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New Hampshire's Commercial Real Estate Market Begins to Head in a Clearer Direction

Even though we are still in the pandemic, the New Hampshire commercial real estate market is beginning to show a clearer direction. The office market is still facing some uncertainties as companies try to make decisions. If the occupancy rate continues its downward trend, we will see more space coming to the market. On the other hand, the industrial market is staying strong as only a small amount of space hit the market this quarter and investment sales flourish.  
The occupancy rate in the office market dropped by 0.7% year-over-year for the second quarter in a row, ending the quarter at 91.2%. This translated to a negative absorption of 314,474 SF. Given the current climate, this does not come as a big surprise, but a larger shift may still come as more companies reconfigure their office space. Despite occupancy rates dropping, rents actually rose by 3.01% or $0.57 PSF year-over-year, ending the quarter at $18.89 modified gross. As more space becomes available, rents will likely level out or start declining. 
Even with more space available in the third quarter, there was a slight uptick in lease deals compared last quarter. One of the larger transactions was the Wheelabrator Technologies lease for 50,300 SF in Newington. The company signed the first lease at the newly constructed, 72,000 SF timber frame building at 90 Arboretum Drive and will relocate its corporate headquarters there at the beginning of 2021. 
Over the quarter, two other companies expanded or renewed in their existing spaces. In Portsmouth, Novocure, Inc continued its expansion along Commerce Way in Portsmouth, subleasing an additional 19,000 SF at 135 Commerce Way. The company now occupies roughly 74,000 SF at 135 and 195 Commerce Way. Additionally, Sheehan Phinney PA renewed its downtown lease in the Class A building at 1000 Elm Street in Manchester, in roughly 38,000 SF.
Although the number of office sale transactions did not increase, there were two notable deals during the quarter. Cameron Real Estate sold the Class B office building at 9 Executive Drive in Merrimack for $2.4 million ($87.79 PSF) to an LLC associated with Melanson, a local CPA firm. The company plans to consolidate its Nashua and Manchester offices into this 27,340 SF building. Once this sale was complete, Cameron Real Estate then purchased the multitenanted 26,975 SF Class B office building at 6 Trafalgar Square in Nashua for $2.0 million ($74.14 PSF).
While the office market was relatively quiet, the same cannot be said for the industrial market. The occupancy rate was steady at 95.1%, a minor 0.18% dip, translating to negative absorption of 114,774 SF year-over-year. As occupancy rates remained steady, rents continued to rise throughout the year, increasing by 3.07% or $0.21 PSF, and ending the quarter at $6.84 NNN. 
There was also an increase in overall industrial transaction volume over the quarter. This was especially true with investment sales, with the largest transaction at The Manchester Logistics Center at 333 Harvey Road in Manchester. The 724,000 SF warehouse/distribution facility has been home to True Value for many years and sold for $32 million ($44.21 PSF). Other industrial investment transactions that occurred over the quarter included the $4.035 million ($53.03 PSF) sale of 562 Mammoth Road in Londonderry, a 76,000 SF manufacturing building; and the $4.0 million ($56.69 PSF) sale of 23 Dumaine Avenue in Nashua, a 70,560 SF warehouse/distribution building. 
In addition to the uptick of industrial investment sales, the number of lease transactions increased significantly compared to last quarter, particularly in the warehouse/distribution category. One of the largest lease transactions this year was the UPS lease of 102,000 SF at 8 Marin Way in Stratham. Another large lease occurred at 36 Executive Drive in Hudson, bringing the building to full occupancy. RJ Schinner leased roughly 91,000 SF of warehouse/distribution space, its 18th location nationwide, but first NH location. Other transactions included Company C relocating its warehouse/distribution space to 36,000 SF at 77 Merrimack Street in Concord and the 26,400 SF leased by Baron's Major Brands Appliances for additional warehouse space at 875 Holt Avenue in Manchester. 
Although the number of office and industrial transactions increased since last quarter, it does not mean that both categories are headed in a positive direction. The office occupancy rate has steadily declined over the past two quarters, and as tenants decide on their new layouts, we may continue to see negative absorption. On the other hand, the industrial market is headed in the opposite direction with its occupancy rate remaining above 95%. We believe the industrial market will continue to flourish with multiple lease transactions and investors still targeting the market.  

 

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Kristie Russell

Research Manager | New Hampshire & Maine

Manchester, NH

As the Research Manager, I serve as the point person for gathering and reporting on market knowledge for the New Hampshire and Maine offices. 

I collaborate with our brokers to deliver in-depth analyses of current market conditions and trends for their clients. Using various in-house and online resources, I maintain our proprietary database, which includes detailed property statistics, sale and lease comparables, market contacts, and tenant activity within New Hampshire and Maine. 

With this data, I develop best-in-class research reports, market analyses, and market insight to ensure our clients capitalize on this research as they contemplate business decisions that significantly affect their bottom line.

Prior to becoming the Research Manager, I was a Marketing Specialist at Colliers for five years. In this position I used Adobe software, including InDesign and Photoshop, to implement marketing strategies in support of our brokers. 

My responsibilities included creating property marketing collateral - such as flyers, brochures, ads, and proposals - as well as maintaining listing databases and our exclusive listing inventory. In addition to the property marketing, I assisted in coordinating special events, handling public relations and advertising, creating brand awareness, and developing our SEO and social media campaigns. 

Additionally, I am a licensed real estate salesperson in New Hampshire.

Prior to beginning my career in commercial real estate, I worked for Gallery Marketing Communications, LLC as a graphic design artist. During my time there, I used Adobe software to design brochures, flyers, business cards, and postcards, among other marketing materials. I also worked for Gatehouse Media, Inc as a freelance sports journalist, covering high school games in Massachusetts.

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