New Hampshire’s industrial market appears to be pausing before entering the next phase of the market cycle, with factors like interest rates, low unemployment, and increasing construction costs affecting growth. A recent survey found 16 proposed industrial projects totaling 4.8 million square feet in Southern NH waiting to be built, but construction has stalled due to weakening demand for high bay warehouse space. Market data suggests a slight downturn in 2025, with existing vacancy rates expected to rise slightly but remain around 6-7%, with rents staying at $11.50 to $12 per square foot.
Business consolidation, particularly due to New Hampshire’s aging demographic, is contributing to market softness. Small business owners are looking for exit strategies, leading to more available industrial space through mergers, retirements, and relocations. Portsmouth remains the strongest industrial market in the region, with low vacancy rates and increasing rents projected through 2028.
Overall, aside from Portsmouth, the industrial market is experiencing higher vacancy rates and slower rent growth. The pause in momentum from 2024 is expected to continue in 2025. Michael Harrington, principal of Harrington & Company, Manchester, NH, believes the market will see changes in industrial space availability and opportunities for buyers or tenants as consolidation and demographic shifts impact the market.
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