Kittery is set to transform some of its famous outlet malls along Route 1 into a hotel and new housing, signaling the town’s intent to become a place to stay and not just visit.
The New Hampshire-based Two International Group will redevelop three buildings of outlet stores at 283 Route 1 in Kittery into 107 apartments, a 119-room hotel and a 6,000-square-foot building intended to be a restaurant, as well as some parking, according to plans approved by the town’s planning board late last week.
The project is motivated by a need for more housing in Kittery, a need we’re seeing all over Maine. Across the state and particularly in southern Maine, there’s a high demand for a low inventory of housing. That makes it nearly impossible to find an affordable place to live.
“Workforce and affordable housing, and even market-rate housing, is lacking here,” Russell White, a member of both Kittery’s planning board and housing committee, said. “And there’s a lot of pressure coming from across the river in New Hampshire.”
Maine’s southernmost town has long been thought of as a shopping and dining destination. Leaders are now looking to create a better balance between being a place to visit and a place to live, especially as consumer shopping habits are shifting online, said Dutch Dunkelberger, Kittery’s planning board chair.
The plaza that will be demolished to make room for new housing now includes Le Creuset, Carter’s and Loft outlet stores and is “dying” retail space, he said.
“Although it’s bounced back since COVID, it’s not what it used to be,” Dunkelberger said.
At the same time, there are only 12 rental units in Kittery listed on Zillow, the cheapest one going for $1,600 a month. There are 18 homes in town for sale on Zillow, but only one would be affordable to the average household there, which makes around $83,000.
Home prices are expected to rise 5 percent in Kittery in the next year, which will bring the median home value there to almost $626,000, according to Zillow. The housing market there is very hot now, with affordable homes usually under contract within a week of going on the market, Linda Pratt, a real estate agent based in Kittery, said.
“There’s a shortage of listings, and there’s too much demand,” said Pratt, an associate broker with Century 21 North East.
One of the driving forces behind that is Kittery’s desirability, Pratt said. It has seen an 8 percent population increase since 2010. It is on the ocean and has plenty of beaches nearby. The town has added shopping and dining options, and it is adjacent to Portsmouth, New Hampshire, a popular tourist destination.
Kittery is also home to the Portsmouth Naval Shipyard, which employs more than 7,000 civilians. The homes that come online in Kittery are typically unaffordable to those workers, who often commute from up to an hour away, Pratt noted.
Many of those shipyard workers need both short-term and long-term housing, which is why the new development includes a hotel. The planning board is currently considering multiple hotel proposals targeted at those workers, White added.
The new housing at the outlets would go a long way in providing longer-term options for those workers and other area families, but only 11 of the 107 apartments being constructed at the outlets will be designated as affordable. They will be reserved for those making 80 percent of the area median income, according to those approved plans.
The idea is that creating more housing opportunities at all levels — workforce, affordable and market rate — and increasing the overall supply of area housing will alleviate some of this pressure on the market, White said.
“Housing is needed,” Pratt said. “The more they put up, it might make things more affordable.”