Southern New Hampshire’s other major market, the Interstate 93/Route 3 Corridor, contains the state’s largest city, Manchester. The corridor’s industrial sector, comprising 40.6 million square feet of product according to CB Richard Ellis’ 2009 New Hampshire Market Survey, had seen improvements in vacancy until the beginning of 2008, when the market began to deteriorate. The report goes on to say that the rate rose from 12.6 percent in 2007 to 13.8 percent in 2008. The strongest segments in the sector are in defense, healthcare and energy. There is almost no demand for manufacturing, as New Hampshire has yet to recover from many of its manufacturers outsourcing operations. A trend has been seen in industrial space being redeveloped for other uses. For example, the former Jac Pac Foods building has been razed by Anagnost Cos. for the construction of a 100,000-square-foot medical office building for Elliot Hospital.

Industrial product is also being converted for retail uses, but this has slowed considerably since 2008. Many new retail project are expected to halt for the near-term until consumers start spending again and demand for retail comes back.

The I-93/ Route 3 office sector stabilized in 2008 but is predicted to decline in 2009, as many users stay put in their current properties. Still, more than 550,000 square feet of office leases will expire this year and into early 2010, according to CBRE’s report, with 50,000 square feet of new tenants expected to enter the market. This will create many opportunities for tenants to upgrade from their existing spaces — with many seeing concessions from landlords eager to fill space — but the lack of new tenants in the market will not have a big impact on absorption. Another new trend is tenants relocating from the Manchester central business district to the suburbs of Bedford, due to the city’s improved infrastructure, lower rents and recent office renovation projects.

Source: CB Richard Ellis – January 2009 New Hampshire Commercial Real Estate Market Survey

©2009 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.

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