COVER STORY

The site of the former Yoken's restaurant in Portsmouth is on the market. How long will it be vacant? Amy Root-Donle photo

As with much economic news, the headlines can seem contradictory and often don't add up to a coherent narrative. For months, there has been no shortage of talk from economists that a recession is lurking in the national neighborhood because of (1) escalating energy costs, (2) soaring national trade deficit, (3) increasing consumer debt loads and, the latest intruder, (4) the credit crunch caused by the sub-prime market meltdown.

Steve Scott sees those headlines and is aware of their very real financial and psychological impacts. Scott is a veteran commercial lender with The Provident Bank branch in Portsmouth and he sees two forces at work in the Portsmouth region — the credit crunch will have an impact both on the lending and development sides and the region remains a very desirable place for the commercial market.

"It does affect your thought process," Scott told Ventures recently. "The challenge becomes one of looking a little deeper (into deals). We're not gonna be wild and crazy. My goal is to try to find a way to a deal. Sometimes you can't."

Scott, whose branch for the bank with its headquarters in Amesbury, Mass., has done loans ranging from $250,000 to $4.5 million, said a realistic look through the local "picture window" shows "a very desirable area. There are still deals people want to do because people of where they are being done."

Which isn't to say that he considers the deals wise.

Steve Scott, vice president/commercial lending of Provident Bank. Amy Root-Donle photo

"We see banks doing deals that just don't make sense," he said. "We see the conditions and we are choosing to be more prudent and give our clients more options to make a deal work best."

In particular, Scott said his bank declined to take part in a significant downtown Portsmouth mixed-use development. Scott said it was a good idea but he was concerned about the long-time viability of the developer to make the project work financially.

Market strength

The local headlines reveal a thriving market, especially on the retail side which Scott said was major force in commercial real estate health. While the multi-national grocery store corporation Shaw's has decided to put a major location development at the former Yoken's on Lafayette Road in Portsmouth on the market, Scott said that spot likely won't stay vacant for long. The location has too much potential for the right plan with the right financing.

At the Portsmouth traffic circle, the Meadowbrook hotel development is moving forward, and downtown, the massive Parade Mall redevelopment is also on track along with plans for a downtown convention center complex.

And in Greenland, after five years of regulatory and court challenges, the Packard Mall development is ready to go on Portsmouth Avenue.

Michael Kane also sees the headlines and feels bullish and bearish depending on what move he is contemplating.

Kane is the head of the Portsmouth-based Kane Company, one of northern New England's largest development and property management firms and he said that a tightening credit market has already had an impact.

"Deals are fewer and more difficult," Kane explained. "Money is more expensive and (developers) need to put more of their own equity into deals. It alters our risk and adjusts our deal."

One of the little known variables of a tightening credit market, Kane said, is that the more difficult the market, the less competitive it becomes and the more sway bigger players can have.

But as any lender, broker or developer will tell you, no matter how uncertain the market is, deals always find a way.

For his part, Kane is at the beginning approval stages of a $12 million project that he is extremely bullish about — the 482-unit Borthwick Village, a retirement center located close to Portsmouth Regional Hospital and Islington Street. Kane bought the project from other developers because he thinks the area needs it and a growing market will demand it.

"We're moving in the right direction," Kane said.

What remains to be seen for the commercial market in the region is just how strong the "right direction" will prove to be.