Office Space in New Hampshire: A Shrinking Market
The amount of available office space in New Hampshire is shrinking and becoming more expensive to lease due to a lack of new construction and higher demand post-COVID.
“With demand holding up and little new space coming online, the market could keep tightening in the coming quarters,” said Kristie Russell of Colliers in her analysis of office market trends for Q3.
The iconic 24-story Brady Sullivan Plaza in Manchester, completed in 1972, now has an even split between office space and residential units.
Among her key findings:
- The state's office vacancy rate fell to 10.3% in Q3, down 3.1% from a year ago.
- Average asking rent rose to $22.28, up 1.7% from the previous year.
Two primary factors are shaping the market: workforce habits and new construction.
Workforce Dynamics:
New Hampshire is adapting to post-COVID work norms. After the remote work era, companies adopted a hybrid model, with employees alternating between home and office days. Some companies have since switched to full-time on-site work, like Fidelity in September. However, the hybrid model remains prevalent, impacting office space demands.
New Hampshire ranks fourth nationally for hybrid job postings, with 19% of positions offering hybrid work arrangements, according to Robert Half, a staffing services and consulting company.
Limited Supply:
The construction side of the market is also constrained. Only a few office projects have broken ground, with development paused while waiting for tenants. Conversions from other uses, like the former Liberty Mutual campus in Dover, into mixed-use lifestyle villages, are on hold but not off the table.
Commercial Industrial Market:
In contrast, the commercial industrial/warehouse market is stable. The statewide vacancy rate remains at 5.8%, with average rents rising 4.4% year-over-year to $11.79 NNN (triple net).
National Rankings:
New Hampshire ranks fifth best in the country for job opportunities, fourth for employment growth, seventh for unemployment rate (2.6%), 10th for median annual income ($112,100), and 17th for average workweek length.