Retail Growth Generating Hundreds Of Jobs

February 24, 2008

SCARBOROUGH — Commerce fades driving south on Payne Road, away from the hubbub of the Maine Mall, past the businesses around Roundwood Drive. Tall pines and second-growth forest flank the roadway at the turnoff the Scarborough Downs and then, unexpectedly, at the intersection of Hagis Parkway, an impressive retail frontier is rising.

Dominating this new shopping landscape is the massive log truss of Cabela's, the Nebraska-based outfitter known for creating showrooms that become tourist destinations. Workers were buttoning-up the exterior late last month, and when it opens in May, Cabela's will be the anchor retail tenant for The Gateway at Scarborough, a mixed-use complex expected to generate 500 construction jobs and roughly 700 office, retail and hospitality positions over the next few years.

The Gateway at Scarborough highlights one of the strengths of the Portland metro area's economy: retail employment. This project, along with a recently opened Lowe's home improvement store and Wal-Mart Supercenter in the Scarborough Gallery project, the Shops at Biddeford Crossing and other ventures, generated roughly 700 new jobs last year, according to the Maine Department of Labor.

But these enterprises also represent a potential weakness.

Consumer spending drives two-thirds of the national economy and is critical to the health of the Portland metro area. The region's dependence on retailing, hospitality and related services makes it especially vulnerable to larger trends that can lead residents and tourists to keep a tighter hand on their wallets.

That's why the evolving economic downturn and recession fears could have an impact this year not only in the Portland area but also the entire state.

"The Portland area is pretty solid, but it's going to go the same way as the U.S. trend," said Gerard Dennison, a market analyst with the state labor department.

The jobless rate in Maine and the country, which had been hanging around 4.8 percent since the summer, edged up to 5.1 percent and 5 percent in December. Cumberland County's December unemployment rate was the lowest in the state: 3.5 percent. But the impact of any widespread job losses could ripple though Maine, according to a study done last fall for the Portland Community Chamber.

The study found that more than $2 of every $5 produced by the Maine economy was generated in the Portland metro area. That's because the region's at the vanguard of Maine's transition from a rural, natural-resource based economy to one driven by retailing, health care, financial services and information.

The diversity is apparent in a quick list of the area's top employers: Maine Medical Center; Mercy Hospital; Unum Provident; L.L. Bean; Hannaford Bros.; Anthem Blue Cross & Blue Shield; National Semiconductor; Fairchild Semiconductor; Idexx Laboratories; and TD Banknorth. These companies are directly responsible for thousands of jobs and generate many more through suppliers and related services.

"More than any other area, it's the hub of commercial activity and the engine for the Maine economy," Dennison said.

The Gateway at Scarborough project incorporates some of the key components that make the engine work.

Cabela's is foremost a store, expected to employ 300 or so. But positioned south of Portland next to the Maine Turnpike, it's also poised to become a tourist destination that draws more than 3 million visitors a year, according to the project's marketing firm. This projection has led a handful of local companies, including Haven's Candies, The Freaky Bean Coffee Co. and the Portland Pie Co., to lease space in The Gateway Shoppes across from Cabela's. A crane was hoisting steel girders late last month to finish the skeleton of the complex, while workers nailed plywood roof sheeting to wooden trusses.

"They understand the Maine market and what Cabela's can generate for traffic," Tony Armstrong, president of Properties Northeast, said of the tenants.

Across from Cabela's and the stores, dump trucks were hauling earth late last month, as contractors cleared land for the project's second phase. It will include a hotel, an office park and possibly a child-care center.

These spaces are expected to fill through 2009, Armstrong said, but the actual pace and number of jobs hinge in part on the health of the national economy and the effectiveness of the federal government's reaction to the slowdown.

As 2008 gets under way, observers were watching how these dynamics will play out around Maine's largest city.

Godfrey Wood, chief executive officer of the Portland Regional Chamber, said he was hearing a mixed message from his retail members. Some were doing well; others were reducing prices and cutting staff. Wood said he was cautiously optimistic that any downturn in the economy would be modest.

That outlook is shared by Charles Colgan, a former state economist who chairs Maine's economic forecasting committee. He sees and increased chance of a recession, but doesn't expect the state to suffer as much as other regions of the country.

The Portland area's dependence on retail, however, might make a downturn more noticeable for local residents.

In the 1990 recession, Colgan said, the collapse of banking, retail and housing hit Cumberland County harder than any part of the state. Similar factors are at play now, he said, because housing equity creates the so-called wealth effect that helps support retail spending.

But there are key differences this time, Colgan said. Housing prices didn't run up as high during the most recent boom. So the outlook is more stable for most of the professional service companies that occupy area offices, with the exception of financial firms dependent on the mortgage industry.

Retail jobs also may not be battered as badly because the latest expansion came from national retailers. The have more capital to weather bumps in the economy, Colgan said. The question is whether some will decide it's not worthwhile to hold on here until the next recovery.

"They arrived in Maine just in time for the decline," he said.

Author: By TUX TURKEL