Landlords Have the Advantage in the New Hampshire Seacoast Industrial Market
Driven by strong leasing activity, the New Hampshire Seacoast industrial market now has a limited supply of available options. The overall Seacoast vacancy rate is currently 5.6 percent. Compare that to the end of 2010, when vacancy in the market hit 12.9 percent. Narrowing the focus to the Portsmouth industrial market (excluding the Pease Tradeport), the vacancy hit 8 percent in 2010 but it had dropped to 3 percent at the end of 2015 — and at the end of June 2016, the vacancy rate hovered at 2 percent. This significant drop in vacancy leaves users with less viable product to choose from and is pushing them away from the Interstate 95 corridor of Portsmouth and Seabrook.
Industrial Users Turn to Ground-Up Development
Users in Portsmouth and surrounding communities, unable to find existing buildings to meet their needs, have turned to ground-up development in areas outside of Portsmouth and further away from the Interstate 95 corridor. Two large industrial users, Rand Whitney and Stonewall Kitchen, broke ground on projects in 2015 and have recently moved into their new facilities.
Rand Whitney, part of the Kraft Group, originally opened a corrugated cardboard sheet plant in Dover back in 1972. Over the years the company has had locations in Rochester and Portsmouth and recently made the decision to move back to Dover. The company’s new location is a state-of-the-art, 129,000-square-foot facility with 32-foot clear heights and is situated next to Stonewall Kitchen’s new development off of Mast Road.
Gourmet Gift Baskets from Kingston, New Hampshire, also broke ground this spring in Exeter, New Hampshire. The company’s new location is in the Tax Increment Finance District at 12 Continental Drive. This 106,000-square-foot facility will house the company’s online gift basket business.
As this trend continues, the towns that will see growth in new development are those with efficient permitting processes as well as city water and sewer availability. Most importantly, however, is that land costs are within market value in order for banks to be able to finance deals.
Fewer Concessions and Lack of Available Land
Industrial landlords are once again in the driver’s seat with regard to lease negotiations. Overall, the market is experiencing fewer concessions and tenant improvement allowances, and landlords are pushing for longer terms and higher rents for quality product.
The lack of inventory and available land surrounding the exits on the I-95 corridor continues to remain a challenge for companies seeking to remain in or expand in the Seacoast. Companies are being be forced to look outside of the more desirable Portsmouth/Pease market, into areas such as Dover, Newmarket, Rochester, Epping and Brentwood. Much of the available product in these submarkets is older and will require retro-fitting and improvements. This, combined with increasing lease rates on quality space, is making ground-up options an attractive alternative for incoming industrial tenants/buyers.
— By Christian Stallkamp, Senior Broker, CBRE | Portsmouth. This article originally appeared in the June/July 2016 issue of Northeast Real Estate Business magazine. To subscribe to the magazine, visit www.FranceMediaInc.com/publications.