Commercial real estate has a long lead-time from conception to finished building, so just as in sports, you want to make the pass to where your teammates will be, not where they are. So where will the commercial real estate action be in two to three years? In harder to build areas. As the “low hanging fruit” continues to disappear, many well located development sites come with challenges, including ledges, wetlands and traffic issues.
Municipal sewer and water is often taken for granted, but many NH communities do not have the sewer and water infrastructure to support a large commercial development. The town of Bow’s decision to fund and expand its municipal water infrastructure allowed for the development of the 250,000-square-foot NH Liquor Warehouse in 2014. Many NH towns do not have sewer and water infrastructure to support this kind of development.
New Development Heats Up
The large developments we are seeing in 2015 will create increased activity in areas that have remained just outside the range of feasibility to justify new development. These projects are scattered around the state as highlighted below and may be worth watching for those interested in being ahead of the curve for 2017 and 2018.
Bedford: The new Whole Foods development that took several years to get off the ground will bring increased traffic and exposure to South River Road. All of that increased traffic and consumer dollars will be traveling by the lighted intersection at the undeveloped 15-acre Kilton Road site. With the 323,000-square-foot/24-acre Bedford Farms office park and Lexus dealership across the Street, the additional traffic on Kilton Road will provide the impetus to make a large Kilton Road project feasible.
Traffic has also increased further south on South River Road near the new airport entrance, which is bringing more viability to the 13-acre Bedford Landing development site (current Coastal Lumber site) and the 30-acre site at 400 South River Road. The planned increase in activity and continued strong demand for medical office space has justified the construction of a new medical and financial services building at 262 South River Road.
This 20,000-square-foot medical and financial services building is 50 percent pre-leased and will be breaking ground in summer 2015. The building will be developed by Sullivan Construction and incorporate many sustainable construction components including energy efficient lighting. With these three sites strategically located between the new airport entrance and Whole Foods, their time has come for development.
Manchester: Wherever there is a Walmart, there are lots of customers, and wherever there was a Walmart there is a lot of commercial space. As Walmart moves to Gold Street, the bidding will ensue for both its current location on Keller Street and for commercially zoned properties along Gold Street and John Devine Avenue. Any previously underutilized sites in this new area of activity will be reenergized with the new Walmart traffic.
Nashua: The John J. Flatley Company, a major developer in Nashua, is once again breathing new life into the southern part of the city. Flatley unveiled plans to develop 400 acres bordering the F.E. Everett Turnpike between Exits 1 and 2, the last major land parcel in the city of Nashua. Known as Gateway Hills, this mixed use site will be comprised of upscale apartments, retail, medical offices, research and industrial buildings, technology space and walking trails. Plans for vegetable gardens and a rebranded fitness center will balance out this innovative environment. This new development will increase demand for convenience retail and services in the South Nashua corridor.
Salem Exit 2: The widening work continues on Interstate 93 from the Massachusetts border north, and after many years of construction, it looks like 2015 or 2016 will be the year of completion for the Exit 2 area in Salem. With increased capacity, the commercial development has already intensified just west of I-93 with the completion of the new 33,000-square-foot office building at 21 Keewaydin Drive and a planned 135,000-square-foot office building at 6 Industrial Way. To the east, the excess land at 9 Northeastern Boulevard is the site of a planned 300,000-square-foot office building. The new and expanded Exit 2 I-93 interchange will provide improved traffic flow and capacity to both the east and west of Exit 2.
Salem Exit 1: The sale of 50 acres at Rockingham Park to Tuscan Village entrepreneur Joe Faro has turned many skeptics more positive that this prime development site will finally get underway. While plans are still in development, many are confident that Faro will bring the same long-term vision and progressive thinking to this area as was implemented at the Salem Depot area at Broadway and Main Street in downtown Salem. With or without an adjacent casino/gambling component, the 50-acre site will provide its own economic engine when combined with the adjacent Rockingham Mall complex at Exit 1.
Seabrook: The interchange at Exit 1 on Interstate 95 was expanded in advance of the increased traffic for the new Walmart at the 380,000-square-foot development at Seabrook Commons. Walmart has moved less than a mile north on Lafayette Road to Seabrook Commons, which is putting the spotlight on ancillary development sites near this new center of activity. Next door, the 175,000-square-foot Seabrook Crossing will open late this year. Half a mile north, the 13-acre former Faro Gardens site is for sale. With more than 700 feet of frontage on Route 1, this development opportunity is receiving attention as the development focus shifts north to the Seabrook-Hampton Falls line.
Seacoast: The Portsmouth area is always hot, and the successful development of Portwalk is bringing even more hotel guests and year-round residents to downtown. The increased commercial activity emanating from this successful development will continue to advance opportunities in the downtown area.
What’s Cold
Except for Salem, the demand for new office space continues to struggle in the face of more efficient office use and downsizing of large office users. Many businesses have been reducing their footprint dramatically over the past few years. Case in point: the 330,000 square feet of Manchester office space left vacant after the 2014 downsizing of Citizens Bank and Anthem remains 100 percent vacant as we reach the mid-point of 2015.
Roger Dieker is first vice president of CBRE|New England in Manchester. He can be reach at 603-792-2604 or at cbre.us/o/manchester
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