet Breakfast: 7:30-8:00 am
Program: 8:00-9:00 am

Registering for this Event

Ticket Prices:
Member:  $45 pp  |  Non-Member:  $55 pp

Prices increase by $10 after April 7, 2016
Payment is expected at the time of registration.

No refunds will be granted to anyone who registers, but fails to attend or who cancels after April 7, 2016

Visit for more information and to register.

This MEREDA “Morning Menu” Breakfast Event is Sponsored by Norway Savings Bank, ReVision Energy and Woodard & Curran.

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Southern Midcoast Commercial Happenings

By Don Spann, CIAS, Owner/Broker, RE/MAX Riverside

The Southern MidCoast (Bath-Brunswick-Topsham) region experienced several long years of anxiety in the general real estate direction, both residential and commercial, beginning with the announcement of the base closure for Naval Air Station Brunswick.  The subprime crisis of 2008 followed that, with resulting “tanking” of the national and state economy.  2012 provided a glimmer of hope in the housing/commercial markets in this region, followed by a resurgence in the market beginning in 2013 and continuing through 2015.  2015 experienced unprecedented activity not only during seasons of expected strength, but continuing throughout the holidays.

As reported at MEREDA’s annual forecast conference, Commercial real estate is seeing significant new and redevelopment efforts, in part due to the energy surrounding Brunswick Landing and Topsham Commerce Park formerly the Naval Air Station Brunswick and Navy Annex Topsham.  In-town Brunswick has benefitted from the creation of Brunswick Station, which offers close proximity to not only the Downeaster train but Bowdoin College as well.  In addition, Topsham Fair Mall and Business Park are growing and flourishing.  Bath has seen a new hotel and Medical Office building. Of interest is the statistic that two-thirds of the population of Maine exists within 35 miles of the Interstate 295/Rt. 196 intersection.  Traffic counts on Rt. 196 at Topsham Fair Mall exceed Maine Mall traffic counts.  This region is well named as the “Gateway to Downeast.”

Growth in Manufacturing, Medical Office, Financial, Eldercare and selected Retail ventures have led the way to the excitement and energy we currently enjoy in the Southern MidCoast region.

If January numbers are any indication, 2016 will be a very good year for the region.

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Legal Implications of Using Drones

By Michael Bosse, Shareholder at Bernstein Shur

Drones are used on an increasing basis in many industries, including real estate, farming, law enforcement and certainly in the construction industry.

The evolution of the law surrounding drones is increasing on a nearly daily basis, and contractors need to understand what uses are permissible and where the legal minefields are likely to be.

A drone is an unmanned aerial vehicle (UAV), which is an aircraft that does not have a human pilot aboard. The flight of a UAV is controlled either autonomously by onboard computers or by a remote-control pilot on the ground. Although drones were first used in military applications, they are now increasingly being used both commercially and non-commercially. The concept of a UAV is not new, as it can be traced back to the mid-1800s when Austria sent unmanned bomb-filled balloons to attack Venice, and militarily, unmanned aircraft were used in both World Wars.

Nowadays, commercial and non-commercial applications are taking over the landscape, and legal issues are popping up near and far. Drones are now being used for aerial surveying of crops, film-making, search and rescue, inspections and surveys, delivering products and supplies, in manufacturing and in law enforcement. Construction and real estate industries are increasingly using drones as part of their regular day-to-day operations. They are used recreationally or as a hobby. All of this generally and until recently had been against a non-existent regulatory backdrop.

The Federal Aviation Administration (FAA) oversees all aspects of civilian aircraft operation in the national airspace system. The FAA Modernization and Reform Act of 2012 has set forth certain parameters for the operation of recreational, non-commercial drones. For commercial use of drones, which is interpreted in a broad fashion, the FAA’s current position is that if a drone is being used for commercial purposes, the operator of the drone must have a pilot’s license and get an exemption. The so-called “333 Exemption” that is now being granted regularly by the FAA allows for various commercial uses with conditions attached to the operation of the drones, including not flying at night, having a visual line of sight, and not being within 5 miles of an airport without permission. Conditions also will be placed on the operator to ensure that the drone is well maintained, and that the operation of the drone is completed in a safe manner.

With a Section 333 exemption, drone users are expected to be required to do the following:

  • have a Certificate of Waiver or Authorization from the Air Traffic Organization;
  • have an aircraft registered with the FAA; and
  • have a pilot with an FAA airman certificate, described below.

Under an exemption, the pilot must hold either an airline transport, commercial, private, recreational or sport pilot certificate. The pilot also must hold a current FAA airman medical certificate or a valid U.S. driver’s license issued by a state, the District of Columbia, Puerto Rico, a territory or the federal government. New draft regulations have yet to be approved by the FAA, and when and if they are approved, the process will be streamlined and made easier to utilize a drone in a commercial fashion.

The proliferation of the use of drones is causing unanswered legal questions to come to the surface on a daily basis. If a drone is on someone’s property without permission, can the person shoot the drone down? One Kentucky judge recently said yes, but the answer is far from certain. Will traditional insurance policies apply to one’s drone use or to liability caused by drone operation? Probably not, and new insurance policies are already coming on the market in the form of a specific drone policy, or as an endorsement to existing insurance policies. To what extent with the federal regulatory framework trump the increasing number of state and local regulations are being passed now? This question will surely be litigated in the coming months.

What is clear is that drones have presented society with a fascinating intersection between the law and a technology that has increased in a rapid fashion. Anyone operating a drone must understand the legal framework that is being built, both legislatively and by the courts, and ensure that any legal risks regarding the operation of the drone is understood and accounted for in an appropriate fashion.

Michael Bosse is a shareholder at Bernstein Shur in Portland, Maine. He is the chair of the firm’s Construction Law Practice Group and recently authored a book entitled “Building the Construction Case: A Blueprint for Litigators.”

Originally published in the January 19, 2016 edition of Construction Executive

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MEREDA’s Morning Menu – “Historic Masonry Reborn” – the care of historic brick and stone buildings in Maine

Breakfast Logo for Press Releases & Social MediaJoin MEREDA on April 5th at DaVinci’s Eatery in Lewiston to learn how to address the challenges of repairing historic masonry buildings.  Our panelists will review how to analyze the conditions of existing buildings, propose solutions that meet budget, design and constructability considerations  as well as ensure the Secretary of Interiors Standards for Rehabilitation are met. As stewards of Maine’s historic buildings, owners and developers want to work to keep and maintain real value and this conversation will help us all do just that.

This work is a team sport and the presenters will discuss the role of each team member and review critical design considerations as well as how the end product will meet historic standards while meeting performance objectives.

Panelists Include:

Mike Johnson  – Maine Historic Preservation Commission
Scott Whitaker – Building Envelope Specialists
Steve Pederson – WBRC Architects- Engineers
Stephen Jones – Building Envelope Specialists

About the Event:

MEREDA’s Morning Menu

“Historic Masonry Reborn” – the care of historic brick and stone buildings in Maine

7:30AM to 9:00AM

DaVinci’s Eatery
Bates Mill Complex
150 Mill Street
Lewiston, ME

Buffet Breakfast: 7:30-8:00 am
Program: 8:00-9:00 am

Registering for this Event 

Ticket Prices:
Member:  $25 pp  |  Non-Member:  $35 pp
Prices increase by $10 after March 29, 2016

Payment is expected at the time of registration.

No refunds will be granted to anyone who registers, but fails to attend or who cancels after March 29, 2016

Visit for more information and to register.

This MEREDA “Morning Menu” Breakfast Event is Sponsored by Norway Savings Bank and Building Envelope Specialists.

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Greater Portland, Maine Industrial Market Snapshot

By Justin Lamontagne, CCIM, Broker, NAI | The Dunham Group

For those of us in the business, the continued drop in vacancy rates is astounding. But the data doesn’t lie, and confirms what we’re feeling on a day-to-day basis. For the fifth consecutive year, the overall vacancy rate in Greater Portland has dropped significantly. As of December 15, 2015, it is a remarkably low 3.38%.

A closer look into the data outlines some really incredible story lines. Take, for example, Biddeford. With the closure of MERC, there is significant investment along Main Street and much of their mill space is being repurposed.  The industrial market there is suddenly extremely tight. Only four or five years ago, we struggled mightily to fill space, even at drastically reduced prices. Today, capitalizing on the pressure of the Greater Portland inventory crunch, vacancy rates are down to 4-5% in the industrial parks and average pricing is about $5.00/SF NNN.

There are many impacts the space crunch has on our market. One that we found particularly interesting is the amount of speculative buying that happened in 2015. Developers and investors, recognizing the high cost of construction but stable lease rates, are buying empty industrial buildings with the goal of leasing them out. We sold and tracked several successful speculative purchase projects, and I anticipate this trend to continue into 2016.

The downside of such a tight market is that it can inhibit some companies from relocating and growing. As such, land for owner/user’s became a very hot sector within the industrial market in 2015. We represented several companies who searched for existing facilities, came up empty, and chose to build new. While there are obvious advantages to building new (ideal layout and design, energy efficiencies, etc) the cost still doesn’t compete with existing inventory. That gap, however, is shrinking as sale price per square foot costs continue to increase.

I predict the inventory and overall supply will increase in 2016 as speculative repurposing of buildings, owner/user new construction and even speculative new construction is inevitable. As such, sale pricing and vacancy rates should stabilize. On the other hand, I predict lease rates to increase sharply. Landlords and brokers have been slow to dramatically adjust lease rates upward for a variety of reasons. 2016 is the year that changes and we’ll see at least a 5% increase in overall base lease costs.

On behalf of the industrial team at NAI The Dunham Group, I hope you find this information helpful as it pertains to your particular real estate holdings and business goals.

Article originally published in the New England Real Estate Journal on February 5, 2016 

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