Friday, July 27, 2018

Preview: Southern New Hampshire Report

While the 2018 KeyPoint Report for Southern New Hampshire, based on our proprietary  GRIID™ retail database, is in production, we will again share some of the early results:

Inventory and Vacancy Rate: The retail inventory in Southern New Hampshire included 29.8 million square feet in 2018, indicating no appreciable change from a year ago. Vacancy increased 41,200 square feet, equating to a vacancy rate of 9.3% compared to 9.1% last year. At the same time, the higher vacancy rate can be attributed to store closings involving just two retail firms, Toys R Us and Walmart. Toys R Us closed four namesake stores and two Babies R Us stores while Walmart closed two Sam’s Club units. Offsetting these store closings were store openings that filled a number of large format vacancies. Three vacant Sports Authority stores were, or will soon be, occupied by replacement tenants including HomeGoods and Sierra Trading Post in Nashua, Cost Plus World Market in Salem, and Guitar Center, Party City, and DSW in Manchester. BJ’s already opened in the vacant Sam’s Club in Manchester. A vacant Shaw’s anchored strip center in Merrimack is under redevelopment with Planet Fitness now open. Altitude Trampoline Park also will anchor this center, now known as Merrimack 360, and is expected to open later this summer.

Size Classifications: Although there was a modest uptick in vacancy in Southern New Hampshire in 2018, the good news is that the increase was confined to only two size classifications, 25,000-49,999 SF and 100,000-199,999 SF, which can be attributed to the same store closings noted above, Toys R Us, Babies R Us, and Sam’s Club. Vacancy rates in both categories rose by more than 200 basis points as a result. Encouraging this year is that the region experienced significant vacancy declines in all other size categories except 200,000+ SF which includes only one occupied tenant, the Walmart Supercenter in Amherst. The most improvement occurred in the 5,000-9,999 SF and the 50,000-99,999 SF brackets. Vacancy rates were lower in both segments by 130 basis points.
Regional Submarket Rankings: There has been no change in the top ten largest regional markets: Nashua continues to rank first with 6.4 million square feet of inventory; Manchester follows at 5.3 million square feet; and Salem is a distant third at 3.9 million square feet. Seabrook and Bedford follow with 2.0 million square feet and 1.5 million square feet, respectively.

Among towns with at least 500,000 square feet of retail space, Salem remains with the lowest vacancy rate at 6.0%, although up a bit from last year. Derry again is this year’s runner-up, coming in at 6.1%. Merrimack jumped up from 10th place to number three this year, resulting from the Merrimack 360 redevelopment project, eliminating nearly 78,000 square feet of vacancy including an unoccupied Shaw’s Supermarket.  Among towns with the highest vacancy rate, Seabrook moved up from 8th to take over the top spot with a vacancy rate of 16.3%, the Sam’s Club closing largely contributing to the rising figure. Londonderry remains in second place followed by Manchester, which dropped out the number one ranking from last year.

Retailer Activity: Retailers adding the most space in the region include BJ’s Wholesale Club, which back-filled the vacant Sam’s Club in Manchester, followed by Cardi’s Furniture and NH1 Motorplex Indoor Karting, with both filling vacant space at Seacoast Shopping Center in Seabrook. With respect to store count, Metro PCS added three units while Sbarro, Cabinet Depot, and Orangetheory Fitness tied for second with two additional locations. Sam’s Club, Toys R Us, and Babies R Us ranked highest in square footage contraction. Subway reduced its store count in the region by six units, followed by Toys R Us with its four closings. Teavana, Burger King, and Best Buy Mobile all closed three locations. 

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

This KeyPoint Report examines changes in supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories during the period from July 2017 to July 2018. The study area includes 39 cities and towns, representing more than 835 square miles and approximately 567,500 permanent residents (42% of the state population).

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