Thursday, July 25, 2013

Southern New Hampshire Report Preview

The annual KeyPoint Report for Southern New Hampshire, based on our GRIID, isn’t quite ready for public consumption yet, but  we are able to share some of the key findings with you:

In Southern New Hampshire, in 2013, things are moving clearly in the right direction.

Vacancy: For starters, retail inventory in the region is up nearly 800,000 square feet from a year ago, a substantial 2.7% increase,  thanks in large part to the 410,000-square-foot Merrimack Premium Outlets coming on line in mid-2012. Better yet, retail vacancy in the region has been reduced by approximately 220,000 square feet, a 7.2% drop from the vacancy level last year. The number of vacant storefronts is down 8.1%, and the vacancy rate has declined from 10.6% in 2012 to a current level of 9.6%. As a result, there has been more than 1.0 million square feet of net absorption in the region.

Size Classifications: In assessing vacancy rates by store size, it was encouraging to see that - although rates are still much too high -  vacancy in smaller store sizes showed considerable improvement.  These smaller store vacancies have been the most troubling in recent years, with vacancy rates soaring into the mid to upper teens.  The most improvement occurred in the 2,500-4,999 square foot bracket where the vacancy rate declined by 300 basis points to a level of 11.4%. Among stores less than 2,500 square feet, vacancy dropped 200 basis points, resulting in a current rate of 15.0%. However, much of this vacancy is confined to the urban cores of the larger cities in Southern New Hampshire, particularly Manchester.

Somewhat surprising was the jump in vacancy in the 50,000-99,999 square foot classification. The increase can be explained entirely by two locations: A 117,800-square-foot Walmart store was only partially replaced by a 46,500 square foot Ocean State Job Lot in Derry, creating a 71,300 square foot vacancy.  In Nashua, Market Basket vacated a 52,400 square foot store. The Walmart and Market Basket vacancies were both the result of relocation to larger units.

Towns in the Study Area:

Town Rankings: There has been no change in the top ten largest regional markets.  Nashua continues to rank first with 6.2 million square feet of inventory. Manchester follows at 5.4 million square feet and Salem is a distant third at 3.9 million square feet. These are the only cities or towns in excess of 2.0 million square feet.

Towns with the highest vacancy rates in Southern New Hampshire also remain the same as last year. Manchester leads the pack while Londonderry moved into second place. In third place Derry, replaces Seabrook in the top five, all of which have double digit vacancy. The five healthiest markets in the region are the same as last year. With a 4.1% vacancy rate, Bedford is the top performer, followed again by Amherst, Salem, North Hampton and Milford.

Retailer Activity: Market Basket is the largest contributor to new retail inventory in Southern New Hampshire, adding 95,800 square feet. New stores in Bedford and Nashua, as well as the Seabrook expansion, were more than enough to offset two smaller store closings in Nashua. Ocean State job Lot entered Southern New Hampshire with its acquisition of the traditional Walmart store in Derry, partially occupying the building with a 46,500 square foot unit. Tractor Supply also was a growing retailer in the region, adding two stores in Plaistow and Brentwood, and an additional 38,200 square feet. The only retailers to add more than two new locations were Subway and Sleepy’s. Both added three stores.

A number of retailers no longer operate stores in the region. Most notably, Fashion Bug closed stores in Nashua, Derry, and Hudson, part of its companywide liquidation. H&M closed its only store in Southern New Hampshire, a 28,000 square foot unit in Salem. Mattress Giant is another retailer that vacated the region during the year; its three stores in Manchester, Nashua, and North Hampton were acquired by Sleepy’s.

The complete report contains much more detailed information on these categories and more, and features an updated, easy-to-read design. It will be available soon at KeyPointpartners.com. The KeyPoint Report for Eastern Massachusetts/Greater Boston is available now, and the KeyPoint Report for Greater Hartford, CT will follow a little later this year.


Bob Sheehan, Vice President of Research
BSheehan@KeyPointPartners.com

This report examines the retail real estate marketplace for Southern New Hampshire, with a focus on changes between May 2012 and June 2013. This report provides an analysis of changes in the region's retail activity and examines supply, vacancy, absorption, retailer activity, and market composition by store size and retail categories. The Southern New Hampshire market includes 39 cities and towns representing more than 835 square miles and approximately 553,900 permanent residents (42.0% of the state population).

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