NORTHEAST SNAPSHOT, NOVEMBER 2004
New Hampshire Industrial Market
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
Executive Vice President
Grubb & Ellis | Coldstream Real Estate
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 Hampshires 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
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 companys 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 Estates
survey also indicates that the vacancy rate for industrial
property throughout the state is 11.2 percent.
Smaller companies continue to spur New Hampshires 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.
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