New Hampshire Industrial Market

David Choate
Executive Vice President
Grubb & Ellis | Coldstream Real Estate
“The hallmark of New Hampshire business has always been the growth of smaller businesses into larger ones,” says David Choate, executive vice president of Portsmouth, New Hampshire-based Grubb & Ellis|Coldstream Real Estate Advisors. “This fact will continue to rule the New Hampshire industrial economy.”

Within the industrial market, the conversion of existing buildings and build-to-suit construction are the prevalent trends. There is little speculative building of large multi-tenant properties, as most construction activity is for specific end users that primarily concentrate on warehouse/distribution and service-oriented businesses rather than manufacturing. Areas with municipal utilities are enjoying the most new growth and/or absorption of existing industrial land.

Owners and developers are attracting general warehousing and distribution companies geared toward servicing the booming home building, retail and service sector markets. The biotech and R&D sectors are experiencing some activity, especially at the Pease International Tradeport, where Lonza Biologics is planning to expand by 250,000 square feet, resulting in the creation of more than 100 new jobs. Lonza Biologics will soon occupy a total of 350,000 square feet within Pease International Tradeport. That particular park, located in Portsmouth, continues to experience significant development, as does the area around the Manchester Airport.

According to Choate, smaller tenants requiring 10,000 square feet or less — but that will grow on-site — are currently the typical New Hampshire industrial occupants.

“A small industrial subdivision in Brentwood Commerce Park on Route 125 in Brentwood has helped to fuel the retail and commercial growth of the Route 125 corridor from Rochester to the Massachusetts border,” notes Choate. “Also, a Massachusetts developer recently received approvals for a multi-lot industrial park in Newton, which will further fuel development in the border towns.”

In the border towns, such as Hudson, Salem, Seabrook and Rochester, there is an above-average amount of development currently taking place. It is in those markets that industrial activity will continue to thrive in the future, says Choate.

“The border towns are enjoying the most growth and absorption of product because of their proximity to interstates 93 and 95 and a strong labor force,” Choate adds. “The latter is especially true for the Tri-City area of Rochester-Dover-Somersworth, which offers businesses a surplus of industrially zoned land.”

The 500-acre Enterprise Park in Dover has several new building projects on the drawing board that will add dozens of new jobs to the area.

Another trend providing a boost to the New Hampshire industrial market is the increasing “in migration” of out-of-state companies. According to Choate, there were very few companies moving into the state prior to the first quarter of 2004. However, since the first quarter, there has been an influx of out-of-state tenants seeking 15,000- to 25,000-square-foot industrial properties along the Manchester-Nashua corridor.

There is activity throughout New Hampshire’s industrial markets. Although the majority of leasing activity is for small spaces of less than 5,000 square feet and most new buildings being constructed are less than 50,000 square feet, there is some significant new development and leasing activity. Rand-Whitney recently moved from Dover and purchased a 200,000-square-foot building in Rochester. Stonewall Kitchen recently leased 100,000 square feet in one of the former Cabletron buildings, also in Rochester.

Polaris Direct has leased 72,000 square feet at the former Sanmina Building located at 300 Tech Drive in Hooksett. Crathern Machinery signed on to occupy 50,000 square feet on Canal Street in Manchester, while End of Life Electronics has leased 54,000 square feet on Hudson Park Drive in Hudson.

“Our company’s recent review of the industrial market, which is based on the analysis of approximately 50 million square feet of inventory, indicates the average triple-net industrial rental rate in New Hampshire is $5.48,” says Choate. “The rates range from $4.23 per square foot in the Rochester submarket to $7.35 per square foot in the Salem submarket.” Grubb & Ellis|Coldstream Real Estate’s survey also indicates that the vacancy rate for industrial property throughout the state is 11.2 percent.

Smaller companies continue to spur New Hampshire’s successful industrial market. Cities along the Maine and Massachusetts state lines will continue to experience an increase in activity as long as developers continue to provide small businesses with the specifications needed and room to grow.

©2004 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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