What The Results Of The NH Business Resiliency Survey Mean For Commercial Real Estate

In June, the University of New Hampshire Survey Center worked on behalf of the NH Small Business Development Center to conduct a survey of over 1,500 small businesses in New Hampshire. The survey was distributed through over 50 business organizations throughout the state, and the highlights can be found here https://www.nhsbdc.org/2020surveyresults. The questions asked in the survey were specific to the economy and COVID-19.  

We wanted to share our thoughts on the results, as it impacts commercial real estate.  Let us start with the more empirical data from the survey, as questions relating to a business owners belief or concern can be heavily swayed by many subjective items.

Employment is a key driver of real estate consumption. For office space, a full time employee will need 200 to 300 square feet of space in an office environment, though there is less of a clear correlation in the retail and industrial markets.  In February of this year a similar survey noted that all businesses in the data set averaged 22 employees, while the June survey resulted in 18. However, a positive sign is that the decline in employment was centered on only 40% of the businesses surveyed.

The suggestion from this correlates with the essential/non-essential data. Just over half of all of those surveyed were deemed non-essential. These were a wide range of retail, hospitality, and some service businesses.  It remains to be seen, but it appears that the steep decline in employment was centered on the non-essential businesses within the retail facing world. Largely speaking, office employment appears to remain steady. 

In addition to employment data, the survey also drew inference on businesses ability to meet their other commitments, such as paying rent. Close to half of all businesses surveyed claimed their revenue dropped by 50% or more. What is alarming is a majority of the businesses surveyed were unable to defer or modify any payments to vendors, such as landlords. Clearly this would create a huge imbalance that is not a surprise to anyone.

To reclaim these lost revenues, businesses sought new funds from various services to meet obligations.  Of the relief programs supplied by the Federal Government or the State, the Payroll Protection Program was utilized by 60% of all of the businesses, the Main Street Relief was used by about 40%, and the Economic Injury Disaster Loan was used by about 25%.  To get into the numbers, it appears that food service and hospitality were more likely to take out the EIDL Loans or the Main Street Relief Funds. These are the same businesses who were more likely to have their employees go onto unemployment while their businesses were deemed non-essential.

More subjectively, a majority of business owners feel that the NH Economy will recover within the year. But, business by business, there is concern about the forthcoming changes. A strong majority see work from home being a key focus of their business planning, along with changing a physical location. The data does not go into more specifics, but it is clear that we all are looking at ways to be more flexible with our space. It remains to be seen if this translates into a lower demand for office square footage.

Of note on the retail side would be that close to two thirds of all respondents see the need for curbside pickup and the same amount for delivery. In a practical sense, what will that mean for civil engineering moving forward? Do we need new lanes and parking spots to accommodate the quick in and quick out that these concepts demand?

The data is always to be taken for the snap shot it is. Commercial real estate is slow moving, as leases, purchases, and developments take time. It remains to be seen how these statistics will impact the details of the commercial real estate deal.

Major Changes Coming To Rental Property In New Hampshire On July 1st

Beginning on July 1 there will be major changes to the prior eviction stays in New Hampshire that were put in place through Executive Orders earlier in the pandemic. However, apartment tenants who have concerns about rent payment should be able to access the new $35M fund that will be set aside for assistance.

On the apartment rental side, throughout the pandemic there has been some concerns about payment of rent from both renters and landlords. While unemployment rates have risen to historical highs, renters without jobs have been concerned about payments. Offsetting these concerns has been an infusion of additional funds from the federal government to increase unemployment benefits. The net result has been that tenant defaults and rent contraction has yet to surface in a major way. However, with the expiration of the expanded unemployment benefits, there is concern of some folks losing their ability to pay.

The CARES Act, passed by Congress, also afforded each state with so called Flex Funds. New Hampshire’s share was $1.2B, and it has been used for various COVID related challenges. One recent announcement, was that Governor Sununu will be taking some of those funds and directing them to housing assistance:

“Governor Chris Sununu has authorized the allocation and expenditure of $35 million from the CARES Act Coronavirus Relief Fund (“flex funds”) to support families or individuals in need of housing assistance as a result of COVID-19. Of the allocated $35 million, $20 million will be initially expended, with $15 million being held in reserve, for rent stabilization and housing support.”

The goal of the program is to provide assistance for those folks who may not have the funds to pay, or may otherwise have back payments on their apartments that they may need to clear up. More on the fund can be found here: https://www.goferr.nh.gov/covid-expenditures/new-hampshire-housing-relief-program.

The goal is to have the funds and the distribution set up by July 1, which coincides with the reopening of evictions.

On March 17, the Governor announced that he was putting a freeze on evictions throughout the pandemic. While there were a narrow band that could move forward, non-payment evictions were stopped. As a practical matter, with the court system shut down, there was no channel for the process to go through. This stay on evictions was for all asset classes. Office, Industrial, Retail, and Apartments, were all collectively stayed on having evictions. As of July 1 this is being lifted as a result of Executive Order 51. More info on this can be found here: https://www.governor.nh.gov/sites/g/files/ehbemt336/files/documents/emergency-order-51.pdf

It is clear that the goal is to soften the concern of non-payment by providing some floor of support to those in need through the $35M flex funds, and dove tailing that with the lift on the eviction freeze. It is worth noting that many landlords and tenants on the commercial side have worked through payment plans, and the hope is that the landing this summer, for all asset classes, will be as soft as it can be.

Landlords and tenants alike should also take interest in the fact that the Executive Orders are not the only governing documents relating to evictions. As part of the CARES Act, the federal government did put a stay on evictions for certain federally backed mortgages on apartments. All parties should research accordingly.

July 1 is right around the corner, and it is very important for all parties to read about the funds, understand if there is appropriate access to them, and see how these new orders affect them, their families, and their businesses.

Contrasting Boston's Return to Work With New Hampshire's, And How It Could Affect The New Hampshire Office Market

On Memorial Day week, Boston City Mayor, Marty Walsh, announced the Return to Workplace Framework for Commercial Spaces the full details of which can be found here: (https://www.boston.gov/news/return-workplace-framework-commercial-spaces-boston).

Today we contrast this with the Stay at Home 2.0 initiative by New Hampshire Governor Chris Sununu and speculate what Massachusetts’ policy means for office space, particularly along the corridors to New Hampshire.

It is worth acknowledging by almost any standard, Massachusetts has been harder hit by COVID-19 than the Granite State.  Reopening standards and regulations surrounding masks and social distancing tend to be stronger in the Bay Stay. As it relates to office space in New Hampshire, the standards for the Universal Guidelines have been set by the corner office, and no additional local regulations have superseded it. However, to the South, there is a statewide standard for office space, and in this case the Mayor of Boston has added additional layers to that standard.

When the stay at home orders are lifted in New Hampshire, office employers and their staff who were previously “non-essential” can start going back to their bricks and sticks offices.  Currently, the regulations on these businesses are centered on the employees and employers, not the built environment. For example, the standards discuss temperature checks and Q&A with people entering the building.   Some in New Hampshire are receiving guidance from the Re-Opening Taskforce and then subsequent guidelines endorsed by the Governor that is more specific to that industry.  So, for example, hair stylists have specific standards that really apply to just their niche, and the task force has addressed this.

However, in Massachusetts the guidelines for office users are in place and very clear. When they reopen the State has stated that, “businesses and other organizations shall limit occupancy within their office space to no more than 25 percent of the maximum occupancy level.” Keep in mind, for standard office build out with mix of cubicles and hard offices, the average demand is 4 people per 1,000 square feet (sf).  That is a rule of thumb and you should consult your local code to check what is appropriate for your business. So, the standard would be 1 person for every 1,000 sf under the new reopening order.  

In addition, the statewide orders would ask for cubical barriers to be taller than a standing person, that common areas be reconfigured, and other broad based social distancing goals. Within Beantown, further restrictions are in place, such as requirements for elevator density, lobby and reception areas, as well as cafeterias. These guidelines are very specific.  As most of the office environment is multi tenanted in the city, the reading of these does create a challenge for both tenant and landlord as to the compliance.

While these specific standards for office space have not yet been released in New Hampshire, we do know that in both New Hampshire and Massachusetts there is a phased approach for these reopening’s. As metrics of COVID-19 improve (or god forbid worsen) the standards may change over time.

What will this mean for the office market moving forward in New Hampshire and Boston? Many have speculated, and we have commented, that there could be dramatic impact from COVID on the office leasing market. Some bloggers have stated that larger offices, with only 1 or 2 people per 1,000 sf, will be the new norm, and office demand will rise. While others have said that only a skeleton crew will go to offices, while most work from home, and office space will plummet. But these trends are too early to tell. The only clear piece of data is that for those employers who are looking to get back into their buildings, there is exploration of new office furniture such as the aforementioned taller cubicles.

However, in light of our headline, we should discuss what these guidelines will do to the cross border tenants. Estimates are around 80,000 people travel from New Hampshire to Massachusetts each day.   It is not out of the question to believe that regardless of what standards are created in New Hampshire, that some employers who see benefits of in person office space versus work from home may open satellite locations in New Hampshire, rather than have team members commute. 

In the long run, it will be curious to see if this speculation will play out on a broader scale in the office market, with more New Hampshire based satellites. The corollary would be in the residential real estate market, where there is speculation of a lasting impact on people leaving more densely populated areas to live in more rural environments. If this is true, would it not also follow that the same is true for employers and lessees of office space?

There is much that is speculation, and aside from anecdotal stories about which office users will be opening up when, it is too soon to predict long term trends. Until then we will watch the Stay at Home 2.0 orders as well as the subsequent phasing levels and see how tenants and landlords react.

How The Main Street Relief Fund Will Help New Hampshire's Small Businesses

There is more relief coming for small businesses in New Hampshire through the Governor’s Office for Emergency Relief and Recovery (GOFERR). The relief package was announced on Friday the 15^th of May, which is also the day the first applications could be made. Funding in the amount of $400 million of expenditure has been authorized to be given based upon needs. 

With the authorization of the CARES Act, Congress created waves of relief for individuals and businesses. At this point most of us are familiar with the acronyms of PPP (Paycheck Protection Program) and EIDL (Economic Disaster Relief); there were additional benefits to individuals such as the stimulus checks and expanded unemployment benefits. In addition the CARES Act created Coronavirus Relief Funds. These funds were to be given to each state to be used as the state sees fit.

According to the Treasury, the funds are “to provide ready funding to address unforeseen financial needs and risks created by the COVID-19 public health emergency”. In addition the federal government put up some rails on how the dollars could be spent. Some of that is still up for interpretation so we will leave that for another blog.

New Hampshire was given $1.2 Billion in flex funds, and $400 Million of it has been earmarked for small businesses under the Main Street Relief program. Our interpretation is that the small businesses of New Hampshire really made their cases. The PPP and the EIDLs were helpful. However, some of the benefits of those programs either have been slow to pass or could not be realized by the businesses as they have been all or partially closed during the qualifying period. Additionally, as was widely publicized, the PPP was a race to the application booth which created the need for the second round of funding. 

To put the amount of funding in context, in just New Hampshire the initial round of PPP loans covered some 11,000+ businesses and over $2 Billion dollars. This new Main Street Relief Program will be funded with roughly 20% of that amount. I never thought I would say that $400 Million may seem like limited funds, but it is so. As a result it appears that the State is adding qualifying language to their application process.

The PPP loans were first come first serve, and by and large had no liquidity test for approval. The Main Street Relief funds have two main differences. First, there is an open round of application. So long as you apply by May 29, 2020 you will be eligible. But it does not matter when in that two week period you apply. The second difference is that you must tell the State all of the additional funds you have received from the CARES Act. This presumably will allow them to prioritize the funds to small businesses that were left off of the carousel the last go around.  All of the various dates and detailed information can be found here (https://www.goferr.nh.gov/covid-expenditures/main-street-relief-fund).

From a real estate perspective there are a few items that are not clear, at least not yet. Are independent contractors as small businesses eligible for these funds? Are businesses that are otherwise holding companies for real estate eligible? Are the funds a loan, a grant or a blend? What can the funds be used for within the businesses? It will take time for these things to come to light, but in the meantime our advice is to review the application and make sure you are lined up prior to the May 29 deadline. 

Leases In The Time Of COVID-19

COVID-19 has had a giant impact on our way of life, though at his point that doesn’t need to really be said. But with every day that brings us a new normal that we have to adjust to, it also brings new repercussions. That is also true for the commercial real estate sector, particularly commercial real estate investors and users.

As more and more businesses begin to shut their doors to work from home, or because of government mandates, questions have begun to arise for both owners of commercial spaces and their tenants. The biggest question of all, “do tenants have a right to stop paying rent due to the coronavirus?” This is a complicated question, one that, depending on how long the pandemic lasts, might be answered by the state, if not federal, government.

The answer to the question is, in most cases, no. Whether a tenant has a right to stop paying rent due to “force majeure” or any other number of clauses is ultimately based upon the specific language and terms laid out in each specific lease agreement. This, though, does not take into consideration if a floor or entire building is closed down by either the property manager or owner. Before mandating a floor or building closure, landlords and property managers should carefully review all possible impacts that decision could have.

While the legalese of each specific lease will ultimately determine whether a tenant is required to pay rent, landlords and tenants should still review their leases to ensure they understand their rights in these unprecedented times. 

At the end of the day though, due to the stress that many tenants, especially those in retail and hospitality, will be feeling at this time, the government may see it fit to step in and take extraordinary measures to ensure that businesses and people survive the financial impacts of the pandemic. For multifamily owners and tenants there have already been discussions within government of suspending rent payments, and some states, including New Hampshire, have already suspended evictions. This is also inclusive of commercial evictions as well.

The most important thing for tenants and owners to do right now is open up communication channels to discuss issues both tenant and landlord face, and come up with creative solutions that benefit both parties. For example, relaxing enforcement of continuous operation covenants, or, if a tenant comes to a landlord needing rent relief, entering into short-term arrangements that provide partial base rent abatement.

While challenges do indeed lay ahead, they can be overcome. By understanding that we are all feeling financial and personal stress right now, and finding ways to work with each other, we can come to a common ground that is fair to both parties. Taking this approach in life, and in real estate, will make dealing with the effects of COVID-19 at least a little easier to handle.

COVID-19 and the Overall Real Estate Market

The COVID-19 Virus has made a giant impact on the health of people around the world. We encourage everyone to be vigilant and follow the guidelines in place to protect oneself. Not to minimize the health effect, these articles will be about COVID-19’s impact on real estate, which is our expertise. The stock and bond market is widely transparent on a minute by minute basis and we hope to provide a transparency into the real estate market.

What at first appeared to be a slow moving pandemic, snapped across our domestic world quickly to start the month of March.  Many of us faced choices on if our businesses would enforce work from home policies, and where our children would be educated and cared for during the school day.  These questions are still playing out and changing on a daily basis. 

The investment markets are in a state of flux. Stocks continue their up and down pace while investors try and get a sense of the next steps in the market. The same rapid movement cannot be said of the real estate market. By nature the real estate cycle is slower. It is a less liquid asset and it takes time to sell and have the market react to external factors. In place leases impact value, and those too take time and have long term. Finally the debt markets impact value, and again, that takes time to work through the system.

At our offices the reaction from users of commercial space have been mixed. Since the week of March 9, 2020 we have seen some folks pull back.  Some of them were expansion tenants, while others were user/buyers with new locations.  For each story of someone delaying plans there is another story of someone moving forward.

•         National users of space, with multiple leases expiring, continue their review to look at the longer picture on relocation choices. They are in the market.
•          Local users, with multiple businesses or divisions, are shifting their focus to those businesses less impacted by recent events that are in need of space. They are still in the market.

These examples may shift overtime, but they do illustrate the types of people who have businesses impacted by COVID-19, but remain in the market to find new lease space.

We will explore more of the investment real estate market over time, but the immediate reaction is, again, mixed. Some investors look at the dip in the stock market and assume that real estate should be at a discount as well, while others see a premium in the asset because of the volatility on Wall Street.  History has shown us that one week is too short of a time to take any meaningful conclusions away, because of the aforementioned speed of the real estate market. 

Certain sectors of the investment market will likely remain strong, such as those properties with apartments, grocers or medical practices. Services that are needed no matter the state of the economy. Additionally, the quality of the income stream is always important, but more so in this past week, as conversations regarding franchisee or franchisors signing of leases is becoming crucial.

This is the first of many articles we plan on distributing to our clients, customers and friends. We are all in this together, and we hope to empower you during this unprecedented time with our collective knowledge.

How Proposed Legislation Could Affect Commercial Real Estate In New Hampshire

Do you hear that? The sound of pencils scrawling new bills, Democrats and Republicans bickering, it must be a new legislative session!

And a new legislative session brings with it, well, new legislation. Some of which, if passed, will impact the commercial real estate sector in both positive and negative ways. Let’s take a look at some of the proposed bills that could affect the world of CRE.

But, before we get into the proposed bills and their effects, a little primer on the New Hampshire State Legislature.

New Hampshire, by far, has the largest legislative body in the United States at 400 State Representatives and 24 State Senators for a whopping total of 424 legislators. The next closest state is Pennsylvania with 253 legislators. New Hampshire’s legislative body is bigger than the legislative bodies of Canada, South Korea, and Australia. Yeah, chew on that for a bit.

Done chewing? Let’s continue, then.

An interesting part of New Hampshire’s legislative process, though not unique to the Granite State, is that all proposed bills get a public hearing. At the federal level the Speaker of the House or the President of the Senate has the power to table proposed bills, denying them from going to committee. While the leadership has authority in New Hampshire, every bill, no matter how odd, must get a public hearing. Though, most will inevitably fail.

Let’s move on from this Civics lesson and take a look at some of the proposed bills that could affect New Hampshire’s commercial real estate sector should they become laws.

The first bill we’re going to take a look at is House Bill 667(HB 667) which proposes that any property that has a well with new construction should have that well tested to ensure well water meets quality standards before a certificate of occupancy will be issued.

HB 667 is one of many proposed bills that deal with ground water, but one of the few that are focused on private wells. The bill comes as we continue to learn more about what PFOAs, PFASs and other contaminants mean to us as humans.

Presently, the state of New Hampshire has no authority to regulate a private well. So, for example, if I was selling my office building that had a well, and there were high nitrates in that well, and you were fine with that, we could go through with the sale and not have to worry about any governing body getting involved. Whereas if a public system was found to have high nitrates the city would have the owner shut the system down and cure it.

The way the proposed legislation would be enforced is through new construction upon certificate of occupancy. Meaning, if you were to build a new commercial property and the city came to inspect said property, and found that the well water did not meet state standards, the city would deny you a certificate of occupancy.

The issues with the bill don’t come from what it is trying to do, protect our drinking water, but from how the bill is currently written, as it introduces a whole new standard that didn’t exist before.

The more specific concern for commercial practitioners is that HB 667 is agnostic to property type. For properties zoned for daycares and restaurants it may make sense to have well water regulated. But for properties zoned industrial, which tend to have barely any water consumption, it may be unnecessary.

The next proposed legislation that we are going to look at is House Bill 561(HB 561) which would allow towns to create their own laws and zoning regulations that would prohibit formula businesses in certain zones. For those not familiar with the term, the bill describes a formula business as a food based franchise, like McDonald's or Starbucks.

The concern with HB 561 is that it allows the Planning Board or Zoning Board, whose main goal is the regulation of land use, to regulate a person’s business, branding, vendor chain and so forth.

While the intent behind the bill is to protect local, community-based businesses, what it fails to take into consideration is that a lot of these corporate, formula-based businesses are owned by local business owners who are just franchisees. So, while HB 561 would protect the mom and pop shops that we usually associate with local business, it would hurt non-traditional local business owners as well. For the moment HB 561 has been tabled, but it could be revived in another legislative session.

Access to affordable housing is very important to New Hampshire employers and their employees, and we consider it a commercial real estate issue. There are two bills concerning housing that we’ll look at. One, Senate Bill 15(SB 15), would require that on an annual basis, $5,000,000 in revenue derived from the Real Estate Transfer Tax (RETT) is allocated to the NH affordable housing fund. New Hampshire spends far fewer dollars than our neighboring states on affordable housing programs and has one of the highest costs of living in the country. Anything to bring that cost down and help retain workers is welcome.

The next is Senate Bill 306(SB 306). SB 306 would create a Housing Appeals Board to hear appeals of decisions of municipal land use boards. Currently, if a property owner wanted to appeal a decision made by a land use board they would have to appeal to the Superior Court which can be an expensive and time-consuming process.

SB 306 would create a three-member board made up of a lawyer, an engineer and another member of the public, appointed by the Supreme Court, all of whom would be required to have expertise in land use law or housing development. The board would be required to hear appeals within 90 days of filing and rule within 60 days after hearing the appeal.

This is fantastic for developers and homeowners as what currently can cost thousands of dollars in legal fees and wasted time can, if SB 306 is passed, be reduced to a $250 dollar filing fee and a roughly 180 day turnaround time for appeals. Time, as the old adage goes, is money, and money that could be used to create more housing opportunities for New Hampshire’s workforce. SB 306 is currently tabled in the Senate, so we will have to wait and see when it is brought back-up.

These are just a few of the proposed bills that could affect those in the commercial real estate sector. What are your opinions on the bills we talked about? We’d love to hear your opinions in the comments. And don’t forget to let your State Rep and State Senator know your opinions as well. There is still time to make your voice heard.

Investors Buying Office Space in Bedford NH

Bedford NH - NAI Norwood Group is pleased to announce two recent office sales in the Bedford NH market. 10 Chestnut Drive is a 13,690+/-sf two story office building off the busy Route 101 corridor comprised of a number of small, local businesses. According to the registry  of deeds it sold for $790,000. 116 South River Road Building B was a 7500+/-sf two story, steel framed, brick façade condo that sold in the prestigious Coldstream Office Park at 116 South River Road. According to the registry of deeds it sold for $870,000.

“It is clear that these sales are a testament that a Bedford business address continues to be highly desirable.” Noted Louise Norwood, Principal at the firm. “With so much new development in town, along with the low interest rates, the demand remains high.”

“Both of these assets were sold to investors.” Added Chris Norwood, President of the firm, “With an additional sale of a small condo unit earlier in the summer, this marks our third investment product sale in Bedford in the last 60 days. While the owner occupant market is strong, the proof is here that investors are still seeking sound real estate as diversification to their other investments.”

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 400+ offices and 7,000+ professionals, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

JOSEPH MENDOLA OF NAI NORWOOD GROUP SELLS PROFILE SELF STORAGE IN HOOKSETT, NH.

NAI Norwood group is pleased to announce the sale of Profile Self Storage at 180 Londonderry Road in Hooksett, NH. Joseph Mendola, Senior Advisor of NAI Norwood Group, represented the seller in this transaction and collaborated with the buyer. Mr. Mendola is also the Argus Self Storage Sales Network representative of Northern New England. Profile Self Storage closed this transaction on June 15, 2017.

This self-storage facility is a state of the art facility. It has 53,950 rentable square feet and 507 self-storage units and it also has a separate lot that is for storing 80 vehicles in phase one of this sale. The property also has a modern office building on the property that houses the self-storage office but also other businesses offices. The facility services the Greater Manchester-Hooksett-Auburn marketplace.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 400+ offices and 7,000+ professionals, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

Millennials are Changing the Face of Commercial Real Estate

Everyone is talking about millennials today. Economists, pundits, politicians and business people have all weighed in, as their generation became the largest proportion of the overall workforce in 2015.

What effect, if any, is this having on the commercial real estate market?

Many of the most significant effects are driven by this generation's dramatically different habits of work, play and travel. From alternative commutes to remote work, any business that employs millennials needs to address these factors and structure their organizations and real estate accordingly.

The rise of telecommuting

Simply put, millennials love telecommuting and working from home. Deloitte's 2016 Millennial Survey confirmed a few key insights about them:

●     43 percent of millennials currently have the ability to work from home.

●     75 percent would like to and think it would positively impact their productivity.

●     88 percent want the opportunity to work with flexible hours, starting and stopping on their own schedule.

The practical effect of this is a reduced need for office space on any given day. In some cases, employees will share desks or rotate freely through dynamic, open-plan offices. Senior millennials in executive positions are equally enthusiastic about this dynamic - according to Deloitte, 56 percent of those in this category enjoy the ability to work remotely and on a flexible schedule.

Moving forward, scaling up an enterprise and hiring new staff won't necessarily obligate a business to acquire the same square footage they might have needed before. 

New priorities for location and lifestyle

Just because millennials don't prioritize office space the same way, however, doesn't mean that CRE professionals can't market to them effectively. One of the biggest differences between them and previous generations is their decreased willingness to endure long commutes.

Millennials just aren't as car-centric as their parents in general - in fact, a study from the University of Michigan showed that only 60 percent of 18-year-olds now hold a driver's license, down from 80 percent in the 1980s. An analysis of millennials' driving habits versus those of Gen X and Gen Y by a professor at the University of North Carolina found that the reasons for this were varied, but a changing - and largely negative - view of cars was responsible for as much as half of the decrease in total driving miles.

As a result, many young people must be willing to compromise in other areas, including the neighborhoods they live in and the size of their houses and apartments. A business that seeks to hire a significant number of millennial employees should take these factors into account.

In addition, increasing use of mass transit changes the favored location for an office significantly. Spaces near major commuting and transport hub may continue to rise in value, while those located farther afield in places where commuting by car is the best option may see demand drop.

How to tackle these changes

It's time to break with some of the conventional wisdom of how to manage partnerships seeking office space and commercial real estate. Increasingly, these businesses will be staffed, managed or even owned by millennial entrepreneurs.

It's critical to understand your local geography and get a grip on how people are commuting, where they prefer to work and how far they're willing to go.

The market may be changing in several key areas, but that doesn't mean opportunities are going away - you just need to know where to look.  

Sarah Carson, Marketing Director

scarson@nainorwoodgroup.com 

NAI Norwood Group 

NAI Norwood Group Leases Space to Olympia Chimney Supply

Manchester NH – NAI Norwood Group is pleased to announce the lease of 17,000+ SF to Olympia Chimney Supply. Aron Brown, of NAI Norwood Group, represented the landlord and Colliers International represented the tenant.

Olympia Chimney Supply is now located on Faltin Drive in Manchester in a building that was formerly associated with the OSRAM Sylvania facility. Olympia Chimney Supply Inc. is a leading designer and manufacturer of chimney venting systems, liners and accessories. To read more about their new location in New Hampshire visit their website: http://www.olympiachimney.com/press-releases.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

NAI Norwood Group Wins CoStar Award

Bedford NH - NAI Norwood Group is pleased to receive the CoStar Power Broker Award for being a Top Sales Firm in 2016.

At the end of each year, CoStar tallies the commercial real estate sales and lease transactions that closed during the previous year to determine the winners of the CoStar Power Broker Awards in each market. These awards are presented to both the firms and individuals who closed the highest transaction volume in commercial property sales and leases in their respective markets throughout the year.

Congratulations to all of those that worked so hard last year to achieve this award.

To view all recipients please go to: http://costarpowerbrokers.com/power-broker-award-winners/

NAI Norwood Group Sells Office Condo Building in Bedford

Jeff Lessard

Bedford NH – NAI Norwood Group is pleased to announce the sale of 22 Eastman Drive in Bedford NH. Jeff Lessard and Jay Lee represented the seller of the four unit, 6000+/- SF office condo building. Acording to the Registry of Deeds the transaction was in the amount of $565,000 ($94.16/SF).

Jay Lee

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

22 Eastman Drive, Bedford NH

Southern New Hampshire Retail Highlights

Southern New Hampshire Retail Highlights Information is accurate as of Q4 2016:

Supply: 29.8M Sqft; Down from 29.9M in 2015

Absorption: -366,100 Sqft; Down from 283,300 Sqft in 2015

Vacancy Rate: Increased to 10.5%; 2015 vacancy rate was 9.6%

City/Town Ranks:  #1 Amount of Retail Space- Nashua

                                #1 Highest Occupancy-Salem

                                #1 Highest Vacancy Rate-Seabrook

Retailer Expansion by SQUARE FEET: #1-FitLab Fitness Club (86,400 Sqft.)

Retailer Expansion by NUMBER of STORES: #1-Mattress Firm/FitLab (5+ each)

Category Expansion by SQUARE FEET: #1-Grocery Stores (+76,300 Sqft)

Category Expansion by NUMBER OF STORES: #1- Medical/Dental Services (+6)

Summary: 

   

Category                                       2016                          2015                    %Change

Total Market Size (Sq ft)                29,830,500                29,939,900            -0.4%

Total Number Retail Properties      2100                          2100                       0.0%

Total Number Retail Est.                5300                          5400                       1.9%

Retail Store Avg Size                    5600sqft                     5600sqft                 0.0%

Total Market Vacancy Sqft             3,131,800                  2,875,100               8.9%

Vacant Stores                                779                           695                        12.1%

Vacancy Rate                                10.5%                       9.6%                        9.3%

The vacancy rate in the region increased from 9.6% in 2015 to 10.5% at the end of 2016, falling back to 2014 levels. However two-thirds of the increase in vacant square feet resulted from the closing of four (4) Sports Authority stores totaling 170,200 sq ft. Net absorption for the year was a negative 366,100 square feet.

Written by David DeLise, COO, NAI Norwood Group, ddelise@nainorwoodgroup.com

NAI Norwood Group Sells State Owned Property in Manchester

Manchester NH – NAI Norwood Group is pleased to announce the sale of 1234 River Road in Manchester, NH. The 2+/- acre parcel was formerly a State of New Hampshire owned parcel, subdivided off from the Sununu Youth Services Center. It was most recently used as office space for the State. Judy Niles-Simmons and Chris Norwood, both of NAI Norwood Group, represented the seller in this transaction. The buyer was represented by Will Kanteres of Kanteres Real Estate.  According to Planning Board meeting minutes, the buyer plans on renovating the space into a religious center for a variety of uses including services, classses, and counseling. The nearly 8,000 SF building sold for $625,500 on February 27^th according to the Registry of Deeds.

The sale of the former State owned Manchester building is one of several that Judy and Chris have completed over the last few years. They have worked closely with State departments such as the DOT, Administrative Services, and the New Hampshire Employment Security to sell the State’s surplus real estate.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

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Office Space For Sale or Lease - Suitable for Headquarters

Rare opportunity for a growing corporation to economically purchase its own headquarters with significant room for growth and existing tenants to off set expenses.

This building also has office space for lease. Please contact Brian O'Brien for more information at bobrien@nainorwoodgroup.com or 603-431-3001.

NTB Builds New Location in Nashua

NASHUA NH - NAI Norwood Group is pleased to announce the sale of 1.32+/- acres on Amherst Street in Nashua. NTB (National Tire and Battery) brought in their preferred developer to purchase the site with plans to build a new 7,000+ SF facility. John Hoben of NAI Norwood Group represented the buyer, and  Mike Tamposi represented the seller in this transaction. According to the Registry of Deeds the sale closed for $1,172,500. 

Through the NAI Global network,NTB was matched with John Hoben and NAI Norwood Group to assist them in growing their business in New Hampshire. John has been working with them directly for a few years and has completed several successful transactions.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

Commercial Real Estate in the Aftermath of the Election

By my count, the 2016 Presidential Election was a mind numbing 596 days and included over 20 different players. We are now down to one President-Elect and a fraction of that time to digest what that means for the United States. Of course the President-Elect was not the only party on the ballot, there were many more down ballot races that narrowed the balance of power in the US Senate and gave the Republicans control of the executive and legislature in Concord. With almost all of our federal election results in New Hampshire being decided by the slimmest of margins with both red and blue victories, I will wager that those reading this article have an equal chance at pleasure and frustration. And while there are many issues that are important in the State and throughout our Country, today’s discussion will focus on issues of concern for real estate, mostly commercial. Spoiler alert: No one has a clue what will happen to commercial real estate as a result of this election. 

At the top of the ticket there is a New York real estate broker President-Elect Donald Trump. He is a licensed broker, which begs the question: “What would it be like to sit through a continuing education course with him?” but I digress. For someone who has made his mark primarily in land, bricks and mortar, his campaign has been very quiet on anything relating to this sector.  The closest we got was in the second presidential debate where carried interest and depreciation were discussed.  While this may have been interesting for someone in my shoes, it really did not help us understand what a President Trump may do as far as changing any current taxation laws on the books.

In Donald Trump’s “Contract with the American Voter”, released in October, he calls for “massive tax reduction and simplification” and the lowering of the business rate from 35% to 15%. This is just one bullet out of twenty-eight and does not expand much further, so we are all guessing on what the details around “simplification” could mean.  In a Nov 10, 2016 Forbes article, Chief Economist for the National Association of Realtors described that he believes “trimming mortgage interest deductions [and] reducing property tax deductions”, could be on the table with a Trump presidency.  He also added the 1031 Like-Kind Exchange could be a focus, which allows owners to sell and exchange into a larger property, while deferring the taxes that would be owed at that time. I may even add a redesign of capital gains on investment property to this list.

All of this, in theory, makes sense.  Mortgage interest deduction on housing, capital gains shelter on primary homes, capital gain treatment for investors of real estate, keeping 1031 Exchanges as is, if removed could all total up to close to $1 trillion dollars per year to Uncle Sam.  However some of the key personnel in both the US House and the US Senate who have been pushing for reform of our tax code have retired.  Even if that challenge is overcome, there are plenty of objections from special interest groups, not just real estate that would push back.  For federal tax reform, there will be a push from the Republicans to reform.  If it comes, I expect: a cap on all deductions for personal returns or elimination of the “stepped up basis” at time of death for a 1031 exchange investment.

In Concord, it does not appear that there will be a tremendous shake up in the taxation of real estate or commercial real estate holdings.  What is of interest to owners and occupants of real estate is the Governor Elect’s energy plan.  For a typical office tenant, energy consumption can be around 10% to 20% of their overall occupancy costs.  For retail and industrial users, the costs are much higher as the Granite State consistently is in the top 10 highest costs of energy.  Chris Sununu’s plan calls for “increasing the availability of baseload power” and in effect increasing the supply to lower the cost.  It is not clear if this is the path that will succeed or another option will open up, but it is clear that our elected officials know this is on the minds of commercial real estate owners and users.

A major theme of the newly elected officials is deregulation.  President Elect Trump calls for two regulations to go away for every new one that is created.  In real estate speak at a federal level, it means that Republicans are sure to use their new power to change/modified/repeal all or portions of Dodd-Frank to free up lending.  The issue is such a priority that it sits in their party platform.  The theory behind reform is that this regulation used to reign in the mega banks and was akin to using a sledge hammer on a thumb tack for our local community banks.  Some local banks claim to have responded to Dodd-Frank regulation by shrinking their lines of business to avoid more costly regulatory requirements. It is almost certain that the Republicans in Washington will go after Dodd-Frank, what is unclear is how the lenders will respond to the change and will that change lead to more capital for real estate and business development.

Of more interest to occupants and owners of real estate is what the Federal Reserve will do with interest rates.  Even though the increase in rates does not have a linear effect on commercial property value, there is a correlation.  While December seems as likely a date as any for a raise to the interest rate, the Federal Reserve is in a no-win scenario, with any action or inaction likely portrayed as a political one.  However monetary policy typically likes stability prior to increase of rates.  With this election cycle being anything but stable, it would seem a drastic rate hike is unlikely but a steady climb over 2017 will be forth coming.  

What is clear is that as a result of the consolidation of power of the Republicans in both Concord and Washington, we are likely to see a good amount of action in the first quarter of 2017. But not even Carnac knows what that will eventually mean for the commercial real estate market.

Chris Norwood is a licensed real estate broker at NAI Norwood Group, Inc. a firm that focuses on commercial real estate sales, leasing and consulting. Chris has actively lobbied with the Realtors in Washington DC for the past six years. Chris sits on the Public Policy committee for both the NH Association of Realtors and the NH Commercial Investment Board of Realtors. He also sits on the Government Affairs Committee of the Manchester Chamber of Commerce.