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BRUNSWICK — Everyone, it seemed, was expecting the worst when developer George Schott purchased former Brunswick Naval Air Station housing last October.
How could the addition of 702 housing units that were previously restricted to military personnel not devastate the local housing market, which was already reeling from the base closure and an economic downturn?
But a year later, area landlords, real estate agents and public housing officials say the impact of hundreds of new rental properties in town hasn’t been as harmful as they thought it would be.
“Hearing all the negative that folks had to say … I thought that Brunswick would take a lot bigger hit than it did,” said Jon Leaver, of Maine Home Realty in Bath.
A housing study prepared for the Midcoast Regional Redevelopment Authority in 2009 by Development Synergies LLC predicted that vacancy rates in surrounding communities could exceed 15 percent after the Navy base closed this year. The impact on Brunswick was estimated to be the most severe: a 30 percent vacancy rate.
According to Dana Totman, president of Avesta Housing and, until this week, vice chairman of the MRRA board, an ideal vacancy rate for a community is between 3 percent and 4 percent. That percentage keeps rents affordable, he said, and isn’t high enough to create a glut.
The actual vacancy rates in the greater Brunswick area are much lower than the study’s authors expected, but significantly higher than the ideal. According to the 2010 Census, the vacancy rate in Brunswick was 9.5 percent – nearly twice what it was in 2000.
Vacancies also increased in Bath, jumping from 7.8 percent in 2000 to 11.4 percent in 2010, and in Harpswell, which increased from 36.8 percent to 47.3 percent. However that town’s numbers could be much higher than surrounding communities due to the abundance of second homes and seasonal rentals.
Topsham appears to have been hit the hardest of the four local communities. Vacancies increased from only 4.4 percent in 2000 – the lowest out of the group – to 12.6 percent in 2010.
Rates may have changed since then, since the most recent census data is more than a year old and the Navy base did not officially close until May.
The fact that Topsham and Bath have higher vacancy rates than Brunswick is not surprising to Leaver.
“A lot of people thought Brunswick would be the worst hit and it would spill out from the epicenter, but I think it’s been the complete opposite,” he said.
Leaver said in his experience, people who couldn’t find or afford housing in Brunswick three years ago are now able to do so, thanks to the addition of the former Navy housing and the departure of so many Navy personnel. As a result, he thinks surrounding communities have been stuck with more empty homes and apartments than Brunswick.
Totman said he believes vacancies are shifting, too.
“I don’t think there’s really net growth of households in the Brunswick area yet because we haven’t had the real job growth we hope to achieve eventually,” he said.
When asked where his tenants come from, Schott estimated that a majority are from outlying communities. He said about 12 to 15 percent moved from elsewhere in Brunswick, and another 20 percent were affiliated with the military, especially the Supervisor of Shipbuilding, Conversion and Repair, or SupShip, program at Bath Iron Works.
Schott wouldn’t disclose his vacancy rates, but said that the housing developments he owns at Cook’s Corner, the newest of the units he purchased, are almost full.
On McKeen Street in Brunswick and Patriot Commons in Topsham, the largest of the developments, rentals seem to be progressing more slowly. Schott estimated that those areas were about 55 percent occupied, but said Patriot Commons posed a particular challenge.
“Topsham, being the oldest housing, is going to be harder to occupy,” he said.
Whether it’s Schott’s units that are sitting empty, multi-unit apartment buildings or single-family homes, high vacancy rates can be detrimental to a community, Totman said.
“When you have a vacancy problem, I think it really starts to tap into the equity of both home owners and multi-family owners, where their buildings depreciate in value and people lose some of the built up equity they have in their homes,” he said.
Vacancy can affect other sectors of a local economy, too, Totman said, since a lot of businesses rely on people moving into new apartments and homes and the spending that come with that for things like new furnishings, appliances and renovations.
But high vacancy rates can also make it easier for low-income renters to find a place to live, according to John Hodge, president of the Brunswick Housing Authority.
In a tight rental market, low-income renters can “end up getting units that are marginal,” he said.
“In an open renter’s market they can really look around and find a unit in a neighborhood they really want to be in,” Hodge said. “… It’s obviously allowed more choice for those clients.”
Despite the availability of housing and the almost daily Craigslist postings advertising the former Navy units and the fact that all utilities are included, many local landlords and property managers say they don’t directly compete with Schott.
“The base housing is not for everybody,” said Robert Whisenant, former president of the Bath-Brunswick landlord’s association and owner of wisenetrentals.com.
“I’ve probably lost maybe three or four potential renters to the base housing out of 100,” he estimated.
He finds that many of his tenants are either looking for detached, single-family homes on larger lots, or they want to rent in-town apartments, neither of which are offered by the former military housing.
John Bouchard, who owns 14 units at Oakwood Terrace in Brunswick, also feels unaffected by the addition of Schott’s 700-plus units to the market and said he hasn’t had trouble renting his apartments at all this year.
“I don’t think the base was as big a factor as the economy and the unemployment,” he said.
Indeed, the economy may play a larger role in the Brunswick-area housing market than Schott plays.
Nearly everyone interviewed commented on the changing dynamics in home ownership in the United States, not just in Maine.
Hodge said many renters have the income buy a house, but can’t secure loans or are wary of home ownership because they fear for their jobs.
“Home ownership isn’t all that it used to be,” Totman said. “That idea of the American dream is eroding a little bit.”
That’s why some real estate agents are wondering what will happen when Schott puts his homes up for sale.
Because he purchased just the homes, not the land, from the former Navy housing authority last October, Schott has been unable to sell them. But that will soon change, because he and MRRA are negotiating the sale of the land beneath his properties.
When that happens, Whisenant predicted there will be a lot of opportunities for first-time home owners, especially in the McKeen Street development.
But Mike Baribeau, owner of Century 21 Baribeau Agency, worried that the addition of new homes into the real estate market would weaken an already ailing sector of the housing market.
“We’re already in a tough situation in the real estate market … it’s going to take us longer to sell those homes” that are already for sale, he said.
The housing market in greater Brunswick is certainly working in the favor of at least one group of people: those tenants who are already settled into Schott’s houses and apartments.
Hilary Chase is a Freeport school teacher who moved into a single-family home in the McKeen Street development with her family in August. She said she is in no hurry to buy a home in the area – she’s still trying to sell her old house in Scarborough – and enjoys the abundance of parks and green space in the development.
She said she likes that the house is affordable and not too crowded, and appreciates that Schott Management clustered tenants together, so that no one is living alone.
“We love it here,” Chase said.
A photo caption in this story was edited on Oct. 6.
Local Realtors say there is an abundance of homes for rent in the greater Brunswick area, like this one on Dunning Street in Brunswick.
Potential renters have many homes and apartments to pick from in Brunswick, like this one on Union Street.
Vacancy rates in Brunswick nearly doubled between 2000 and 2010. The apartment attached to this empty mailbox, on Cumberland Street in Brunswick, is for rent.
About half of George Schott’s McKeen Street housing development is rented. Occupied units are clustered together along Moore and Columbia Avenue. These houses along Emanual Drive are still empty.
Late afternoon shadows hang over Mariner Landing, the newest – and most popular – former military housing that developer George Schott owns. Community Manager Bethany Niles advertises the Cook’s Corner area development to those who want a more “fast-paced” lifestyle.
Sandwiched between Mariner Landing and the Navy base fence line are George Schott’s Brunswick Gardens homes.