Has E-commerce Plateaued? An Economist and a Millennial in Conversation

By Blueprint, presented by CBRE

Do millennials shop differently than older generations? Are brick and mortar shops fighting back against the rise of e-commerce? Must retailers move online to survive? Are consumers more likely to buy if they browse online? Does a brand need a physical presence to have a successful launch? Above all: Has e-commerce plateaued?

These and other questions are part of the wider debate about how technology is shaping how we shop.

In our latest conversation in an ongoing series with CBRE thought leaders, Richard Barkham, CBRE’s global chief economist, argues that technology and e-commerce have only just started to reshape how we shop, while Sahar Rezazadeh, a chartered surveyor on CBRE’s Central London retail team, argues that in certain sectors and countries, millennials’ shopping habits mean that there is plenty of life in brick and mortar yet.

Richard Barkham: Let’s start with the big picture. Clearly, technology is reshaping every sector it touches. In retail, for example, it is reshaping the key drivers of the modern logistics operation: supply chains, same-day fulfillment, and how we deal with returned goods. Most importantly, e-retail volumes continue to grow and grow.

We are also seeing e-commerce affecting large retail firms. For example, Michael Kors, a big U.S. retailer, recently recorded a decline in growth of sales, which they put down to the poor performance of U.S. malls. I’m sure that’s the result of technology and sales moving online. In short, e-commerce looks healthy. It’s having an impact.

So Sahar, why do you say that millennials are going to be responsible for the plateauing – or perhaps even decline – of e-commerce?

Sahar Rezazadeh: I think it’s not as straightforward as that, for three main reasons.

First, there’s a lot of variation going on under the surface of the macro picture, in different sectors. In the field of fashion and accessories, for example, people of my generation are just as keen to buy in person as they ever were. One recent CBRE report, Millennials: Myths and Realities found that apart from food, millennials do less than 10 percent of their non-food shopping online.

Second, if any brand wants to make its mark in retail, it has to have a physical presence. That’s always been the case, and it still is. Retailers, especially startups, are struggling to get the attention they need online because there’s so much information and consumers are so fickle. Retailers are increasingly finding that the way to make their brand stand out is to launch a store. It still gives you much more exposure than just having a website.

You mentioned Michael Kors, for example. They’re a U.S. retailer that have decided to enter the U.K. market. It’s notable that despite the opportunities online they’ve decided to roll out physical stores across the country. If they thought e-commerce was more profitable in the long run, why would they be opening stores in key locations like Regent Street in London, where they have upsized to a 16,000 sq.-ft. flagship store? We see a similar story in other key cities such as New York and Hong Kong. If you want to make your mark in retail, you need that physical presence. Certainly we’re seeing that online names are even starting to look to add physical stores to the mix.

Third, I think retailers are beginning to realize that moving online is a more expensive proposition than they thought it would be. It’s not just a question of building the site or the app. If they want to compete with the more established brands, new entrants have to invest to get the attention of the right consumers in the right way at the right time. That could mean SEO and other kinds of online promotion, it could mean publishing, it certainly means making sure that the app or site works seamlessly and stays up-to-date. The reality is that it’s a competitive market and smaller retailers or up-and-coming brands will struggle compared to the brands that have already made their mark.

THE RETAIL EXPERIENCE

RB: I take your points. And although I said that the decline of growth in mid-market malls might point to the health of e-commerce, there could be other reasons for it too, such as particularly poor wage growth. Since the financial crisis, lower and middle income wages have been relatively stagnant. That’s probably another reason why many mid-market malls are stagnating.

I was interested in your point that there’s something distinct about millennials’ shopping habits which is checking the rise of e-commerce. What were you referring to?

SR: Well, of course we have to be wary of generalizing too much. And of course there are some products which millennials would purchase from an online retailer because it’s cheaper or easier.

But there are other categories which I wouldn’t dream of purchasing online. To buy a pair of shoes, for example, you need to go into the store, try them on, and walk around in them. If you need to refund them, it’s much easier to do in person. All of these things are possible to do online – some shops send you items to try on and you can send them back, for example – but we are not seeing consumer habits changing rapidly. Seventy percent of millennials’ shopping still takes place in-store; over half say they like to see the products before they buy them. Shopping online, it turns out, is just not as convenient for most millennials.

Brick and mortar also benefits the retailer. When I go into a store, my visit is more likely to be converted into a purchase, whereas online I might click on a few items, save them in my basket, leave the site, and perhaps come back to it later.

THE INTERNATIONAL PERSPECTIVE

RB: I take your points about experience, but the best e-retailers give a fantastic experience. Great choice, rapid delivery and returns service – sometimes better than shops. Although e-retail is better for ‘classic’ items like business shirts – more so than, say, new designs, colors and brands.

Another factor, of course, is the big picture in terms of economic growth. Today, we are seeing an increasingly powerful recovery in many developed countries. Consumer balance sheets are in good shape around the world and confidence is high, so you would expect overall volumes to be going up. Overall growth and increased market share will keep e-retail booming. I did think that maybe market share had plateaued in the U.K., but I am not sure that is true. Moreover, in most other countries, including the U.S., market share is low and heading up quickly.

SR: The sector-by-sector analysis is important here, too. If we look at the luxury market, very few people will spend thousands of pounds online at the push of a button. We want to go into the store, feel and experience the product. And research shows that we are increasingly interested in buying into the experience as opposed to merely the product.

Topshop, for example, is getting better at giving its customers an experience. They never used to have too much going on in store, but now some of their stores have hairdressers, treatments, a nail bar, style consultants, and more. It’s no longer just about going in, picking something up, and leaving.

Primark is an interesting example, because they have decided not to have e-commerce at all. You might think that an essentials brand which is cheap would want to go the e-commerce route. I suspect they know, though, that by keeping their commerce in store they’ll increase their dwell-time, which will lead to more sales and impulse purchases.

Any retailer which can develop a robust multichannel retail strategy that combines ‘clicks with bricks’ will succeed. Needless to say, the occupancy costs for a physical store need to stack up, and retailers will be mindful of the size and number of stores they will commit to. In the U.K. for example, we are yet to feel the impact of the business rates (property tax) increases in key retail destinations.

SPEED OF ADAPTATION

RB: The question of what determines the speed of adaptation to e-commerce is an interesting one. As an economist, I think prices, incomes, and the availability of technology are the main factors. In the U.S., for example, there is some evidence that online commerce correlates to the gas price: When petrol prices go up, people are more likely to buy online; when it goes down, they’re more likely to go back into physical stores.

And when I think about my own adaptation to e-commerce, I’ve come to the conclusion that I have similar shopping habits to millennials myself. I prefer to shop in shops, particularly when it comes to luxury items. I will go a long way to see new cool stuff. Perhaps, I’m a closet millennial … despite the trivial matter of age.

In any case, the battle of consumer engagement is super-fierce right now. ‘Bricks and clicks’ need to be right ‘on their game’ to succeed.

Sahar Rezazadeh is a chartered surveyor on the CBRE Central London retail team, offering advisory and transactions services to clients. She advises retailers on their store portfolios including new entrants to the U.K. and London market and specializes in fashion and lifestyle brands. She’s a former finalist of the Network of Aspiring Women Young Entrepreneurs, and in 2014/15 won the RICS Young Surveyor of the Year Award.

Richard Barkham is the global chief economist at CBRE. He is a former director of research for the Grosvenor Group, and a visiting professor in the Department of Construction and Project Management at University College London. He taught at the University of Reading between 1987 and 1998. He is the author of Real Estate and Globalisation, which explains the impact on real estate markets of the rise of emerging markets such as China and Brazil, as well as numerous academic and industry papers.

Article originally published on February 23, 2017 –  https://blueprint.cbre.com/has-e-commerce-plateaued-an-economist-and-a-millennial-in-conversation/ 

“Blueprint, presented by CBRE, is an online magazine dedicated to telling timely and insightful stories about the transformational role real estate plays in the world.”

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DevelopME’s Lunch & Learn Series “Breaking into Development”, Part Two: “Out to Bid: Managing the Construction Process”

DevelopME Logo 2017Join the Maine Real Estate Development’s DevelopME for their Lunch and Learn Series “Breaking into Development”, Part Two: “Out to Bid: Managing the Construction Process on October 4, 2017 at the Rines Auditorium, Portland Public Library from 11:30 a.m. – 1:00 p.m.  Our expert panelists will discuss necessary conditions during the design and construction period to mitigate risks and deliver a quality project. The audience will leave with a better sense of what questions need to be answered prior to the start of construction and how to select the right team.

Alyssa Parker of Wright Ryan Construction and Graham Vickers of SMRT Architects will dive into what goes on during the construction period, and shed some light on a process that can be intimidating to would-be real estate entrepreneurs.

Ethan Boxer-Macomber will return to moderate the discussion and the hypothetical project from part I of this series will pick up right where it left off.

About the Event:

October 4, 2017 – 11:30AM to 1:00PM

Portland Public Library
Rines Auditorium
5 Monument Square
Portland, ME

Lunch: 11:30 AM
Program: 12:00 – 1:00 PM

About the Panel:

Ethan Boxer-Macomber, LEED AP, has over 18 years of experience in real estate, housing, and community development and has successfully led multiple large-scale residential development projects across southern Maine. In 2013, Ethan started Anew Development, a Portland-based real estate development company dedicated to residential infill that provides highest, best community value by adhering to principles of quality urban design, smart growth, and sustainability. 

Ethan formerly was a City Planner for the cities of Davis, California, and Portland, Maine. He earned a BS in natural resources and ecology from the University of Maine and an MS in community planning and development from the University of California, Davis. He is a returned Peace Corps volunteer and was formerly certified by the American Institute of Certified Planners (AICP). 

Alyssa Parker, LEED AP BD + C, has over 20 years of design and construction experience and a technical background in Architecture. She earned her Bachelor of Science in Art and Design and her Master of Architecture from the Massachusetts Institute of Technology and began her career working for architectural firms from Vail, CO to Boston, MA. Alyssa’s wide-ranging construction expertise includes experience on projects all across the United States, from California to Virginia and Hawaii to Minnesota. 

She’s led some of Wright-Ryan’s most complex and architecturally distinctive projects to date during her tenure with the firm, including the recently completed Press Hotel – a LEED-certified historic property.

In her role as Director of Commercial Project Management, Alyssa mentors and oversees all other Commercial Project Managers in the firm. She has most recently helped guide the successful management of two large-scale Passive House projects in Maine – Village Centre Apartments in Brewer and Bayside Anchor in Portland. A third Passive House project, a new Lower School for Waynflete in Portland, is currently underway. 

Graham Vickers, AIA, is an architect and project manager with SMRT Architects and Engineers in Portland.  His experience with SMRT has covered all project types, sizes and construction delivery methods.  Some select examples included: Integrated Project delivery (IPD) for the MaineGeneral Medical Center; P3 for the Commonwealth of Puerto Rico; Construction Management (CM) for multiple developer led projects for Midcoast Health; Design-Build (DB) on numerous facilities for the Department of Defense; and Design-Bid-Build (DBB) projects for a wide variety of client types.  Graham has worked on the design of offices, high tech research and manufacturing, institutional, and educational facilities for clients like Draper Laboratories, WEX, Nanocomp, the State of Maine, Colby College, and Alexandria Real Estate Equities.

Graham’s work includes construction administration and owner’s project management, where he protects the interests of the building owners and developers.

Graham sits on the board of the Portland Society for Architecture and on the Advisory Board of the University of Maine School of Architecture. He holds a bachelors of architecture degree from Rensselaer Polytechnic Institute. 

Registering for this Event:

MEREDA Member: $15 each  | Non – Member: $25 each

Register After September 27:  Member: $25 each  |  Non-Member $35 each

Your RSVP is requested by September 27. 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 September 27.

This MEREDA DevelopME Lunch & Learn Series Event is Sponsored by Wright-Ryan Construction and SMRT Architects and Engineers. 

 Visit www.mereda.org for more information and to register.

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The Right Equation for Responsible Development: Spotlight on Mission Hill

In multi-part series, exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, social impact and job creation.

Please join with us in celebrating Mission Hill.  A conversation with Guy Gagnon, Biddeford Housing.

MEREDA:  Describe the building and project. 

Guy Gagnon:  Complete renovation and re-use of St. Andre’s Church campus encompassing an entire city block near the center of Biddeford.  Former school has 35 senior apartments; former convent converted to 15 new senior apartments; rectory being converted to community center and a few affordable family apartments above;  Church to be location for youth related activities, teen center, large gathering area and historic chapel.

MEREDA:  What was the impetus for this project?   

Guy Gagnon:  The closure of St. Andres parish and the deterioration of its buildings was having negative impact on the neighborhood.  Fit perfectly within Biddeford Housing Authority (BHA) / Southern Maine Affordable Housing’s (SMHA) mission to improve the quality and quantity of affordable housing.

Mission Hill Plaque Photo

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started? 

Guy Gagnon:  BHA had this project on its potential redevelopment list since 2010 when the last church service took place.  Construction began in 2015 after acquisition in 2014.

MEREDA:  Tell us about the most challenging aspect of getting this project completed.  

Guy Gagnon:  Piecing together the various funding sources needed to allow the units to remain affordable for seniors, most of whom are on fixed incomes.  And now finding more funding to complete the re-use of the spectacular Church building itself.

MEREDA:  Something unexpected you learned along the way was….

Guy Gagnon:  Stories from current and past residents of the area who visited or had some connection with the church have been very interesting to hear.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable?  

Guy Gagnon:  Just the fact that we are saving an entire campus of some of the most historic buildings in Biddeford is a rare opportunity

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2017 Changes to the American Institute of Architects (AIA) Documents

By Mike Bosse, Shareholder, Bernstein Shur

Earlier this year, the American Institute of Architects released its new set of 2017 documents into the market. The AIA has long published standard form agreements for the construction industry, for well over a hundred years, and they update them to reflect the changing marketplace that is intended to offer protections to all participants on a construction project. The last major change to the documents took place in 2007, and this article will summarize most of the changes made to the general contractor and owner agreements.

  1. Insurance obligations are a notable change. A new feature in the A201, the general conditions of construction, is a new insurance and bonds exhibit that is appended to the contract. This exhibit provides both required insurance coverage, but also a list of optional insurance coverages that might be appropriate given the nature of the project. Required coverage, not surprisingly, includes commercial general liability coverage, auto coverage, and workers’ compensation. Some types of optional coverage include asbestos abatement liability coverage and insurance for damage to property while it is being either stored or is in transit. The goal of the new exhibit is to make the insurance on a project easier to navigate by providing a suite of possible coverage in a separate exhibit. Finally, the new agreement requires the owner to purchase the builders’ risk policy, but also offers for the ability for the contractor to purchase it, which often occurs on construction projects because the contractor may have easier access to purchase an all risk policy.
  2. The 2017 agreements also include new provisions for digital data and Building Information Modeling (BIM) that has enjoyed increasing popularity in the marketplace. The 2017 agreements expressly require the use of an AIA document that established protocols for using and exchanging digital data between project participants.
  3. The AIA forms address the contractor’s ability to ensure that an owner can actually pay for the project. In the new forms, the contractor will understand when he can refuse to proceed with the work if the financial information that he receives from an owner reveals that the owner is unable to pay, or if the owner simply fails to supply the information. Under the new suite of agreements, the contractor has to keep the information confidential, but is entitled to it to ensure that the funds exist to pay for the project.
  4. Also, when an owner terminates a project “for convenience,” the contractor will normally want to ensure that it receives overhead and project on the portion of the work not executed on because of the termination for convenience. Many owners strike this clause in contract negotiation. The new A201 requires owners to pay for costs “attributable to termination of subcontracts” as well as a “termination fee.” This is an effort to strike a balance between owners who do not want to pay overhead and profit on work not performed, and contractors who are left with holes in their schedules when work is terminated for convenience by owners.
  5. The new A201 also tightens up the lien waiver process. The new document explicitly requires contractors to submit lien waivers along with their progress payment applications. Surprisingly, some contractors are still resistant to procuring and sending these waivers. It also requires the contractor to indemnify the owner for damages that the owner suffers as a result of a lien filed by a subcontractor or supplier so long as the owner has fully complied with its payment obligations to the contractor. While this was already the law in almost every jurisdiction, having the clause explicitly in the A201 is a helpful change when lien situations arise after final payment on a project.
  6. As to warranties, all warranties must now be issued in the name of the owner, or be transferable to the owner. This new clause is helpful to owners, and equipment and materials are often installed by general contractors after having been supplied by others who have no contractual privity with the owner. The document also tries to make more clear what warranty obligations a general contractor has before substantial completion, and how those duties change following the issuance of substantial completion.
  7. Finally, the revised AIA contains a provision related to arbitration and litigation. After the initial decision from the initial decision maker, and mediation, either party may demand that the other party move forward with arbitration or litigation, as the case may be. If the other party does not file its claim within 60 days of the demand, then both parties waive the right to file the claim with respect to that initial decision that was made.

Overall, the 2017 changes to the AIA 201 are not considered major changes. However, regular revisions and changes to the AIA documents are not only helpful; but necessary. As the process of construction changes as we advance in our technology, change to the AIA documents will remain a constant.

Article originally published in the June 2017 issue of the Bernstein Shur Monthly
http://www.bernsteinshur.com/what/publications/bernstein-shur-monthly-june-2017/#2017

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MEREDA’s Annual Lewiston/Auburn Fall Networking Social

After the summer break, make plans to join the Maine Real Estate & Development Association (MEREDA) at Baxter Brewing Co. in Lewiston on September 28 from 5-7 pm for its Annual L/A Fall Social.  Located in the historic Bates Mill, Baxter Brewing currently distributes its flavorful and unique craft beers statewide in Maine, Massachusetts, New Hampshire & Vermont.

MEREDA’s networking events attract key players in Maine’s real estate industry.  Come enjoy great food, Maine-made beer, and lively conversation with colleagues, friends and other industry professionals. A great forum to put a face with a name as well as make new business connections!

Interested in learning about the brewery? A guided tour will be available fifteen minutes before the event at 4:45 pm.

About the Event:
MEREDA’s Annual Lewiston/Auburn Networking Social

September 28, 2017 – 5:00PM to 7:00PM

Baxter Brewing
130 Mill Street
Lewiston, ME

Tour:  4:45 – 5:00 PM
Event: 5:00 – 7:00 PM

Registering for this Event:
MEREDA Members: $25 each | Non-Members: $35 pp

Prices increase by $10 after Sept. 21

Your RSVP is requested by September 21. 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 September 21.

Visit http://www.mereda.org for more information and to register.

MEREDA’s 2017 Annual Lewiston/Auburn Networking Social is sponsored by Skelton, Taintor & Abbott and DeStefano & Associates, Inc.

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The Right Equation for Responsible Development: Spotlight on Village Centre

In multi-part series exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, social impact and job creation.  Please join with us in celebrating Village Centre.  A conversation with Erin Cooperrider at Community Housing of Maine (CHOM).

MEREDA:  Describe the building and project.

Erin Cooperrider:  Village Centre is a new construction, 48-unit apartment building providing affordable housing for working families. The 55,000-square foot, 3-story, elevator building includes a community kitchen, library, playroom, conference and meeting rooms, bicycle storage, and service animal washing station, and was constructed in accordance with a rigorous energy standard certified by the Passive House Institute U.S. Approximately 12% of the electricity used by residents of the building is provided by solar panels on the roof, and the project was designed to be user friendly for persons who are blind or visually impaired.

The project included the Village Centre and grounds, as well as improvements constructed on city land to create a new municipal parking lot, a new bus stop shelter, a new curb cut allowing the bus to pull over and stop without halting traffic, and a new sidewalk connecting these improvements with the existing municipal recreation center and ball fields.

Village Centre is the second largest Passive House certified multifamily structure in the U.S., and the first multifamily project in New England to achieve this certification.

MEREDA:  What was the impetus for this project? 

Erin Cooperrider:  The project is located in a downtown revitalization area, which the City of Brewer identified in the Highland Street Community Revitalization Plan.  The Plan goals are to 1) preserve, enhance and strengthen the residential aspects of the plan area, 2) increase the availability of affordable housing, 3) increase the availability of community services, and 4) create a more attractive High Street Community Revitalization Plan area.

After an extensive process to try and identify a new owner and feasible rehabilitation program for a former school in the district, the City of Brewer decided the best way to redevelop an important in-town parcel was to demolish the building and remediate the site, making way for sale of the property and new construction.

The City of Brewer worked closely with Community Housing of Maine in support of the redevelopment of this former school site, which involved changes to the land use ordinance regarding density, and the creation of a Tax Increment Financing District, which provides the project with operating support and made funds available for a municipal parking lot, which CHOM developed for the City as a part of the larger project.

The decision to try and attain the Passive House certification came long after the project was begun. CHOM had completed two LEED certified projects, and was still seeking better energy performance and thermal comfort for residents when the Passive House energy standard was suggested by CHOM Board Member Gunnar Hubbard.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

Erin Cooperrider:  Almost two years from conception to construction start, including the extra time it took to figure out how to meet the Passive House certification requirements inside a hard cost cap imposed by the financing requirements. The design development team called on the experience of several outside engineers and met every two weeks for months to get the design, the energy model, and the plans and specifications right.

MEREDA:  Tell us about the most challenging aspect of getting this project completed.

Erin Cooperrider:  The most challenging aspect of the project was its sheer complexity. We had terrific support from the City of Brewer, but there were many firsts for the city staff, who had to work their way through some complicated issues. The financing structure necessarily brings in many state and federal regulations, not to mention multiple lawyers. We also had the addition of extra elements like the solar arrangement, which was made possible by a Housing for Everyone grant from the TD Charitable Foundation, and involved a power purchase agreement – possibly the largest document on a closing agenda featuring 142 other documents. Figuring out how to design and build to the Passive House standard required many extra meetings and a lot of research for the design team. Executing that plan in the field put extra pressure on the contractor, Wright Ryan, and the field staff. The air sealing coordination meeting with the subcontractors, for example, involved no less than 21 people and involved going through the entire plan set, page by page. And for the third-party Passive House Rater, doing the testing for the certification, figuring out how to adapt the existing testing protocol to multifamily buildings was just part of the challenge.

MEREDA:  Something unexpected you learned along the way was….

Erin Cooperrider:  Building to the Passive House energy standard was not difficult, didn’t require any dramatic changes to the way we are otherwise constructing multifamily buildings in Maine today, and didn’t cost much more than standard construction (about 5 percent more), but produced a much better building.

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable? 

Erin Cooperrider:  Certainly, the Passive House certification makes the project notable not just in Maine, but nationally for this achievement. The climate in Maine combined with the cost cap imposed by the financing made this particularly challenging. We’re very proud of the team that helped make that certification possible, and grateful for the lessons we learned about how to build a better, greener, more energy efficient building along the way. We have been honored by the attention the building has attracted nationally, and the opportunity to talk to our peers in other states about the process and the result.

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MEREDA’s Morning Menu Breakfast Event – Gown and Town Synergy: The Impact of Commercial Development in Waterville and Colby College’s Vision

MEREDA Morning MenuColby College’s ambitious plan to help revitalize downtown Waterville has helped launch multiple projects on and around Main Street that have attracted attention across Maine and the northeast.

Join the Maine Real Estate & Development Association (MEREDA) for breakfast on September 7th from 7:30 – 9:00 AM at the Clarion Hotel in Portland as Colby College’s Vice President of Planning shares insights into the impact of commercial development in Waterville, along with the College’s long-range vision.

About the Event:

September 7, 2017
7:30AM to 9:00AM

Clarion Hotel
1230 Congress Street
Portland, ME

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

About the Presenter:

Brian J. Clark, Vice President of Planning, Colby College

As vice president of planning, Brian plays a key role in ensuring that Colby fully supports its academic and co-curricular programs, and he leads the College’s outreach to the community, in Waterville and beyond. He came to Colby in 2014 as assistant to the president and director of planning, a senior staff position. In that capacity he worked closely with President Greene, senior leadership, the Board of Trustees, and internal and external stakeholders to organize and support the College’s efforts to develop and implement long-range and strategic planning. Before coming to Colby he spent seven years at the University of Chicago in a variety of roles, finally as associate director for strategy and planning in the university’s Office of the President. A Maine native, Clark earned a bachelor’s degree in government and law and in art history from Lafayette College in Easton, Pa., and a master of public policy and organizational management degree from the Muskie School of Public Service at the University of Southern Maine.

Registering for this Event:

Member: $45 pp | Non-Member: $55 pp
Prices increase by $10 after August 31.

Your RSVP is requested by August 31. 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 August 31.

For more information and to register, visit http://www.mereda.org

This MEREDA “Morning Menu” Breakfast Event is Sponsored by Norway Savings Bank

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MEREDA’s Year in Review 2016 -2017

Since its inception, MEREDA has continued to make progress on behalf of the development community addressing the challenges and issues relating to Maine’s real estate activities.  MEREDA’s strength has always come from the support and participation of its valued members. While we look forward to the beginning of a new fiscal year, it is important that we take a moment to look back and reflect on our accomplishments, and take time to thank you, MEREDA’s members, (320+) for your investment in the Association over the year.  Your continuing support is critical to our ability to maintain and increase our advocacy work, programs and related services, which are all vital to development interests in Maine.

It’s been a very busy year, and we have some great successes in the legislature and some great events and other accomplishments that we are excited to share with you!

MEREDA’s Three Overarching Priorities.  MEREDA serves members’ mutual interests in responsible development by advocating for fair and predictable regulation, hosting events rich with educational and industry insight, all the while providing opportunities to network with a diverse group of real estate professionals.

Advocacy

Over the past few months, MEREDA’s public policy initiatives have been front and center for the organization.  This session, MEREDA ambitiously submitted three bills to the Maine Legislature for consideration.  We’re happy to report that two of our 3 bills have passed! In addition, MEREDA’s Public Policy Committee and Counsel continuously monitor bills printed that may be of interest to MEREDA, choosing to weigh in on those that pose significant opportunity or risk to responsible real estate ownership and development in Maine.

LD #805, “An Act to Streamline the Municipal Review Process When Dividing a Structure into 3 or More Dwelling Units and to Amend the Process for Recording Subdivision Variances”, now Public Law 2017, Chapter 104, will streamline the process of getting permits when a building is being subdivided into 2 or more units, by removing the requirement that such projects get state subdivision law approval if they already are getting municipal site plan ordinance approval. This law will take effect 90 days after the legislature adjourns.

In collaboration between the MEREDA public policy committee and the Regional Organization of Municipal Attorneys, L.D. 1381, “An Act to Clarify Appeals of Municipal Land Use Decisions” is now Public Law 2017, Chapter 241. This law states that a municipal land use decision that must be reviewed by more than one municipal review board, must receive a final decision from each board before the decision can be appealed to Superior Court. The law clarifies some confusion which arose as a result of a 2016 Maine Supreme Judicial Court case entitled Bryant v. Town of Camden.  This law will also take effect 90 days after the legislature adjourns.

We’ve also found ourselves at the negotiating table on the proposed increase in fees for review of plans by the State Fire Marshall, and to support the Voluntary Remedial Action Plan program at the DEP.  In both cases, we are going to see fees increase, unfortunately, but fortunately we’ve been effective at reducing the increases from the original amounts requested.

MEREDA is also being asked by other groups to testify on bills of interest to our membership, such as supporting a bill proposing a statewide economic development plan, and opposing a bill proposing changes to the TIF law to limit a municipalities’ ability to offer credit enhancement agreements to only certain types of uses.  Suffice it to say that we are actively representing the interests of developers at the Maine legislature on a daily basis.  We appreciate the efforts of our many Public Policy Committee members in guiding that work.

For more detailed information on these bills and our efforts this past legislative session, please refer to last week’s Maine Real Estate Insider Article, MEREDA Continues to Improve Real Estate Development Climate – Succeeds in Changing Two Laws to Streamline Processes and Minimizes Two Fee Increases During 2017 Legislative Session

MEREDA Hosts Hall of Flags Event at the State House

On Thursday, April 13, MEREDA hosted its first Hall of Flags event at the State House. Hall of Flags events are an opportunity for business, organizations and others to showcase and highlight the mission of their organization, their membership and notable achievements, as well as to mingle with members of the Legislature. MEREDA’s first Hall of Flags day was a great success, and provided a unique opportunity for MEREDA members to meet with and talk to Legislators as they go about the work of their day. MEREDA’s event featured poster presentations of notable projects undertaken by MEREDA members. The Hall of Flags day was held on the same day as the work session for L.D. 805, so many MEREDA members were on hand to chat with legislators about our bill over a cup of coffee. We look forward to making this a regular event!

Education & Insight

Morning Menu Meetings, Networking Events, Conferences – MEREDA has held nearly 20 events this past year – topics ranging from the state of senior living and housing choices in Maine, parking, alternative project delivery and the high costs of construction among others.  MEREDA’s breakfast and social events held throughout the state bring together highly-regarded experts and cover a variety of topical subjects.

Successful Forecast and Spring Conferences

MEREDA’s signature event, the annual forecast conference and member showcase in January attracted nearly 800 attendees, and this year’s spring conference had an all-time high of 280 attendees. Each year, MEREDA works hard to find forward thinking, trend-worthy topics for the annual spring conference, and each year seems to amaze us!

This year our goal for the spring conference was to offer a big picture perspective of how development is good for our collective future, and the rationale around smart growth development by hosting a “Yes-In-My-Backyard: Why Development is Good” event.  MEREDA was pleased to welcome Jesse Kanson-Benanav – a Boston-area pioneer in the YIMBY (“Yes in my Backyard”) movement, as the keynote speaker at this year’s Annual Spring Real Estate Conference titled “‘YIMBY’ism: YES in my Backyard – Why Development is Good”.  His perspective was augmented by a panel of local professionals who anchored this national trend in local context.

MEREDA representatives were prominently featured on, or in, various news media outlets leading up to, and following, the Spring Conference.

Build Maine – Again this year, MEREDA partnered with the Congress for the New Urbanism | Maine Chapter (CNU Maine) and the Maine Municipal Association (MMA) on “Build Maine: a tactical approach to growing Maine towns and cities” with a day-long program of dynamic, nationally renowned speakers.  Build Maine brings together all people participating in the act of building our cities. The builders, funders, elected officials, engineers, lawyers, planners, finance institutions, and rule-makers converge annually to share best practices and aspirations for moving Maine forward within the political and economic climates of today.  MEREDA is pleased to be able to participate in this annual event.

DevelopME – We formed a new committee for MEREDA’s enthusiastic emerging leaders.  DevelopME was formed with a simple mission: “To engage membership and create professional development opportunities within MEREDA for the next generation of industry professionals”.   The committee is working on developing its “Lunch & Learn” series aimed at drawing on the expertise of MEREDA’s seasoned members and sharing their experiences with this group of emerging professionals, as well as a mentorship program and other special projects to cultivate and connect MEREDA’s future leaders within the organization.

MEREDA Index – In addition to our strong efforts in Augusta, MEREDA is always keeping its finger on the pulse of the state’s real estate market. The Spring 2017 MEREDA Index reflects a solid performance in the real estate market coming in at 96.

The first quarter of this index came in at 95.70, showing only slight growth from the third quarter 2016 value of 95.67, but this was primarily due to a slowing of activity in the first quarter of 2017. In fact, the fourth quarter of 2016 was quite strong, with an Index of 98.04, the Index’s highest value since the first MEREDA’s Year in quarter of 2006. The index grew only 0.1% over the past six months, but it grew by 2.9% over the past year. The Index grew by over 7% over 2016, the strongest growth since the recovery from the recession began.

It is remarkable that the Maine economy has sustained such a healthy and robust real estate and development sector for so long. This quarter marks the eighth in a row — that’s two years — where The MEREDA Index has been above 90, a number not otherwise seen since the height of the market in 2006.

Learn more by watching the following video.

Networking

The opportunity to connect with a diverse network of real estate professionals and related service providers is a valued benefit of the MEREDA membership.  Over the years, many beneficial business relationships have begun at one of our annual social events, conferences, breakfast forums, and even through committee work.  We held 3 annual networking events, along with providing separate socializing time at our annual Forecast & Spring conferences, Bowl-a-Thon, and breakfasts, which give our members several opportunities to get to know one another.

Workforce Development  

Annual Strikes for Scholars –MEREDA is looking into ways to contribute and lend resources to efforts to help educate, attract, and retain skilled workers.  An educated workforce is vital to support economic development. On May 4th, MEREDA hosted its 5th Anniversary “Strikes for Scholars” Bowl-a-Thon Fundraising Event at Bayside Bowl in Portland.  MEREDA members put together 24 teams all to raise money and fund scholarships for Maine students enrolled in the building trades and business programs at the Maine Community College System or the College of Science, Technology & Health at USM. We raised nearly $17,000 for scholarships Maine students!  MEREDA will be adding an additional $3200 to this figure to be able to assist 16 students throughout the State achieve a college credential.

MEREDA strongly supports a strong education system. In fact, over the past 4 years, MEREDA is proud to have raised and donated over $47,000 in scholar­ships helping over 30 Maine students by making it a little easier for them to achieve their goal of obtaining a college credential. This year, those numbers will jump to $67,000 and 46!

MEREDA’s leadership, members and volunteers are a vital part of Maine’s economy.  In addition to providing quality programs and events for our members, raising money to fund student scholarships, and creating a new committee called “DevelopME” to help guide MEREDA’s emerging leaders of tomorrow, we continue to work hard each and every day to help foster a healthy development climate.

We’re proud of our many accomplishments this last fiscal year, and we can’t do it without you, our members and volunteer committee members.  As always, thank YOU for your continued support of MEREDA and its programs! We wish you an enjoyable summer and look forward to seeing you back here this fall for more great events beginning in September.

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MEREDA Continues to Improve Real Estate Development Climate – Succeeds in Changing Two Laws to Streamline Processes and Minimizes Two Fee Increases During 2017 Legislative Session

by Andrea Cianchette Maker, Esq., Pierce Atwood, LLP, Public Policy Counsel to MEREDA

Based on a survey of MEREDA members in the summer of 2016, MEREDA‘s proactive Public Policy  Committee developed legislation to address difficult governmental challenges faced by the real estate development community.  Of the three bills MEREDA submitted, two were enacted and the third was not (at least not this session).  Also, during the session, MEREDA actively engaged in negotiations that resulted in lower fee increases that impact developers.

One of the new laws, Public Law 2017, Chapter 104, has two parts.  The MEREDA Public Policy Committee and Counsel worked closely with other stakeholders to enact this law, which will help promote infill development and encourage the renovation and rehabilitation of older buildings.  The first part of the new law removes a complete regulatory process when dividing a new or existing building into three or more dwelling units in those municipalities that require both site plan review and subdivision review.  Under the new law, after June 30, 2018, the project no longer will need to undergo subdivision review if the municipality has a site law. In those municipalities that do not have a site law, a subdivision review will continue to be required for these projects.  The second part of this new law provides that when any type of project undergoes subdivision review and receives one or more waivers from the subdivision requirements, the developer will have up to two years (from the current 90 days requirement) to file the waiver or variance in the registry of deeds.  The law will take effect 90 days after the legislature adjourns.  MEREDA thanks Senator Nate Libby (D) of Androscoggin County, for sponsoring this bill.

Another bill that arose in the Public Policy Committee deliberations was passed into law as Public Law 2017, Chapter 241. This new law, which MEREDA worked on in collaboration with the Regional Organization of Municipal Attorneys, states that any municipal land use decision that requires review by more than one municipal board must receive a final decision from each board before any of those decisions can be appealed to Superior Court.  This bill will shorten the judicial process for such decisions.  The legislation was submitted in response to a 2016 Maine Supreme Judicial Court decision in a case entitled Bryant v. Town of Camden.  This law will take effect 90 days after the legislature adjourns.  MEREDA thanks Senator Cathy Breen, (D) of Cumberland County for sponsoring MEREDA’s concept draft of this legislation and acknowledges the good work of ROMA in working on similar legislation.  Ultimately, MEREDA’s concept bill was withdrawn in deference to ROMA’s bill, which was amended and then enacted into law.

MEREDA also submitted a third piece of legislation regarding dimensional standards, which created a complex set of implications that needed more time to address than was available to the Legislature’s Committee on State and Local Government this session, and ultimately the bill did not pass.  But as is often the case when a new bill is introduced, the legislation generated awareness and yielded productive discussions of the issues surrounding Maine’s existing dimensional standards variance law.  MEREDA’s Public Policy Committee will review this bill to determine whether it might be fruitful to try to advance it in the next Legislature.

In addition to introducing legislation, MEREDA reactively engaged in negotiations to lower proposed new fees on developers.  After lengthy negotiations and persistence by MEREDA, the Fire Marshal agreed to a fire plan review fee of 1.5/10 of 1% (or .00015) of the cost of construction of the portion of the project that is required to be reviewed by the Fire Marshal’s office.  This fee is anticipated to sufficiently fund the Fire Marshal’s fire plan review activities.  The Fire Marshal’s original proposal was a 3% rate and applied to the “cost of the project” which was undefined and we feared overly broad.  By adopting the language “the portion of the project that is subject to State Fire Marshal review” the intention is to assess the fee only on the cost of construction or reconstruction of the building shell and the components that are within that shell before the walls are enclosed.

MEREDA also advocated to lower and cap the amount of the new fee structure for participating in the DEP’s Voluntary Response Action Plan.  The DEP’s original fee proposal was 3% of the assessed value of the property at the time of filing the VRAP application.  MEREDA was the only organization to testify on this bill.  While we spoke favorably about the program and the people who administer it, we opposed such a significant fee increase.  We succeeded in reducing the fee to 1% of the assessed value of the property at the time of filing the application, up to a fee cap of $15,000. This is a substantial decrease from the original 3% proposal.  While most new laws will take effect 90 days after the Legislature adjourns, this new law will take effect on January 1, 2018.  Until then, the current fee structure of $500 filing fee and $50 per hour for staff time will remain in place.

In enacting clarifying laws that reduce redundancies in permitting processes and that clarifies decision-making processes, MEREDA continues to improve the climate for real estate development in Maine.

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The Right Equation for Responsible Development: Spotlight on The Lofts at Saco Falls

In multi-part series, exclusive to the Maine Real Estate Insider, we’ll provide an up-close look at the most notable commercial development projects of the past year that are helping to fuel Maine’s economy in terms of investment and job creation.  MEREDA is proud to recognize responsible development based upon criteria including environmental sustainability, economic impact, energy efficiency, social impact and job creation.

Please join with us in celebrating The Lofts at Saco Falls.  A conversation with Nathan Szanton.

MEREDA:  Describe the building and project. 

Nathan Szanton:  The building has a fascinating history.  The first part of it was built in 1842 by the Saco Water Power Company, to manufacture machinery for cotton spinning and weaving.  In 1867, another wing was added to expand manufacturing capacity.  These buildings were home to some of the most talented machinists in the United States throughout the latter half of the 19th century and first half of the 20th.  During that time, through mergers and acquisitions, the company’s name changed to the Saco and Pettee Shops and then to the Saco-Lowell Shops.  It was not until the mid-20th century that Saco-Lowell Shops sold the building and ceased building textile machinery there.

The goal of our project was to adapt this rugged industrial space to state-of-the-art rental housing for the 21st century.

MEREDA:  What was the impetus for this project?

Nathan Szanton:  There were several major impetuses.  These included:

  1. The passage in 2008 of a robust State Historic Tax Credit program.  This project would have been impossible without that.
  2. Our desire to work in Biddeford again after the success of The Mill at Saco Falls, our project adjacent to The Lofts at Saco Falls.
  3. The City of Biddeford’s courageous decision to purchase and demolish its trash-burning electric plant in its downtown.  That plant was immediately next door to this project.  We wouldn’t have undertaken The Lofts had the City not done that.
  4. Our desire to have a “campus,” to control properties adjacent to what we had already developed.

MEREDA:  That sounds like quite a process.  How long were you in the planning stages before construction started?

Nathan Szanton:  Three years.

MEREDA:  Tell us about the most challenging aspect of getting this project completed.

Nathan Szanton:  Obtaining an allocation of affordable housing tax credits from MaineHousing is always very challenging.  There is much more demand for these credits than supply of them.  This project was no exception.

Probably even more challenging than that, however, was negotiating the complex arrangements we needed with neighbors.  This project is in a mill district whose properties had at one time all been under common ownership, but whose ownership had fractured over time into smaller and smaller parcels.  As a result, these parcels had shared utilities, common walls, cross-easements, etc. etc.   We had to sort out 35 easements and cross-easements with our neighbors, deciding which ones to keep, which to modify, and which to discard.  Sometimes we and our neighbors didn’t agree, so there was a lot of talking, a lot of negotiating.

MEREDA:  Something unexpected you learned along the way was….

Nathan Szanton:  That at one time, part of the complex system of water works that channelled water to power the Biddeford mills included a canal that ran right through our dooryard and under our building!  It was designed and built to bring water to feed the turbines in mills further from the river than ours.  We have historic photos of it running under our building, but the only physical sign of that canal which remained when we purchased the property is a huge brick arch embedded in the exterior wall of our building.  That arch used to be the ceiling of the canal as it passed under the Saco-Lowell Shops on its way to the Lincoln Mill and other Biddeford mills.  It’s now in the wall of our Community Room kitchen!

MEREDA:  Now that it’s complete, what feature of the project do you think makes it the most notable? 

Nathan Szanton:  The historic character we were able to retain in the renovations, including enormous overhead carrying beams, giant exposed columns, original hardwood floors in the elevator lobbies, and wainscoating from the old executive offices which are now in some apartments.  Our Community Room contains two wonderful artifacts from the mill: an enormous mahogony chest of drawers used to hold machine parts, which we call Old Bessie; and a bull wheel from the 1840s used in a pulley system that raised and lowered heavy machines and machine parts through the building in a time before freight elevators.

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