As investors continue to eye the market and quality availabilities are being leased or sold as soon as they are available, the industrial sector is the hottest commodity.
The vacancy rate steadily dropped over the last three quarters and finished the first quarter at 4.4%. The vacancy rates in the Manchester and Portsmouth submarkets fell by just under 100 basis points, with the largest drop in the warehouse/distribution category.
With such a low vacancy rate, it is not surprising to see rents climb. The overall average asking rate rose by $0.58 PSF (7.6%), ending the first quarter at $7.58 NNN. The large decrease in the vacancy rate in the warehouse/distribution category specifically led to a rent jump of $0.58 PSF and ended the quarter with an average rent of $7.49 NNN.
As vacancy continues to rise it leaves only the least desirable space available. This has led to many owner-occupiers looking to build or expand their facilities. This year, there is roughly 465,000 SF of inventory under construction, with the Dover submarket leading the way. Although the vacancy rate in that submarket is higher than the average rate in the state, at 5.2%, the Dover submarket continues to attract companies who are looking to build new facilities on the seacoast. In Rochester, there are currently three new construction projects underway including:
- A 150,000 SF warehouse/distribution building is under construction on Innovation Drive. Prep Partners Group, the owners, plan on occupying 100,000 SF of the facility and leasing out the remaining space.
- After Intec Automation outgrew its facility on Sampson Road in Rochester, it decided to build a new building. The company will open its new 30,000 SF facility on Industrial Way this summer.
- Pella Windows broke ground on its 24,000 SF facility during Q1 along Airport Road. This location will be the new headquarters for one of the New England franchisees.
The push towards owner-occupier construction also comes from the increased activity of investment sales throughout the state. The average sale price for both owner-occupier and investment sales from Q1 2020 was $81.14 PSF. A year later, sales have climbed by 17.6%, ending this quarter with an average of $95.39 PSF.
At Colliers , we internally track over 70.7M 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).
