Seacoast office market: the nuts and bolts.
The Seacoast New Hampshire office market encompasses just over 8 million square feet, with the Portsmouth and Pease submarkets representing 3.7 million square feet--roughly 45 percent of the entire Seacoast office market.
The Portsmouth and Pease submarkets continue to be where companies want to locate. This location offers tenants in the market three distinctly different choices for office space--downtown Portsmouth, Pease International Tradeport and the remaining suburban locations.
These subgroups break down into 876,214 square feet for downtown Portsmouth, 1,677,721 square feet at Pease Tradeport, and 1,153,138 square feet in the outlying suburban areas of Portsmouth.
At the end of 2011, the vacancy rate for these respective groups was surprisingly similar: downtown at 15 percent; Pease Tradeport at 14 percent; and suburban at 14 percent.
The downtown and suburban submarkets have seen slight improvement over 2010, when the downtown vacancy rate was 16 percent and the suburban market was 17 percent.
Pease Tradeport saw a slight increase, from 13 percent in 2010 to 14 percent at the end of 2011. This change is attributable to a few departures of Pease Tradeport tenants, specifically Powerspan from 100 International Drive and Bid2Win, which moved from 1 New Hampshire Ave to new waterfront space at 99 Bow St. in downtown Portsmouth. That building is the only new construction anywhere in the Seacoast that was completed in 2011.
There was an influx of new tenants in the Pease Tradeport market during 2011 including IAPP relocating from York, Maine; JSA Architects to 273 Corporate Drive from downtown Portsmouth; and Nisource, occupying space vacated by Powerspan at 100 International Drive
It appears that trends are moving toward significant absorption across all office market subgroups in 2012, with new requirements for large blocks of space coming from Liberty Mutual, SunLife, Willis and ManuLife, among others.
Further, with the growth of companies like FlexEnergy at the Pease Tradeport needing more office space, Global Relief Technologies has recently bad, led vacancy at 15 Rye St. at the Pease Tradeport. Additionally, with the planned conversion to residential of the newly purchased Cocheco Mill in Dover, we expect that more office tenants currently in the mill may look to migrate to availabilities in the Portsmouth/Pease Tradeport market.
Savvy landlords have been offering tenants in the market very desirable lease terms, including free rent and generous fit-up allowances. With lease rates at an all-time low, it is a great time for tenants to lock into long-term leases. Landlords can take advantage of the currently low interest rates and refinance their properties if they are fully leased with long-term tenants.
Expect to see significant absorption, as there are currently no new build-to-suit office projects on the horizon.
Margaret O'Brien is vice president of CBRE's Portsmouth office.
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|Title Annotation:||Commercial Outlook|
|Publication:||New Hampshire Business Review|
|Date:||Mar 23, 2012|
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