November 2023 – CRE Market Overview
As of the beginning of 2023, the commercial real estate market in New Hampshire has shown dynamic activity across various sectors:
Industrial Sector
The industrial real estate market remained robust, with significant movement in both investment and owner-user sales. Notably, the industrial vacancy rate across the state remained stable at 2.7%. This stability in vacancy rates suggests a balanced market with little room for further tightening.
Notable Transactions
In March 2023, a 94,000 square feet warehouse/distribution building in Newfields sold for $5.15 million. Additionally, a 60,000 square feet flex building in Milford was purchased for over $2.9 million in January, indicating continued interest in larger commercial spaces.
Office Sector
The office sector saw a steady decline in vacancy rates in 2022, ending the fourth quarter at 10.7%. Class B spaces were particularly dynamic, absorbing approximately 153,000 square feet. Despite some companies relocating or expanding, an increase in the vacancy rate is forecasted for 2023.
Major Office Sales
The first quarter of 2023 witnessed significant office sales, including the sale of a large mill office building in Manchester for $23 million and a Class B office building in Nashua for nearly $9 million, reflecting continued investor interest in the office sector.
Multifamily Sector
In early 2023, New Hampshire’s multifamily sector is thriving, driven by increasing demand and a robust development pipeline. Approximately 20 multifamily projects are in progress, set to add over 2,000 new rental units by year-end. Rental rates have risen by 5%, with the average one-bedroom apartment now renting for $1,200 per month. Urban and suburban areas both experience heightened demand, reflecting diverse renter preferences. Additionally, investor interest remains high due to stable rental income and appreciation potential, while local government initiatives, such as zoning changes and incentives for affordable housing, further support sector growth. This data, sourced from the New Hampshire Housing Finance Authority and local government reports, underscores the multifamily sector’s significance in the state’s commercial real estate landscape.
Impact of Hybrid and Work-From-Home Models
The hybrid and work-from-home trends continue to influence the commercial real estate landscape. Companies like Liberty Mutual and Timberland have announced downsizing plans, affecting the overall square footage required for office spaces and potentially leading to an increase in vacancy rates in specific submarkets by the end of 2023.
In summary, the commercial real estate market in New Hampshire in early 2023 is marked by active sales and leasing across sectors, with a stable industrial market and evolving trends in the office sector driven by changing work models and economic factors.
