Modest recovery seen in southern N.H. retail market
2.7% gain in retail space recorded; vacancy rate falls to 9.6%
While the announced closure of 12 supermarkets around the state has been one of the biggest real estate stories in southern New Hampshire in 2013, the biggest retail story of 2012 was no doubt the opening of the Merrimack Premium Outlets, according to a report released this month by a Massachusetts-based commercial real estate firm.
“Southern New Hampshire received a double shot of retail love in 2013 — inventory was up and vacancy was down,” said Bob Sheehan, vice president of research for KeyPoint Partners of Burlington, Mass., which recently released its annual report on southern New Hampshire real estate.
The report examined supply, occupancy, absorption and retailer expansion and contraction for virtually every retail property in 39 cities and towns in the southern part of the state between June 2012 and 2013. The study area encompasses about 42 percent of the state population.
According to the report, the region gained nearly 800,000 square feet of retail space between 2012 and 2013 – a 2.7 percent increase from the previous year and the biggest increase since 2006. The gains were in large part attributable to the opening of the Merrimack Premium Outlets, which added 410,000 square feet to the region when they opened in June 2012 and became southern New Hampshire’s fifth-largest shopping center. Thanks to the outlets, Merrimack moved from ninth place to sixth place for towns by retail supply.
The report also found that the region’s vacancy rate declined 7.2 percent over that period, from 10.6 percent in 2012 to 9.6 percent in 2013. The city with the highest vacancy was Manchester, at 15.6 percent, compared with Bedford, which had the lowest vacancy rate, at 4.1 percent.
The retailer that added the most square footage in that period was — for the second year in a row — Market Basket, which is not all that surprising given its aggressive building spree in New Hampshire over the past several years.
The value grocer added 95,700 square feet in southern New Hampshire during the study period, which was actually down from the previous year, when it added 158,000 square feet. Market Basket now has nearly 1 million square feet of retail space in the state, the report found.
With help from Market Basket and the new Fresh Market in Bedford and Trader Joe’s in Nashua, grocers and food retailers added more square footage than any other retail category in 2013.
Department stores came in second, helped by the Bloomingdale’s and Saks Fifth Avenue Off Fifth outlets in Merrimack, Walmart’s relocation to a supercenter in Derry, and its replacement by Ocean State Job Lot, according to Sheehan.
Meanwhile, women’s retailers added the most stores by category, with 21 new women’s retailers opening up, mostly due to the Merrimack outlets.
By store count, though, Subway and Sleepy’s tied for expansion in the region, with each adding three stores between June 2012 and 2013. The new Sleepy’s locations were a result of its acquisition of Mattress Giant stores, the report found. Several other retailers – including Advance Auto, Jos. A. Bank, Tractor Supply and Sport Clips – added two locations between June 2012 and 2013.
Several brands exited the state altogether, including Fashion Bug – which vacated three stores in Hudson, Nashua and Derry as part of the shuttering of its 600 stores nationwide – and Ritz Camera, which topped the list of store closures in the state, with four store closings.
H&M also closed its only New Hampshire store, which was located in Salem. The report also noted Stop & Shop’s announcement that it was pulling out of New Hampshire, although it occurred after the study period.
Stores in the 5,000-to-9,999-square-foot range had the highest vacancy rate in the region during the study period, at 15.6 percent. Close behind were mom-and-pop shops of less than 2,500 square feet, which had a vacancy rate of 15 percent. Stores between 10,000 and 24,999 and 25,000 and 49,999 square feet had much lower vacancy rates, at 7.7 percent and 7.5 percent respectively.
“The opening of the Merrimack Premium Outlets has brought a spark to the region’s retail outlook, and we can be cautiously optimistic for recovery to continue through the coming year,” said Sheehan.