Christian Stallkamp / May 27, 2021
Originally featured in our 2021 Seacoast New Hampshire Market Outlook.
The Seacoast New Hampshire industrial market remains extremely tight, and this trend will continue for the foreseeable future even with the uncertainty of the COVID-19 pandemic. The 2020 year-end vacancy rate for industrial space in the Seacoast is 3.9%, dropping from 5.7% in 2019. This remarkably low vacancy rate leaves companies scrambling to renew their current space or look to relocate, which typically includes only one or two options, if any.
Companies relocating to the Seacoast are now forced to extend their search radiuses because of the lack of quality industrial product. However, a relocation that adds significant commute time to the business’s workforce creates a challenge for employee retention.
Due to the low availability, industrial rents in 2020 have increased throughout the Seacoast market. Industrial buildings that can support high-bay warehousing with clear heights exceeding 20 feet and have good access to Interstate 95 have seen more substantial increases in pricing per square foot than older-style buildings.
The Seacoast is experiencing several industry trends, all of which are putting additional pressure on the industrial market:
• Companies are increasing inventory across the board
in response to supply chain disruption as a result of
COVID. These companies are looking to expand their
footprints to handle the additional raw materials,
product, or inventory.
• Companies are looking to manufacture more in
the U.S. and are looking for suppliers that also
o This will lead to more advanced manufacturing
spaces and building requirements to handle
o This will also lead to the need for higher clear
heights and heavy power requirements for
• The surge in e-commerce and last-mile logistical
operations will result in:
o Retail companies continuing to grow online sales
o Continued growth for companies that support
large box retailers
• Increased demand from businesses in the life sciences
and medical sectors that have received government
grants and/or contracts, will:
o Increase manufacturing to meet demand
o New products will be manufactured
Challenges continue to exist for ground-up
industrial development in the Seacoast, creating
obstacles to reach price points that tenants are
willing to pay.
Examples of these challenges for development
along Interstate 95 are:
• Lack of industrial land with city water/sewer
• Cost of industrial land
• Cost of construction and raw materials
• High labor costs
Finding space available for sale or lease will continue to be a challenge in 2021 and beyond based on the current demand and pressure. Due to this lack of product, lease rates will continue to increase in all Seacoast towns. This will also hold true for sale prices that have increased by as much as 30-50% in just 4 years. The challenges faced along the I-95 corridor leaves new construction pricing on a level that has not been supported by tenants in previous years. I believe that with the continued lease rate increases for existing buildings, tenants will start to justify the higher new construction costs.
Contact Christian today:
Christian Stallkamp – Senior Broker