New Hampshire’s office occupancy rate rose by 2.6% year-over-year, ending the first quarter at 91.2%. This market tightening was accompanied by a rental rate increase of $0.15 PSF, or 1% year-over-year, ending the quarter at $18.65 modified gross.
The Manchester submarket had one of the largest increases in occupancy rates with a 3.2% jump year-over-year, ending the quarter at 91.2%. The sale and then leaseback of 3000 Goffs Falls Road in Manchester significantly impacted the occupancy rate this quarter. The NH Business Finance Authority purchased the 193,000 SF property for $31.0M ($160.62 PSF) and will lease it to BAE Systems for 10 years allowing BAE Systems to continue its expansion in NH by entering the Manchester marketplace for the first time. This is the largest office transaction we have seen in well over 5 years.
Also in the Manchester submarket, a local investor acquired the Devine Millimet building at 111 Amherst Street. The 35,230 SF Class B office building sold for $12.95M ($367.58 PSF) in January.
One significant lease that occurred in the Manchester submarket involved the relocation of Sitecore from the Langer Place Mill to 1750 Elm Street. Sitecore, a web content management, multichannel marketing provider and automation software provider, had to relocate from Langer Place as part of Southern New Hampshire University’s move to the millyard building and its new parking garage. Sitecore will now occupy 10,545 SF in the tower at 1750 Elm.
The Concord submarket was another submarket with a positive occupancy rate, with a 4.4% rise, ending the quarter at 93.1%. With occupancy continuing to rise, it is no surprise that an investment group purchased two off-market office buildings in Concord in January. 5 Chenell Drive, a 59,840 SF Class A building, sold for $5.5M ($91.91 PSF) and 51-53 Regional Drive, a 38,700 SF Class B building, sold for $2.5M ($64.60 PSF).
Also in the Concord submarket, Merchants Fleet, a branch of Merchants Automotive, expanded its footprint with its 10-year 55,000 SF lease at 14 Central Park Drive in Hooksett. Merchants’ auto sales will remain at 1278 Hooksett Road and its office operations will relocate to Central Park Drive over the summer. The move will allow the company to expand and attract new employees.
The Salem submarket continues to have one of the lowest occupancy rates in the state at 85.89%, but a 22,000 SF office lease was entered into at 27 Northwestern Drive. Taymax, a franchisee of Planet Fitness, is moving its office space from 5 Industrial Way in Salem due to Scott Electronics, who purchased the building at the beginning of the year, taking over its space.
Also in Salem, Tiger Air Freight recently presented new construction plans to the Planning Board, proposing a 20,000 SF office/warehouse building on Manor Parkway. The company plans to occupy about 6,000 SF of office and warehouse space, and the remaining 14,000 SF of office space will be available for lease.
The Portsmouth submarket continues to have the highest occupancy rate, ending the first quarter at 94.3%. With the market’s occupancy remaining high, it is not a surprise to see investment sale occurring in the submarket. The Kane Company acquired this 69,000 SF Class A building at 1 Liberty Lane in Hampton for $2.435M ($35.29 PSF) in March. This multitenant building had only 300 SF vacant, but with its large amount of common area space the sale price was lower than what we are typically seeing.
Also in the Portsmouth submarket, Medtronics Transformative Solutions announced it will be closing its 46,000 SF building at 190 International Drive at Pease be the end of the year. With a high occupancy in the submarket, it will be interesting to see how long the building will stay on the market.