2025 Capital Markets Outlook

By Chris Paszyc, CCIM, SIOR | Managing Partner, Broker 

Maine’s 2024 capital markets volume experienced significant head winds, which reflected the sector’s national trends. However, a handful of noteworthy investment transactions did occur. Multifamily, hospitality and industrial properties dominated the largest sales, ranging from below $1 million to nearly $14 million. Cap rates varied widely, from the low 5% range to over 12%, averaging in the high 8%, reflecting both the diversity of asset quality and risk profiles across the state.  

The Federal Reserve’s cautious stance on interest rates throughout 2024 has kept borrowing costs elevated, slowing transaction volumes nationally but encouraging creative deal structures in Maine. Local sellers increasingly embraced options like seller financing and joint ventures to facilitate transactions.  

Looking ahead to 2025, the incoming presidential administration and changes in Congress bring new unknowns. Key areas of concern include potential shifts in tax policies, regulatory landscapes, and economic stimulus measures, all of which will significantly impact commercial real estate markets. Additionally, the Fed is expected to keep rates flat through 2025. Therefore, capital availability will remain constrained, emphasizing the importance of strong equity positions and creative financing. 

Investors should strategically assess opportunities by focusing on fundamentals like property cash flow, market rents, tenant stability, and market dynamics. Industrial properties, especially those aligned with logistics and e-commerce, and multifamily assets catering to workforce housing demand, are expected to remain attractive. However, higher cap rates suggest increased risk, underlining the importance of careful underwriting and due diligence.  

For opportunistic investors, Maine’s evolving market conditions present opportunities to acquire assets at favorable valuations as sellers adjust to economic realities. Collaborating with experienced advisors will be essential in navigating these challenges and capitalizing on the state’s real estate opportunities in 2025.  

The Boulos Company is here to guide you through this dynamic environment, ensuring your investment strategy aligns with emerging trends and opportunities.