“We have too many listings?” - by Justin Lamontagne

No self-respecting commercial real estate broker would ever complain about having too many listings. No, the title quote came from our beloved marketing director, Marina Turmelle. While she was assembling this year’s annual survey she realized we literally ran out of room for the listings portion of the report. After more than a decade of lamenting a lack of listings, 2025 finally brought a measure of market correction. 

Marketing headaches aside, the truth is our overall Southern Maine industrial vacancy rate has climbed to 3.32%. That is still objectively low by national standards, but it confirms what I’ve been reporting on for the last two years: vacancy is no longer flatline tight, it is rising meaningfully, and the trendline matters more than the snapshot.

The point isn’t that 3%± vacancy is high (it isn’t). The concern was the pace of change, which I summarized with this progression: 1.84% (Jan. 2021), 1.69% (Jan. 2022), 1.91% (Jan. 2023), 1.97% (Jan. 2024), 2.49% (Dec. 2024), 3.57% (July 2025) — an 81% increase in inventory in just 18 months.

Now, at 3.32%, we’re slightly below the mid-year peak — but we are still well above where we sat just a year ago, when overall vacancy was 2.49% as of December 1, 2024.

The most striking data point is not even the increased supply – it’s time on market. Leasing activity has been stalled by lack of demand, and high-quality standalone buildings are seeing materially less traffic. Landlords are still in a good position to get market lease rates, but they need to be prepared to wait longer than in years past. There are simply fewer industrial tenants in the market today than there have been, on average, over the last decade plus. In 2025, there was more hesitation, more “wait-and-see,” and more internal scrutiny on long-term commitments.

Lease rates, however, have not fallen; in fact, they are rising for right-sized, Class A spaces. We are now at an average of about $9.65 per s/f NNN, with the expectation that rent growth will flatten or potentially decline in the short term as tenants regain leverage.

That leverage, though, is playing out unevenly. Well-located small-bay space still commands a premium because it remains scarce in the exact geographies most users want. Larger blocks are where you’ll see the most negotiation — free rent, TI, shorter terms, or more tenant-friendly expansion/contraction options.

On the sales side, the “bright spot” I referenced mid-year continues to be a striking shortage of for-sale inventory, especially smaller owner-user product. This is fueling competitive pricing that can exceed $200 per s/f.

A few years ago, Greater Portland vacancy was a remarkably inhibiting 0.66%, and the market functionally stopped working for growing businesses. This led to some hard decisions and, in some cases, relocations out of state.

Today, 3.32% overall vacancy is clearly less of a crisis and it is an indication that the industrial market is in a new chapter. The meteoric run has cooled. Inventory has risen. Demand has slowed. And while the market remains fundamentally healthy, it is no longer a one-way street dominated by landlords.

Forecasting into 2026, I believe tenant leverage should continue to improve, but largely in the larger-bay segment. Users under 10,000 s/f will still feel pinched in the core Greater Portland corridors because scarcity remains and even a modest rise in vacancy won’t suddenly create meaningful small-space options or motivate landlords.

On the landlord side, it’s more important than ever to gauge the market and your competition. With fewer tenants in play, even one other viable alternative can mean extended vacancy periods. In other words, if you have a shot, win the deal! 

We should also continue to see more “repurposing” discussions, which has been a recurring theme in prior years — finding ways to make non-industrial shells work when purpose-built supply can’t keep up. If vacancy continues to rise unevenly by submarket and building size, adaptive reuse will remain part of the solution. Finally, sales pricing should stay relatively strong until supply improves in a meaningful way, because even with softer leasing conditions, the owner-user buyer pool remains deep — particularly for functional, well-located buildings. And anticipated interest rate cuts mid-year should only deepen that buyer pool.

If there’s one takeaway, it’s this: the supply and demand scale is slowly tipping back. Property and business owners alike need to monitor market trends and neighboring activity now, more than ever. No, Marina, we don’t have too many listings. But the fact that you even had to ask is a bright sign for buyers and tenants.

Justin Lamontagne, CCIM, SIOR is a managing partner/designated broker with The Dunham Group, Portland, ME.