By David Harry

Staff Writer

Even if fortune has yet to fully smile on the Gateway Square office park, developer Gene Beaudoin sees a brighter future.

Beaudoin, a partner with developer Barry Feldman in New England Expedition LLC, said he anticipates development of the 32.5-acre site bordered by Haigis Parkway and Payne Road to occur within the next several years.

The proposed office complex represents the second phase of development in the Haigis Parkway and Payne Road area by Beaudoin and Feldman – the pair built the 225,000-square foot retail area called Gateway Shoppes that is anchored by outdoor outfitting chain Cabela’s.

The company first must be granted an extension until 2013 of the contract zone agreement with Scarborough. A second reading and vote on the proposal is expected to occur at Wednesday’s town council meeting.

The contract zone agreement allowing zoning changes for development expires March 12 and calls for “substantial completion” of the proposed business park with 250,000 square feet of office space in five buildings.

Finding takers for any office space has been difficult, Beaudoin said. The company already has installed about $5 million of infrastructure, including sewers, street lamps and a paved road with curb cuts.

“We are starting to see an uptick in calls (from prospective tenants),” Beaudoin said. But without signed leases from new tenants, construction financing will not be easy to get, he said.

While the access road curving from Payne Road to Haigis Parkway passes under ornamental street lamps and sites have been cleared for building, Beaudoin said it may be several years before all plans become reality.

Without an extension of the agreement, New England Expedition could be held in default. That would make financing more difficult to obtain, said Town Manager Tom Hall.

“I remain incredibly confident,” Hall said. “We could not expect anyone to do a better job.”

Development of Gateway Square appeared to be off to a good start about two years ago with South Portland-based computer chip manufacturer Fairchild Semiconductor poised to lease office space. However, the company withdrew its interest last January after a slump in the chip market, Beaudoin said.

 Since then, interest in new office space has been minimal as demand for existing office softened with the economy. A commercial real estate marketing survey by Portland-based Boulos Co. lists a 9.15 percent vacancy rate in greater Portland for 2009, up from 9.11 percent in 2008.

The lack of development also has hurt land valuations used to fund a credit enhancement financing zone for the area. Fully developed land would lead to increased tax valuations. The tax increases from new valuations are then returned to New England Expedition, Hall said.

The credit enhancement financing is distinctive from tax increment financing because after additional property taxes are collected on new land values, the taxes are returned to New England Expedition, Lesperance said.

Those rebates help finance the development of the site, Beaudoin said.

Data supplied by Town Assessor Paul Lesperance shows the office park’s tax valuation increased from more than $792,000 in 2007 to $4.89 million in 2008. Valuations did not increase in 2009.

Tax records indicate New England Expedition bought the land in 2007 for $2.9 million.

Feldco, the parent company of New England Expedition, has developed commercial properties throughout New England, Beaudoin said. Scarborough is not as overbuilt as other sections of the region, he said.

An additional development casualty in Gateway Square is a proposed hotel. Beaudoin said plans for the hotel are on hold because demand for hotel rooms also ebbed.

Beaudoin had approached the planning board last August to discuss preliminary plans for the hotel on the Gateway Shoppes retail site between Payne Road and the Maine Turnpike.

Even if a planned hotel never materializes, Beaudoin said development at Gateway Shoppes has an 80 percent occupancy rate.

The rate will increase when two businesses move to space in the next couple of months, but Beaudoin declined to name the new tenants because leases have not been signed.

Staff writer David Harry can be reached at 282-4337, ext. 219