NH CIBOR president’s message: Statistical update - by Joe Friedman

Here’s a statistical update on the commercial real estate markets in in the U.S. and the metro market of Manchester.

Nationally, office occupancy fell by 2.3 million s/f compared to 3 months ago, after rising in the second quarter. From 2020 Q2 to date, 131.4 million s/f of office space has become unoccupied. The vacancy rate is at 12.6%. The average asking rent is down by 0.5%. 139.8 million s/f is under construction, equivalent to 1.7% of the current office inventory. Some of the ongoing construction will add to vacant space so expect vacancy rates to remain over 10% in 2022. Cap rates decreased to 6.8%. In New Hampshire the vacancy rate was 9.8% on an inventory of 19.62 million s/f. In the last 12 months there was 90,111 s/f of leasing and minus 345,471 s/f of absorption.  Cap rates average 8.7%

In the national industrial market, occupancy increased by 125 million s/f compared to three months ago, with a total of 670 million s/f of industrial space absorbed since 2020 Q2. The vacancy rate has fallen to 4.4%, the lowest rate among the core commercial markets. The average asking rent per s/f rose 7.2%. The acceleration of e-commerce sales is bolstering the demand for industrial warehouses and distribution centers. 449.5 million s/f is under construction, equivalent to 2.6% of current inventory. Cap rates rose to 6.7% (7.1% in 2020 Q1). In New Hampshire the vacancy rate was 5.9% on an inventory of 42.6 million s/f. In the last 12 months there was 587,985 s/f of leasing and minus 62,973 s/f of absorption. Average asking rents increased 7.3% to $8.90 per s/f. There are 327,318 s/f under construction. Cap rates average 5.7%.

Nationally in the retail property market, 15.1 million s/f became occupied compared to three months ago, with total net absorption of 47.1 million s/f since 2020 Q2. The vacancy rate is at 4.7%. The average asking rent rose 2.5%. There are 50.1 million s/f under construction, down from 60.8 million in 2020 Q1. This is just 0.4% of the inventory of retail space. Cap rates dropped to 6%. In New Hampshire the vacancy rate was 2.5% on an inventory of 28.73 million s/f. In the last 12 months there was 131,639 s/f of leasing and 405,498 s/f of absorption.  Average asking rents increased 0.4% to $17.30 per s/f.

Nationally, multifamily asking rents continue to soar, rising to 11.4% year-over-year, a new high for rent growth. Occupancy increased by 101,223 units compared to three months ago, with a total increase in units occupied by 1.05 million units since 2020 Q2. The vacancy rate is at 4.6% (6.7% in 2020 Q1). As of 2021 Q3, there were 644,690 apartment units under construction, equivalent to 3.6% of the current inventory of apartment units. However, the level of units under construction is down from 719,272 units in 2020 Q1 (pre-pandemic). Cap rates rose to 5.2%.

This information is from the National Association of Realtors (“NAR”) and their chief economist Lawrence Yun. The NAR includes the greater Nashua market as part of the Boston-Cambridge market. Overall, the Boston-Cambridge market is even stronger than New Hampshire.  More detailed information can be found on NAR’s website.

Joe Friedman is the 2021 president of NH CIBOR, Bedford, NH and is the founder of Skyline Realty, Durham, NH.