The industrial market has been hot over the last couple of years, but the rise in the occupancy rate seems to be slowing down. Occupancy rates only rose by 0.17% year-to-date, ending the quarter at 94.7%. With almost 2.8M being absorbed, the slowdown could be due to lack of suitable inventory. With this high occupancy rate and less desirable space on the market, rents still rose by $0.47, ending the quarter at $6.73 NNN.
Despite occupancy rate growth slowing down, some large leases still occurred. Amazon leased the former BJ’s Wholesale Club at 400 Quality Drive in Hooksett. With the 109,000 SF building being absorbed, it is no surprise that the Concord submarket saw a 2.2% jump in its occupancy rate year-to-date.
Concord was the only submarket to have such an impactful change, as most other submarkets were close to static. Although relatively flat, there were 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 doubled 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 Salem to the new headquarters and now occupies about 125,000 SF in NH.
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, with the lowest occupancy rate (92%), a local investor purchased the 75% occupied building at 7 Eastpoint Drive in Hooksett for $1.8M ($75.31 PSF).
Although Salem has one of the lowest occupancy rate (93%), 16 Garabedian Drive in Salem reaching full occupancy will help the submarket. All Access Equipment purchased the 52,800 SF multitenanted building for $4.5M ($85.23 PSF) and as the company expands into NH, it will occupy the remaining vacant 15,800 SF.
The Portsmouth submarket, with the highest occupancy rate (98%), welcomed a new user this quarter. Rochester Electronics purchased 20 Durham Street in Portsmouth, an 81,600 SF building, for $6.9M ($84.56 PSF). The company from Newburyport, MA, had leased 8,400 SF at 19 Durham Street for about 6 months prior, taking advantage of the Foreign-Trade Zone. Wanting more space and permanent use of the zone, this site was a perfect fit.
The Dover submarket, with the second highest occupancy rate (94%), welcomed RTH Mechanical Contractors, Inc. to 17 Production Drive in Dover. The company bought the 30,672 SF building for $2.141M+ ($69.81 PSF) and is relocating and expanding from a 7,400 SF building in Brentwood.
Some companies found existing buildings that fit their needs, while others expanded at their current locations or plan to construct brand new facilities. In the Manchester submarket, Safran Optics 1 celebrated its groundbreaking 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. In the Portsmouth submarket, Unitil broke ground on its new 54,000 SF operations facility just off Continental Boulevard in Exeter. The company is moving part of its Portsmouth operations into this facility.