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V O L . X X I N O. X M AY 1 8 , 2 0 1 5 16 W hen Ben Kaplan became CEO of CashStar in late 2013, it was clear that the growing Portland-based digital gift card company was in need of new space for a workforce now topping 100 people. CashStar had already reached capac- ity, but its offi ce space had other limita- tions. It lacked the quality and ameni- ties the company needed to attract great talent. Worse, the offi ce was spread over three fl oors and across two adjacent buildings. It was far from an ideal situa- tion for a company that puts a premium on open, collaborative spaces. "We needed to have enough space that it could support additional hiring in the coming years, but not too much space that it would be cost-prohibitive or overwhelm the 100-plus employees that work in our Portland offi ce," Kaplan says. "We wanted a pretty open and integrated fl oor plan with a lot of meet- ing rooms, a lot of collaboration spaces. … e nature of our business requires a lot of cross-collaboration so we wanted to feel like one integrated building." So after months of planning, CashStar signed a lease for a 22,550-square-foot, Class A offi ce space at 25 Pearl St. in fall 2014. Set in the heart of the Old Port, the lease would become one of the greater Portland area's largest commercial lease transactions of that year, according to a southern Maine commercial real estate report compiled by CBRE | e Boulos Co. What's more, it helped highlight the lack of Class A offi ce space on Portland's peninsula, a prime area for companies like CashStar because of the city's many amenities and housing options. "It's a great place to work," Kaplan says. " e proximity to restaurants, water, stores, running trails — all of these things make it a really attractive place." As Portland's offi ce real estate market continues to recover, the demand for Class A space on the city's peninsula has industry observers wondering if and when it could prompt new development. And while new development may be the right option for a company looking to expand or relocate to Portland, such a pursuit would have its own set of hurdles. An improving market Greater Portland's offi ce real estate mar- ket took a major hit during the recession, with the vacancy rate reaching nearly 13% in 2011, according to a real estate report by Malone Commercial Brokers. at peak vacancy rate was preceded by two years in which offi ce tenants vacated a total of more than 300,000 square feet of space, the report says. But the market has come a long way since then. In 2014, the market's overall vacancy rate narrowed to 8.48%, continuing a three-year rebound to 2008 levels, accord- ing to Malone Commercial Brokers' report. And the market's net absorp- tion rate — the total number of square feet occupied minus the total space vacated — remained positive for a fourth consecutive year, allowing the market to re-absorb space lost before the recession. While the market has continued to improve, Nate Stevens, an associate broker at CBRE | e Boulos Co., says Portland's offi ce market is still in the recovery phase of the real estate cycle. Stevens spoke at the Maine Real Estate & Development Association's annual forecast conference in January. "I don't think we've hit the top of the market yet," Stevens says, noting that vacancy rates haven't yet reached those of 2006 and 2007. But, he adds, "we are at surprisingly low vacancy rates." e Class A offi ce market in downtown Portland, which includes CashStar's new space, is doing particu- larly well, with fewer and fewer options becoming available. In 2014, the vacancy rate for down- town Class A space actually went up slightly to 8.8% from the year before, Stevens says, but it has since decreased to somewhere around 5% or 6% after a few leases were signed this year. One of the market's remaining holes is 161 Marginal Way, where the Maine Department of Health and Human Services vacated 50,400 square feet earlier this year. However, Stevens adds, "there is signifi cant activity on that building at the moment." Class B space in downtown Portland, on the other hand, isn't recovering as fast, Stevens says. at market's vacancy rate went from 9.43% in 2013 to 11.06% last year, according to the commercial real estate report by CBRE | e Boulos Co. While Stevens says he doesn't have a current fi gure for the Class B mar- ket's vacancy rate, two of those recent P H O T O / T I M G R E E N WAY Office space in demand Downtown Portland's Class A space is in short supply B y D y l a n M a r t i n CashStar, a provider of digital gift card solutions, moved into offi ces at 25 Pearl St. in Portland last fall. It wanted a contiguous fl oor plan that would allow for open workspace.

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