Summary
Lowry may be in a tricky situation as a free agent this summer. He's certainly worth a sizeable contract, even at age 35, but there aren't a lot of obvious suitors. Rebuilding teams that have cap space like Charlotte and Oklahoma City probably won't have interest in him. The Spurs have plenty of guards. The Knicks could convince themselves that having Lowry could really improve their culture, and could help develop some of their young players such as RJ Barrett, Mitchell Robinson, and Obi Toppin. Then there are the actual contenders with cap space, such as Dallas and Miami, who may have interest but could be looking for a wing rather than a point guard. There are also always sign-and-trade possibilities for an over-the cap team to emerge as a contender to sign Lowry.
 
Lowry didn't have a great season, but his numbers don't suggest much decline, as his shooting percentages in most areas have remained pretty constant, even at the rim, where most point guards start to decline as they age. Lowry is a competitor. A bulldog that is going to battle every night, make the right plays, and hit shots (although he has had some cold streaks in the playoffs, mostly forgotten after his big performances in the Raptors title run in 2019). He probably won't get a big long-term deal due to his age, but teams will be willing to spend on him.
 
Cap Considerations
Lowry will be an unrestricted free agent with full Bird rights. As his cap hold ($39.3 million) exceeds the salary he will get in free agency, his cap hold is not really relevant. If the Raptors re-sign Lowry, they will most likely be operating over the salary cap, as he would have to take a major pay-cut along with the Raptors losing almost all of their potential free agents in order for Toronto to have meaningful cap space.
 
Depending on how close the Raptors are to the luxury tax after free agency, if Lowry is brought back by the Raptors on a multi-year contract they could benefit from frontloading his contract, as it could give them additional flexibility in the future.
 
Lowry will demand a starting salary of more than the full $9.5 million Non-Taxpayer Mid-Level Exception, which means only teams with cap space will be able to sign him. If Lowry and an over-the-cap team have mutual interest, sign-and-trade options can be explored.