Report finds more retail vacancies in southern N.H.

The retail vacancy rate in the region rose to 10.6 percent, a gain of 1.1 percent from the 9.5 percent vacancy rate in last year's study

The closing of three big box stores, the Daddy's Junky Music chain and numerous independent mom-and-pop shops all contributed to a higher vacancy rate in southern New Hampshire than there was at the same time last year.

That's the among the findings of a report released Wednesday by the Burlington, Mass.-based commercial real estate firm KeyPoint Partners LLC, which examined all the retail changes within 39 cities and towns in the southern part of the state in the 11 months between June 1, 2011 and April 30, 2012.

The study period did not include the opening of the Merrimack Premium Outlets, which the study's author, Bob Sheehan, noted would very likely be the leading story in next year's report.

During the study period, the retail vacancy rate in the region rose to 10.6 percent, a gain of 1.1 percent from the 9.5 percent vacancy rate in last year's study, according to the report. That amounts to an additional 269,000 square feet of empty space over last year.

All told, when factoring in the opening of new retail spaces, the region lost about 195,000 square feet of retail space.

While the increased vacancy rate is disappointing, the report said it's mostly attributable to the closing of a few big box stores — the 147,00-square-foot Lowe's in Manchester, the 86,500-square-foot Sears Essentials in Nashua, and the 74,200-square-foot Building 19 in Nashua.

While they had a major contribution to the increased vacancy rate, they weren't the only reason for the rise. The closings of independent mom-and-pops continued to be the primary reason for new vacancy in smaller store size categories. The report finds vacancy rates to be much higher for these smaller stores — 14.9 percent vacancy for stores of less than 2,500 square feet, and 14.7 percent for stores between 2,500 and 4,999 square feet.

'Path to recovery'

"Although it was not generally a very gratifying year for retailing in Southern New Hampshire, it was by no means a disaster. A vacancy rate increase is never a good thing, but at least the cause was weighted toward a few large big box closings, unlike the broad-based vacancies of the recent past," writes Sheehan, who is vice president of research for KeyPoint. "At the same time, small store vacancy remains a concern which may persist until the economic recovery gains more strength and more people are back to work."

The retailer that added the most square-footage over the last year was Market Basket, which continued its aggressive expansion into New Hampshire with the completion of two new locations in Londonderry and Manchester, adding 158,000 square feet during the period.

The second biggest addition of space was by Lord & Taylor, which opened a 124,000-square-foot store in the former Macy's space at The Mall at Rockingham Park in Salem.

Other notable big box additions to the region include the 90,600-square-foot Kohl's in Bedford; the 90,400 square-foot Dick's Sporting Goods in Nashua; the 83,500-square-foot Ashbrook Furniture, which filled the vacant Furniture World store in Nashua, a space that had been unoccupied since 2007; and the 65,800-square-foot Hobby Lobby, the arts and crafts superstore that opened its first New England location in a former Burlington Coat Factory unit in Manchester.

Other notable findings of the report:

  • Only midrange store size categories (between 10,000 and 49,999 square feet) showed improvedoccupancy. Vacancy in the 10,000-24,999 square-foot range decreased from 10.7 percent to 8.6 percent, while the 25,000-49,000 square foot segment improved from 9.9 percent to 9.1 percent.
  • Nashua, Manchester and Salem encompass 54 percent of the retail space in the region.
  • By adding three locations, Weight Watchers added the most locations of any retailer in the region during the period.
  • Several retailers added two net additional stores, including Chipotle Mexican Grill, White House Black Market, Francesca's Collection and CVS.
  • Only two retailers lost more than two stores during the year: Curves for Women closed four locations, and Daddy's Junky Music closed three.
  • Manchester and Merrimack had the highest vacancy rate, 16.7 percent, while Bedford had the lowest vacancy rate, 4.5 percent.

"Although the rise in the vacancy rate was a bit discouraging, there is a considerable share of encouraging news in the region. We shouldn't forget the relative strength of the regional economy either. New Hampshire is currently ranked fifth in the country with a seasonally adjusted unemployment rate of 5.0 percent in April 2012, the lowest it has been in the same month since 2008," writes Sheehan.

"To say there won't be any more bumps in the road may be a stretch, but retail in southern New Hampshire is clearly on the path to recovery."

He adds: "The long-term success of the industry depends largely on how well it adapts to the new world order of retailing, how it copes with ecommerce, and how it adjusts to the new frontier of social media. Let's hope the vibrant new retail cycle now underway in the region is not short-lived." 

Categories: Real Estate & Construction