Thursday, June 27, 2019

Preview: KeyPoint Report forSouthern NH 2019

While the 2019 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 29.9 million square feet in 2019, indicating a modest increase of 107,800 square feet from a year ago. However, vacancy rose by 130,600 square feet, increasing the vacancy rate to 9.7% from 9.3% last year. The closings of two Sears stores in Manchester and Salem, as well as a Walmart store in Bedford, are largely responsible. Staples also closed one of its two stores in Nashua, while Mattress Firm vacated four stores. Offsetting these vacancies were new stores that now occupy a number of former large vacancies. Ocean State Job Lot moved into a vacant Toy R Us box in Salem, while Bed Bath & Beyond joined Boston Interiors in occupying the former Hannaford store. XtremeCraze, a trampoline and laser tag entertainment venue, opened in the former TJMaxx store at Apple Tree Mall in Londonderry, which had been vacant since 2016. Another backfill occurred in Nashua where HomeGoods and Sierra Trading Post, its first store in New Hampshire, opened in a vacant Sports Authority store.

Size Classifications: Although the vacancy rate in Southern New Hampshire ticked upward this year, there was one size classification that showed remarkable improvement and that was the 25,000-49,999 SF segment, declining from a vacancy rate of 14.1% to 10.9% this year. Much of that was attributed to the large format backfilling of vacant stores such as Toys R Us, Sports Authority, and TJMaxx mentioned above. The 10,000-24,999 SF classification also made significant improvement. Conversely, the 100,000-199,999 SF segment was hit hard by department store closings, resulting in a rise in the vacancy rate from 2.5% to 6.8%. The 5,000-9,999 SF size range was the only other size bracket that was adversely impacted by more than 100 basis points.

Regional Submarket Rankings: There has been no change in the top ten largest regional markets for the second year in a row: 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 the lowest in vacancy rate for the third consecutive year at 6.0%, the same as last year. Derry is a runner-up for the third straight year, coming in at 6.1%. Merrimack remained in third place again this year at 6.5%. The Merrimack 360 project in Merrimack, a 67,300 square foot redevelopment of the former Shaw’s anchored shopping center, which had partially opened last year, is nearing full occupancy.

Among towns with the highest vacancy rate, Seabrook remained in the top spot with a vacancy rate of 16.3%; the Sam’s Club vacancy was largely to blame for the high level. Bedford jumped from 10th to 2nd place on the heels of the Walmart closing. Manchester remains in third place at 12.1%.

Retailer Activity: With respect to expansion by store count, no retailer added more than two stores in the region this year; in fact, there were only two that added that many: Verizon Wireless and California Burritos. D’Angelo’s closed six sandwich shops. Payless ShoeSource closed five stores following its announcement to liquidate. Mattress Firm closed four stores.

Expanding the most by square footage was Ocean State Job Lot, which took over the former Toys R Us unit in Salem. Bed Bath & Beyond followed by filling the remainder of the vacant Hannaford store in Bedford. Core Medical Group, a medical staffing agency, came in third, opening as an anchor to The Shoppes at 655 South Willow, a new mixed-use project located on the site of a former manufacturing plant in Manchester. Sears heads the list in space contraction after closing two stores in Manchester and Salem. Walmart is next on the list, vacating a store in Bedford. Staples was third following the closing of its Amherst Street store in Nashua.

Expect to see a lot more on the Southern New Hampshire retail market when we publish the 2019 KeyPoint Report later in July!

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

The KeyPoint Report for Southern New Hampshire examines changes in supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories during the period from July 2018 through June 2019. The study area includes 39 cities and towns, representing more than 835 square miles and approximately 567,600 permanent residents (42% of the state population).

The 2019 KeyPoint Report for Eastern MA/Greater Boston is available now at KeyPointPartners.com.
The report for Greater Hartford, CT will follow soon.

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