Results from 2024’s first-quarter reports show a mixed bag for New Hampshire’s real estate market: There’s too much office space to rent, too little residential housing for sale and a stabilizing trend for industrial/warehouse space.
The biggest news out of the reports was the fact that, in March, the last month of Q1 2024, the median price of a single-family home reached an historic $500,000. That helped push the single-family median price for Q1 to $475,000, an all-time high for a quarter and 10.5% more than Q1 2023.
That record trend continued into April, the first month of Q2, as the median price of a single-family home climbed another $15,000 to a new high of $515,000.
On the commercial side, there’s a continuing trend to higher vacancies in office buildings as companies figure out how to right-size their square footage needs in the post-COVID era of hybrid workplaces.
For industrial/warehouse space, the word is stabilization, according to a first-quarter analysis by Colliers International.
Kristie Russell — research manager for Colliers, the commercial real estate broker with offices in Portsmouth and Manchester — holds out hope that the office market, despite high vacancy rates, is also finding some stability.
“Over the last five years, many companies have closed or downsized their operations in New Hampshire, leading to a 5.8% increase in the vacancy rate. The Portsmouth submarket, historically a satellite location for national companies, saw an 11.3% jump in its vacancy rate since the onset of 2020, ending Q1 at 14.4%,” reported Russell.
Q1 2024 ended with a 13.3% vacancy rate in office space, down slightly from the Q4 2023 rate of 13.6% but notably higher than Q1 2023 when it was 10.6%.
“In the first quarter of 2024, the New Hampshire office market showed signs of stabilizing after a surge in vacancy rates in the fourth quarter of 2023,” said Russell.
Colliers looks at six submarkets: Concord, Manchester, Nashua, Salem, Portsmouth and Dover.
Dover topped the list with the highest office vacancy rate: 39.2% for Q1 2024. It was followed by Salem at 27.5%, Portsmouth and Nashua at 14.4%, Concord at 8.3% and Manchester at 6.5%.
Contrary to how a market usually works, the overall price of office space is rising, despite higher vacancy. Usually, when demand is low, prices are low.
“This vacancy and rent relationship deviates from a market’s typical behavior,” said Russell. She noted that the high-end space — the Class A space — is actually following the market trend with rental rates starting to fall, experiencing a decrease of 0.8% ($0.19 per square foot) year-over-year.
Overall, the office space rent stood at $16.93 per square foot NNN, known as triple net, where the tenant is responsible for all operating expenses associated with the property, including rent, utilities, insurance, maintenance and taxes.
The Portsmouth submarket had the highest rent rate at $25.83 per square foot, followed by Salem at $25.31, Manchester at $20.99, Concord at $20.49, Nashua at $19.37 and Dover at $16.93.
On the industrial/warehouse front, Russell said in a separate Q1 2024 report that vacancy rates “look to be balancing out.”
“The NH industrial market is undergoing a period of stabilization after experiencing significant changes in vacancy and rental rates in the last few years,” said Russell. “Now, as vacancy steadily increases due to factors like companies consolidating and new construction, rents continue to climb, albeit at a slower pace in recent quarters.”
According to Russell, Q1 2024 ended with an industrial/warehouse vacancy rate above 4%, which was the first time that rate has been above 3.7% since the start of 2021. She noted, too, this is the first quarter the percentage increase in rental rates in the market was not double digits, with a rise of 6.6% year-over-year.
Colliers data shows Portsmouth with the lowest industrial vacancy rate at 0.9%, followed by Manchester at 3%, Dover, at 3.6%, Nashua at 5.5%, Concord at 5.9% and Salem at 11.1%.
The Salem submarket had the highest rent at $13.30 per square foot, triple net, followed by Nashua at $13.20, Manchester at $12.76, Portsmouth at $12.61, Dover at $11.37 and Concord at $8.55.
The median price for a single-family home hit an all-time high of $500,000 in March only to be followed in April by a new high of $515,000.
The state’s affordability index followed a similar pattern. It finished the first quarter in March with a record low index of 59, followed by a new low of 56 in April. The index is based on 100, meaning an average earning family has exactly enough money to cover the cost of owning a median-priced home. The lower the index, the less affordable the real estate is.
“The problem remains the shortage of available housing that is continuing to make homeownership more difficult than ever for those workers needed to help an economy thrive,” NH Association of Realtors President Joanie McIntire said in a statement.
