PORTSMOUTH — The commercial real estate sector on the New Hampshire Seacoast continues to be one the hottest in the state and in northern New England.
According to a recent market survey report by CBRE/New England, Portsmouth continues to be a strongly sought location. In the past few months, the national grocery retailer Trader Joe's announced it will open a new store in Newington, SIG Sauer is relocating its headquarters and manufacturing to Pease International Tradeport, and Kittery Trading Post just signed a major warehousing lease in Dover.
"There is more velocity in the market and more people in the market," said Margaret O'Brien, a vice president with CBRE in Portsmouth. "More people are bullish on the economy."
O'Brien represented the landlord in the Kittery Trading Post lease. Kittery Trading Post is moving out of the former Celestica facility at Pease (where SIG Sauer is moving in) and locating its warehousing operation at the former Textron facility (250,000 square feet) at Industrial Park Drive in Dover.
"More companies are expanding or relocating, and we are seeing an uptick in activity. They aren't sitting on the sidelines," O'Brien said.
"We're seeing the best activity we've seen in years," said Michael Kane of the Kane Company, which helped broker the SIG Sauer deal. "I think that deal (SIG Sauer) spoke volumes about the strength of the economy. People are clearly hiring; we are seeing (it) all across the real estate market, though it's less so in the retail sector."
The CBRE report had the Seacoast region/Interstate 95 corridor with an office vacancy rate in 2011 at 15.4 percent, down from 18.3 percent in 2010 and ahead of the national 16.2 percent average. It's been part of a continuing trend of greater activity in the downtown Portsmouth and suburban office markets.
"The Seacoast office market has recorded positive absorption for three consecutive years, signaling that it is continuing to experience a slow and steady recovery," the report stated.
O'Brien said Pease International Tradeport remains a popular but hard-to-fill location for prospective office tenants.
"There are still pockets of office space but we've seen locations like 273 Corporate Drive completely leased," she said. Even the downtown location at 99 Bow St. has been filled.
Despite the optimism, O'Brien said, there's still enough caution in the market that there hasn't been any overbuilding of office buildings, and strong credit tenants can still negotiate favorable lease packages, including improvements and lower long-term rental rates.
By far, the industrial market is the strongest with vacancy in the Seacoast region at 11 percent, which was down from 12 percent in 2010, and it continues to outperform the Greater Boston and national industrial markets.
The reasons for the resiliency noted by the CBRE report are a small market overall (16.2 million square feet), limited land for expansion and less dependency on large multinational companies.
O'Brien said that certain parts and locations of the industrial market are very tight "with vacancies starting to fill and fewer warehousing options available."
But not everything is filling up. Seabrook has seen its vacancy rate decrease some, but it's still at 36 percent. There are still larger, antiquated buildings that are expected to languish unless building upgrades (such as large docking bays, efficient layouts and new ceiling lights) are made.
O'Brien said he believes there will be continued demand for manufacturing and warehousing facilities that could lead to development in available land areas away from Interstate 95 (where available land is almost all developed) and more toward Route 101 Hampton to Exeter and the Spaulding turnpike Dover to Rochester areas.
Kane said Portsmouth remains a draw because of its location, which can draw from three states and the economic magnet that Pease International Tradeport has become.
Kane also cited the efforts of city leaders and planners in Portsmouth who have continued to invest in the city's infrastructure — with efforts such as the State Street project — despite budget challenges.
"All these little things add up, and these investments have paid huge dividends in making Portsmouth even more attractive to companies and people who want to love and live here," he said.
Source: http://www.seacoastonline.com/articles/20120611-BIZ-206110309
