A MESSAGE FROM OUR MANAGING DIRECTOR
CBRE | The Boulos Company is pleased to present the 2018 Market Outlook for Greater Portland's commercial real estate market.
We are pleased to present you with this year's Market Outlook for the State of Maine's commercial real estate environment. We have focused on the trends and factors influencing our market in 2017 and forecast expectations for 2018.
The pace of change continues to gain momentum in our world and Maine's real estate market will be impacted by market disruptors. Twenty-four-hour news cycles, endless social media posts, emails, and podcasts all vie for consumer attention with predictions about our future. What can we expect in a rural state like Maine? Will we soon have our pizza delivered by drones? Will Amazon take over retail, rendering our malls and downtown shopping districts obsolete? Will the growing telecommuting trend leave our office buildings vacant? Will self-driving cars eliminate the need for parking lots and garages? Will tiny house developments be the new normal?
In this publication, we are stepping back and reviewing the fundamentals of our market. We are looking through a lens which is aware of the new trends and disruptive industries, but real-world data should still govern investment and development decisions. Our industrial market is hotter than it's ever been, unemployment and interest rates remain low, and our multifamily market is experiencing record growth and investment demand. The main factor limiting the velocity of transactions in Capital Markets is a lack of available product. In the office market, as long as firms continue to hire and expand in Portland, the need for office space will increase. New product will be constructed to meet this demand. Due to new construction projects and renovations of existing spaces, lesser-quality buildings will struggle to retain their tenant base, unless owners make necessary investments and improvements.
How long will this strong market last? In all likelihood, we are just past the peak in the market cycle. Now is presumably a good time to sell, as prices have started to soften over the past 12 months. We expect cap rates to flatten over the next year and pricing to stabilize in all sectors. Still, 2018 is expected to be a strong market with solid tenant and investor demand.
Given the amount of conflicting information coming at us from every direction, it can be difficult to make informed real estate decisions. We are here to provide consultation and advice based on objective, real market data. While most of us do not have plans of moving into a tiny house any time soon, we are looking forward to having our lunch delivered by drones one day.
As the leading firm in Maine's commercial real estate market, we are continuously making the investment in educating professionals to ensure we are on top of emerging trends and able to advise our clients with their current and upcoming real estate needs. Best of luck throughout the year in 2018.