The industrial market continues to tighten as the overall vacancy rate fell by 170 basis points and ended the quarter at 3.7%. As vacancy rates continue to descend, rents also climbed by $1.01 PSF since last year, or about 14.7%. The lack of space and increase in rents is leading to new construction throughout the state.
The largest shifts in vacancy and rents took place in the warehouse/distribution (W/D) category. The vacancy rate in that sector fell by 230 basis points year-over-year. With a vacancy rate of 2.7%, W/D rent climbed by $1.51 PSF and finished the second quarter at $8.32 NNN.
Higher rents have kept investors interested in the W/D category. One of the top sales of the quarter involved KPR Centers LLC, a NY-based investment firm, purchasing two fully leased cold storage facilities in Londonderry. 219 Rockingham Road, a 180,600 SF facility, was bought for $28.4 million ($157.39 PSF) and 6 Rockingham Road, a 117,412 SF facility, sold for $18.175 million ($154.80 PSF). In the Nashua submarket, a MA-based investment group, Equity Industrial Partners, acquired the longtime vacant building at 1 Bon Terrain Drive in Amherst for $24.0 million ($60.62 PSF). The 395,920 SF W/D building reached full occupancy with leases by Alene Candles and Novo Building Products soon after.
Across all the industrial property types, there are multiple constructions projects either breaking ground or seeking approval. Here is a quick snapshot of companies expanding their NH footprints with construction projects:
- Baron’s Major Brands is looking to consolidate its warehouse locations and build an 132,000± SF in Litchfield.
- Lonza Biologics plans on adding 32,300± SF at its current facility at Pease in Portsmouth.
- Freudenberg-NOK and The Granite Group broke ground on a 64,000± SF expansion bringing 11 Ricker Avenue to a total of 305,620± SF.
- LSNE is expanding on its property along Commerce Drive in Bedford, constructing a two-story, 28,500± SF manufacturing building.
Additionally, with rents increasing, investors are starting spec construction:
- BentallGreenOak purchased 36 Executive Drive in Hudson in January and is now marketing an expansion of 95,000 SF at the facility. The project is set to be completed by January 2022.
- The former Walmart at 17 Colby Court in Bedford was purchased in May by RJ Kelly Company. They are proposing a conversion to high bay warehouse, similar to the former Sam’s Club in Seabrook that was leased quickly by two tenants in Q1 2020.
- A 193,000± SF W/D facility with 28’ clear height is being marketed along Route 4 in Nottingham, with plans for occupancy in 2022.
- A 100,700± SF W/D or manufacturing building is being proposed in Merrimack with a delivery of Spring 2022.
At Colliers , we internally track over 70.7 million 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).
