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Office and industrial markets continue to tighten, but each sector seems to have their own nuances

The New Hampshire market continues to see both office and industrial inventory tightening.  We are seeing ample lease and sale transactions, as well as welcoming some new tenants to the market, which is helping drive the higher occupancy rates.

The industrial market has been hot over the last couple of years, but it seems like the market’s occupancy rates dramatic rise may be slowing down. Since the beginning of the year, occupancy rates rose by only 0.17%, ending the quarter at 94.7%. This slowdown could be caused by a lack of suitable inventory, but active searches have decreased year-over-year. Even with a slightly stagnant market, rents continue to rise, ending the quarter at $7.21 NNN.  

Despite occupancy rate growth slowing down, we did see some large leases. Amazon leased the former BJ’s Wholesale Club at 400 Quality Drive in Hooksett. With the 109,000 SF being absorbed at this building, it is no surprise that the Concord submarket’s occupancy rate saw a 2.2% jump this year.

The Concord submarket was the only one to see such an impactful change as most were close to static. Although flat, there are still large deals taking place. BAE Systems expanded in the Nashua submarket by leasing about 118,640 SF of warehouse/distribution space. The company leased slightly more than half of 36 Executive Drive in Hudson, bringing the building occupancy rate to 56%. In the Manchester submarket, Foxx Life Sciences is doubling its footprint by leasing the entire 70,180 SF building at 12-14 N Wentworth Avenue in Londonderry. The company will move some of its operations from the Salem location to the new headquarters, and will now occupy about 125,000 SF in NH.

With most of the submarkets’ occupancy rates staying above 93% this quarter, we continue to see more industrial investment sales. Starting in the Nashua submarket, with a 93.8% occupancy rate, the USPS logistics and distribution center at 10-12 Celina Avenue in Nashua sold to a NYC-based investment firm for $25M ($74.18 PSF). In the Concord submarket, a local investor purchased the 75% occupied building at 7 Eastpoint Drive in Hooksett for $1.8M ($75.31 PSF). The Salem submarket, with the lowest occupancy rate (87.7%), is continuing to see its rate climb. 16 Garabedian Drive in Salem reached full occupancy this quarter when All Access Equipment purchased the 52,800 SF building. The company will occupy the remaining 15,800 SF as it expands into NH.

The Portsmouth submarket, with the highest occupancy rate (98.3%), saw two owner/users purchase buildings this quarter. RTH Mechanical Contractors, Inc. purchased a 30,672 SF building at 17 Production Drive in Dover for $2.141M+ ($69.81 PSF). The company is relocating and expanding from a 7,400 SF building in Brentwood. 20 Durham Street in Portsmouth, an 81,600 SF building, was purchased by Rochester Electronics. The company from Newburyport, MA, had been occupying the 8,400 SF building at 19 Durham Street and taking advantage of the Foreign-Trade Zone. With the goal to stay in this zone, this site was a perfect fit and gave the company the ability to expand.

While a few companies are finding existing buildings, other owner/users are expanding at their current locations or filing plans for brand new facilities. In the Manchester submarket, Safran Optics 1 celebrated its ground breaking of a 15,000 addition at its 44,950 SF facility in Bedford. In the Dover submarket, Index Packaging Inc. of Milton announced its plans to build a 130,000 SF commercial facility at Granite State Business Park in Rochester.

Switching to the office submarket, occupancy rates are still on the rise, ending the quarter at 92.1%. So far this year about 61,200 SF has been absorbed, or approximately 0.29% of the office SF we track. 

Over the quarter, we saw a few companies consolidate multiple locations into one office. In the Portsmouth submarket, Stanley Security Solutions, Inc. combined three of its offices into 12,600 SF at 75 Portsmouth Boulevard in Portsmouth. The company saw Portsmouth as a good fit due to its centralized location for customers and employees. In the Manchester submarket, Drummond Woodsum is consolidating its locations and expanding its Manchester presence into 11,130 SF at 670 N Commercial Street.

Southern New Hampshire University was active again this quarter.  On the Seacoast, SNHU renewed its lease of 19,450 SF at 231 Corporate Drive. In the Manchester Millyard, SNHU is relocating much of its Manchester operations into the former Langer Mill. With this move, it is opening up some large footprints around the city. For example, at 186 Granite Street about 82,000 SF is hitting the market. SNHU is keeping a small space in the building, renewing 8,200 SF.

In addition to the lease activity, a few office investment sales occurred over the quarter as well. In the Manchester submarket, Wellington Business Park in Auburn was purchased by CGI Real Estate Holdings for $3.5M ($57.11 PSF). This 61,290 SF 2-building park was mostly occupied at the time of the sale, and the new owner moved into the remaining space. In the Portsmouth submarket, the Kane Company purchased 111 Maplewood Avenue in Portsmouth for $9.065M ($446.40 PSF). The fact that this 20,307 SF building was 90% occupied was only part of the reason Kane made this purchase. Before purchasing the property, the Kane Company went before the planning board to add a four-story, 74,000 SF, office building to the site.

In NH, both the office and industrial markets continue to tighten, but each sector seems to have their own nuances. The industrial market is continuing to see large leases, ample investment sales, and owner/user development. However, the office market is seeing more tenant renewals or consolidation, with some build-to-suit or spec construction. All of these are good signs for the state.

 


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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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