With each new year, our brokerage teams closely evaluate their markets and critically assess the use, quality, and amenities of each property. This thorough reevaluation led to a recategorization of a portion of both office and industrial buildings. For example, moving a Class A building into the Class B category. It also contributed to the removal of buildings if the use changed, for instance, from office to medical.
During the first quarter, office vacancy rates throughout the submarkets continued to drop, with the Portsmouth market remaining the lowest in the state at 4.78%. Throughout the market, average asking lease rates steadily increased to $18.35 full gross, with Class A rising to $22.02 full gross.
This trend was particularly true in markets that have strengthened, like the Nashua and Manchester submarkets. In Nashua, a confidential tenant subleased 14,000± SF at 10 Tara Boulevard and Londonderry School District took the remaining 11,000± SF of first generation office space on the main floor at 6 Kitty Hawk Landing in Londonderry.
The Concord submarket, on the other hand, saw mixed results. Overall rents in the capital city fell below average, despite its Class A rates being second highest market-wide. The lack of available Class A inventory supports this high asking rate. However, the lack of inventory may be due to the small Class A market when compared to other submarkets. Concord has 545,000± SF of Class A space, but only 23,000± SF available, equating to a 4.32% vacancy.
We see a similar trend in Portsmouth, with 4.4% vacancy in Class A buildings. There is just over 86,000 SF available in a market with an inventory of 1.97± million SF. Again, the demand for Class A space in the market continues to promote an above average lease rate.
In the Salem submarket, the Class A vacancy is dropping, yet still remains the highest market-wide at 17.93% (81,688± SF). Interestingly, rents are just above the average. This anomaly may be due to the submarket’s location. Our Boston Colliers office is reporting a year-over-year rent increase of 5.2% in their suburban market. Despite the above average rents in the Salem market, when compared to the Boston suburban market rents, New Hampshire rents seem low. This could be enough of an incentive for tenants to choose New Hampshire and potentially explains why Salem’s rents are just behind Portsmouth.At Colliers International | New Hampshire, we internally track over 19 million SF of office space, including only buildings larger than 10,000 SF, across six New Hampshire submarkets. These buildings can be multitenant, single tenant, or owner occupied and are classified as Class A, B, or C.