CBRE/New England 2015 outlook: a mixed picture
Seacoast office, industrial markets set the pace in New Hampshire
CBRE/New England’s newly released forecast for the southern New Hampshire/Seacoast commercial and industrial markets paints an essentially confident picture for the coming year, although most of the optimism is focused in the Portsmouth area.
The story on the office market along the Interstate-93/Route 3 corridor from Nashua to Manchester could be better, writes the company’s Roger Dieker, first vice president at CBRE/Manchester, in the 2015 New Hampshire Market Outlook.
According to Dieker, the market “took a small step backwards in 2014 as the overall vacancy rate increased to 12.5 percent, up slightly from 11.6 percent in 2013.”
In fact, writes Dieker, 2014 was “the first year of negative absorption since the 2008/2009 recession,” with companies like Anthem Blue Cross and Blue Shield and Citizens Bank reducing their office footprint by 176,000 square feet and 90,000 square feet, respectively.
But on the Seacoast, the market is “strong and healthy,” writes Kent White, principal of CBRE/Portsmouth.
According to White, the Portsmouth area “has turned the corner, moving past the recovery stages from the effects of the 2008-2011 recession years.”
White does point out that some submarkets on the Seacoast, including Rochester, “continue to be stagnant with limited demand,” but overall “the Seacoast market continues to see positive absorption with vacancy rates declining.” According to White, Seacoast office vacancy rates have decreased from 11.1 percent in December 2013 to 10.7 percent at the end of 2014.
As for the coming year, Dieker foresees the Manchester/Nashua Office market remaining “steady” as office employment continues to stabilize and as “remaining vacant spaces left by consolidating tenants” are slowly absorbed “in the strengthening economy.”
On the Seacoast, White says the office market “will remain stable with vacancy rates declining throughout 2015.” But he adds: “Although this is welcome news for existing landlords, the lack of available space will become problematic for tenants in the market for space. With limited office supply, tenants may want to start site searches and evaluate the market well in advance, up to 12 months prior to lease terminations.”
As for the industrial market in both areas, the story is pretty much the same.
According to Mike Tamposi, vice president at CBRE/Manchester, there was “a continuation of slight decreases” in the vacancy rate, although there was a bright spot: the “strong demand for newly constructed, modern high-bay warehouse facilities over the older, less-efficient inventory.”
Tamposi writes that “much of the new construction is the result of an influx of new businesses, as well as current occupier expansions, taking initiative to create the additional space needs that do not currently exist in the market.”
On the Seacoast, writes Christian Stallkamp, an associate at CBRE/Portsmouth, “strong industrial sales and leasing activity on the Seacoast in 2014 was a direct result of the strengthening economy and a rise in business confidence.”
He adds that “this healthy transaction volume has diminished the availability of quality industrial product within the Seacoast market. Further, the recent lease of the former 500,000-square-foot Poland Springs facility in Seabrook to US Foods left the Seacoast void of any large industrial options north of 150,000 square feet.
As for his forecast for the Manchester-Nashua area, Tamposi writes, “As confidence in the economy grows and the unemployment rate continues to drop in the coming year, ongoing positive absorption in the Southern New Hampshire industrial market is expected. Demand will stay strong in and around Greater Nashua (Hudson and Merrimack), Bedford and Manchester, as well as Salem and Londonderry.”
On the Seacoast, writes Stallkamp, “with growing confidence in the economy, the 2015 forecast will stay consistent with that of 2014. The continued lack of inventory and available land surrounding the exits on the I-95 corridor will remain a challenge for companies seeking to remain or expand in the Seacoast.”
To see the full report, visit cbre.us.