🔒Boulos Co. sees resilience in the commercial real estate market

Tariffs, trade, tensions with Canada, labor shortages and housing constraints all influenced business decision making across the state in 2025, but the Maine commercial real estate market did see growth, according to the recent market outlook from Portland-based Boulos Co. Andy Gerry, chief operating officer at the firm, said he is optimistic the renewed momentum will hold this year. “Even with the current market risks in place,” Gerry said in the report, “we’re seeing businesses act with greater confidence. Maine continues to offer compelling opportunities for tenants, investors and developers, and in 2025, transactions closed, capital stayed active, and collaboration and creativity helped keep projects advancing. “In 2026 we anticipate all these factors will continue to facilitate positive momentum across property classes in the region.” The report analyzes trends across office, capital, industrial, multifamily, retail and hospitality markets and highlights several themes. In the office market, the "flight to quality" continues to be a factor. The industrial market faces softening demand for large industrial properties alongside limited smaller-scale inventory. Progress in housing development remains constrained by supply and affordability challenges.

Regional office market vacancy rates are high

Across the Greater Portland region, the office market direct vacancy rate (excluding sublease space) increased from 8.1% to 8.84%, the highest rate in 12 years. Despite the increase, the market recorded approximately 139,000 square feet of positive net absorption, Boulos found, showing that new supply outpaced demand, a position the region hasn’t experienced since before 2020. Nearly 240,000 square feet of new inventory, largely from the development of Rock Row in Westbrook, affected the vacancy rate. Overall demand was strong throughout 2025, but not strong enough to fully digest the new supply in a short period of time. For the first time in eight years, there here were no office buildings removed for conversions.

Industrial property prices remained level

Industrial investment sales were limited in 2025, primarily due to low inventory, seller complacency and deals not "penciling" — meaning the numbers don't work. Despite lower sales volume, price per square foot remained level. The lack of inventory and new construction continues to be an issue and is unlikely to ease in 2026, creating a favorable market for industrial real estate owners interested in selling.

The multifamily sector was strong

In 2025 the multifamily market overall saw strong price appreciation, moderate rent growth and a gradual shift toward a more balanced vacancy range as new deliveries came online after years of undersupply. Higher debt costs and rising operating expenses compressed investor returns and slowed transaction activity compared with pre-pandemic levels. And yet, 2025 proved to be a relatively solid year for Maine’s multifamily sector, with resilient demand and continued investor interest in well-located assets. For 2026, new development in this sector is likely to further support more balanced vacancy rates, which should translate into modest, sustainable rent growth following the post-pandemic surge. However, maturing debt originated at historically low interest rates, combined with continued increases in operating expenses, are expected to lead to a rise in more multifamily assets coming to market, potentially contributing to more stabilized pricing. The full 36-page market outlook can be downloaded from the Boulos Co. website. The Boulos Company is a 50-year-old commercial real estate firm, with 45 employees based in Portland and in Portsmouth and Manchester, N.H.