Throughout the first quarter, the New Hampshire industrial market welcomed new tenants and investors from out of state and local companies strengthened their presence in the market.
Although new tenants entered the State, more space opened up in the market than was leased. Overall, the industrial market had a negative absorption of 176,173 SF year-to-date, or about 0.26%. With more space coming available, occupancy rates were relatively stagnant with a slight downward movement of 0.64% year-over-year. These dips are small and do not show the market weakening.
Overall rents continued to increase over the past year, ending the quarter at $6.81 NNN. The warehouse/distribution category continued to see the largest increase in rents, rising by 5.9%, or $0.41 PSF.
While the market is in a time of uncertainly due to COVID-19, it is unclear what direction it will take. The overall industrial market has stayed above a 94% occupancy rate for years, but given the current environment, we may see it fluctuate. Some industrial companies are working at full capacity due to the pandemic. On the other hand, some companies are just trying to stay afloat. Over the next year, occupancy may slightly fall if some companies do not survive. However, this may be good news for the companies that have been looking for space for a while in a tight market.
Since the occupancy rate has remained high, we have noted some owner-user construction over the past year. Prime Source Foods nearly completed its new facility on Jack’s Bridge in Londonderry at the end of Q1. With the current environment, construction could be expected to slow down, yet, owner-user construction continues. Bellevance Beverages began site work at its new facility in Londonderry and TRM Microwave’s expansion broke ground at its Bedford facility. We will continue to monitor the impact COVID-19 has on industrial construction.
While NH unemployment numbers have increased dramatically due to the pandemic, many of the manufacturing and industrial employees have job security. According to the NH Employment Security Department, only 4% of unemployment claims are in the manufacturing category, while the hospitality, health/education, and retail categories are taking the hardest hit. Hopefully this is an indicator for how the industrial market will fair during the current climate.
At Colliers International in New Hampshire and Maine, we internally track over 67.3M SF of industrial space across 6 submarkets in New Hampshire. Our inventory includes buildings and condominiums 10,000+ SF and are classified as manufacturing (MFG), flex/R&D, or warehouse/distribution (W/D).
