In Portland, office market has seen a 'right-sizing,' Boulos reports

An aerial view of a corner of a building.

FILE PHOTO / COURTESY MAINE PUBLIC Notable transactions in 2024 included 320 Cumberland Ave., Portland, sold to Maine Public Broadcasting Corp. by East End Corp. for $20 million. Joe Malone and Luke Malone of Malone Commercial Brokers and Joe Porta of Porta & Co. brokered the transaction.

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By Laurie Schreiber

Greater Portland’s office market is experiencing its highest direct vacancy rate since 2013.

That stems from the combination of expiring leases signed before the pandemic and office users "right-sizing" operations to fit current needs, Nate Stevens, managing partner and designated broker with the Boulos Co., wrote in the firm’s recently released “2025 Maine Market Outlook” report.

Direct vacancy rates across the entire market rose from 7% to 8.15%, which is the highest since 2013, wrote Stevens.

“Over the past several years, it became evident that the effects of the pandemic would persist longer than initially expected,” he wrote. “This is due to pre-2020 leases of seven to 10 years expiring and companies continuing to adjust their real estate needs as they rolled.”

The trend was anticipated, he said. But unexpected movements in the marketplace drove the vacancy rate higher than anticipated.

“Direct vacancy rates had been trending downward over the last three to four years, however sublease vacancy rates were simultaneously increasing at a rapid pace, offsetting any positive trends in direct vacancies,” Stevens wrote.

Stevens’ article outlines which submarkets have the highest vacancies and which fared well, overall, in 2024.

Overall, the report covers commercial real estate trends across the industry’s key segments: office, retail, industrial and capital markets.

The capital markets display an expected drop in leasing and sales activity due to 2024’s economic factors and high interest rates, wrote Chris Paszyc, a managing partner.

Paszyc identifies a number of elements that will continue to impact activity in capital markets for 2025.

Jon Rizzo, a partner and broker, and Joseph Italiaander, a broker, contributed to the report in the industrial and retail markets, respectively.

This year, the Boulos Co. is celebrating its 50th year. To mark the occasion, a gatefold featuring company milestones is printed in the book.

To read the full report, click here.