Gourmetgiftbaskets.com warehouse facility, built by PROCON in Hooksett. Courtesy photo.
The industrial property at 55 Crown St. in Nashua had been for sale since 2017, with not much interest. “It’s a unique piece of property that’s been on the market for four years,” says Kathy DeMello, a real estate agent with Berkshire Hathaway in Londonderry, describing the 7.6-acre site with rail access and a 3,000-square-foot manufacturing building.
“We did have a few offers in that time, but as of the first of this year, my phone started ringing off the hook for that one. I showed it yesterday and expect an offer today,” she says. Even long-languishing industrial properties, like 55 Crown St., which will require asbestos cleanup, are being grabbed up at a record-setting pace in what is being described as a “red hot market” for industrial land and buildings.
COVID-19 has made winners and losers in the U.S. economy, and one of the apparent winners is the market for industrial space, particularly warehousing and logistics space. The shop-at-home phenomenon, already growing before the pandemic hit, has accelerated for warehouse space in ways no one could have predicted pre-COVID.
“Industrial has been one of the most resilient real estate sectors amid the COVID-19 crisis, buoyed by rising e-commerce demand,” according to the Coldwell Banker (CBRE) 2021 Real Estate Market Outlook. “This has put pressure on retailers, wholesalers and third-party logistics companies to reach consumers while lowering transportation costs.”
The National Association for Industrial and Office Parks is even more ebullient about the trend, reporting in late 2020 that 2021 could be a banner year for the not-so-sexy industrial market.
“Investing in industrial real estate is red hot as the continued growth of consumer online shopping drives the need for additional warehouse space,” according to the NAIOP report. “Industrial real estate—including plants, warehouses and distribution facilities—has been the investment ‘asset class of choice’ the past several years and demand is on the rise.”
“Absolutely Booming”
Recent headlines in the NH Union Leader drive home the point. A new cargo facility is planned for Manchester-Boston Regional Airport, while just up the highway, developers are proposing a massive distribution center on land off Interstate 93 in Hooksett.
Another developer is proposing a 595,000-square-foot distribution center and 150,000-square-foot warehouse/industrial building across the highway at 39 Hackett Hill Road, where Portland-based Shipyard Brewing is planning a $36 million brewing and packaging facility.
Then there’s the proposed Hudson Logistic Facility, with 363 loading docks in three separate buildings, on land that was once a golf course along the Merrimack River. Amazon will occupy most of the space.
“It’s absolutely booming,” says Jesele Zurell, marketing manager for the H.L. Turner Group, an architectural and engineering firm based in Concord.
A cleanroom designed by The H.L. Turner Group, incorporating mesh enclosures. Courtesy photo.
Paul Roy, director of business development for PROCON in Hooksett, is seeing a similar trend. The design-build firm, best known for its hotel projects, is also riding the warehouse wave. “We’re looking at some large industrial warehouses right now, going all the way up to a 42-foot clearance,” says Roy. “There’s a shortage of logistics centers in New Hampshire, especially with that type of clear height. We’re looking at half a million square feet in various projects, mostly in the southern tier of the state.”
Demand for Clean Rooms
It’s not just warehouse space that’s attracting so much interest. With economists predicting a strong economy in the near future, manufacturers of all sorts are trying to position themselves to take advantage of anticipated growth.
“We are seeing a lot of companies looking to start up or expand businesses in New Hampshire,” says Zurell. “We are seeing clients approach us about buildings they can use in manufacturing for the military, the high-tech sector and the automobile industry. There’s definitely been a lot of new interest this past year.”
Also related to the pandemic is the growing interest in clean rooms for industries that need a high level of control over air quality, dust and other contaminants.
“This would be the kind of thing needed for manufacturing of medical equipment or work on vaccines,” Zurell says . “It’s not an average building project. Lots of steps need to be taken. We specialize in this and are getting a lot of demand.”
There’s demand for smaller-scale industrial spaces as well, especially what DeMello calls “contractor bays.” Units at a development on Carl Drive in Manchester are selling like hotcakes, she says. They are about 1,200-1,500 square feet per unit, with office space in front, loading docks out back and work space in between. The well-appointed office areas and mezzanine, large overhead doors, drive-in bays and high-bay industrial spaces are popular with contractors. “If we had an inventory of those, they’d be flying off the shelves,” says DeMello.
However, home improvement projects are keeping many contractors busy. “Contractors are so busy now because people stuck home are wanting home improvements, and if they want to work from home, [they] are going to have to make some changes,” she says. “Available space for conversion to a home office,” is now a standard pitch in residential real estate ads.
Space Getting Scarce
The trend toward renewable energy is also contributing to the explosion of industrial-scale construction. The Turner Group recently completed a rooftop solar panel installation for the health sciences corporation, Millipore, at the company’s Bedford, Mass., manufacturing plant. It’s the largest commercial solar installation in the Bay State.
“We have a number of engineers on staff who are LEED [Leadership in Energy and Environmental Design] certified,” says Zurell, “so creating energy efficient systems in our projects is something we take into consideration in our design process.”
All this activity in the industrial real estate market is starting to eat up the available industrially zoned space, according to Matt Lefebvre, a commercial real estate agent with Elm Grove Realty in Manchester.
The Nashua Millyard, for example, which languished for years, has seen renewed interest with the completion of the Broad Street Parkway and is filling up. “Maybe not like the Manchester Millyard, where you’ve seen incredible growth in high-tech, education and medical, but you are seeing conversion in some of the last outliers of buildings there,” says Lefebvre.
“I looked at some space at 1 Chestnut St., a large structure in that area, and they are almost completely full with different businesses, either offices or industrial space,” he says.
A mill building at 88 Pine St. in Nashua, built in 1840, just sold to a Boston developer, and the former NIMCO building in Nashua is being eyed by the city for industrial redevelopment. Nashua’s Millyard District Development plan calls for the building to be “redeveloped to create a central place for entrepreneurship—an incubator for multiple businesses but with a focus on precision manufacturing, health-care technology, and software.”
Hot Spots
New Hampshire doesn’t have much industrial zoned space with municipal utilities and highway access. What exists is getting gobbled up fast, says DeMello. “The Nashua Millyard and Continental Boulevard in Merrimack … you’d usually be able to find something there for small manufacturing,” she says, “now it’s really slim pickings.”
With Pease Tradeport in Portsmouth practically built-out, the hot spot now is the area around the Manchester-Boston Regional Airport and Pettingill Road, where the town of Londonderry decided in 2014 to extend utilities and otherwise develop 1,000 acres of industrial land.
The new 142,000-square-foot distribution center for Bellavance Beverage Company at Pettengill Road is the sixth major tenant to sign on in the past five years, along with the UPS Northeast Logistics Center and FW Webb.
With this wave of new industrial construction comes a fresh look at industrial architecture, says Zurell. “It can be a big metal box if you want it to be, but we have many industrial clients today who want some curb appeal,” she says.
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