What New Hampshire's Commercial Market Reveals About Regional Real Estate Trends

Written by:

Steve Marcinuk

Date:

02 May 2026

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After more than three decades working across New Hampshire’s seacoast and southern commercial real estate markets, David Choate, Executive Vice President at Colliers International, offers a ground-level view of a region quietly shaped by tax advantages, proximity to Boston, and steady demographic shifts. New Hampshire’s appeal runs deeper than headlines suggest — a state of roughly one million people that punches above its weight by offering an accessible state government, a highly educated workforce, and an unmatched quality of life defined by seashore, mountains, and lakes all within a short drive of one another. These qualities have made it a consistent draw for CEOs and business owners seeking an alternative to the high-tax, high-cost environments of Massachusetts and New York — and where the CEO goes, the company often follows.

In this market update, Choate breaks down the forces driving record-low industrial vacancy, early signs of office recovery, surging multi-family demand, and the long-term growth of healthcare real estate across southern New Hampshire. He also reflects on the headwinds now giving investors pause — from tariff disruptions rippling through small businesses to broader economic uncertainty shaping a cautious wait-and-see posture across the region.

Market Fundamentals

New Hampshire’s commercial real estate market runs on a different engine than larger Sun Belt or gateway cities. No sales or income tax, reasonable business taxes, and proximity to Boston have made it a steady destination for businesses and individuals relocating from Massachusetts — a trend accelerated by the state’s millionaire’s tax. The state’s accessible government means companies can engage directly at the highest levels, a meaningful advantage for businesses weighing a relocation.

However, real constraints temper that growth. High energy costs and limited water and sewer infrastructure — largely confined to the state’s 13 cities — have kept southern New Hampshire from attracting the large-scale distribution centers and data campuses that dominate industrial headlines in other markets. The state’s position at the end of major transportation networks adds another layer of friction for companies weighing a relocation.

The result is a market that grows steadily rather than dramatically, with fundamentals that reward patience over speculation.

Industrial Vacancy Hits Record Lows

Industrial space across southern New Hampshire is as tight as it has been in recent memory, with vacancy rates sitting below 5% in most submarkets and demand showing no signs of softening. Recent leasing activity has drawn healthcare and distribution users, with HCA Healthcare and Georgia Pacific both occupying space within a single 110,000-square-foot building.

One of the most telling demand signals is the appetite for small contractor-bay space — multi-tenant industrial buildings of around 20,000 square feet divided into 2,000-square-foot units, suited for electricians, landscapers, and small trade businesses outgrowing residential settings.

The challenge is that building these properties is difficult to pencil out. Land is scarce, and construction costs remain elevated. The rents required to make development viable often exceed what small tenants can afford — leaving a significant demand gap that the market has yet to fill.

Office Market Shows Early Recovery

Southern New Hampshire’s office market is beginning to show signs of life after years of pandemic-driven vacancy. Leasing activity has picked up noticeably over the past year, with return-to-office mandates — particularly those requiring employees to be in the office at least three days a week — credited as a key driver.

The seacoast submarket, however, carries a structural burden unique to the region. The redevelopment of Pease Air Force Base added several million square feet of office inventory to the market, and that legacy supply continues to weigh on vacancy figures today.

Some developers are responding by pivoting toward residential conversion, repositioning underperforming office buildings as multifamily housing — a trend driven in equal measure by southern New Hampshire’s chronic affordable housing shortage.

Multi-Family Demand Exceeds Supply

Investor appetite in southern New Hampshire points clearly in one direction. If you asked ten investors what they are looking for, nine would say multi-family — but finding it is another matter.

The inventory of available multi-family assets is thin, and the scarcity is partly self-reinforcing. Owners of well-leased, income-producing properties have little incentive to sell when 1031 exchange options are limited by the same tight inventory constraining buyers, making it difficult to justify triggering a capital gains event without a suitable replacement property in sight.

The result is a market where buyer demand is genuine and well-capitalized, but transaction volume remains constrained by a shortage of willing sellers. Most buyers are targeting cap rates in the seven to eight percent range, given current lending costs, though whether sellers have fully adjusted their pricing expectations depends heavily on individual motivation.

Healthcare Drives Long-Term Growth

Healthcare real estate has quietly become one of the most reliable drivers of demand in southern New Hampshire. New Hampshire is an aging state, and that demographic reality is translating into sustained demand for medical offices, assisted living facilities, memory care centers, and hospice properties across the region.

Hospital affiliations linking local providers to major Boston health systems are accelerating the trend. Portsmouth’s hospital now operates as part of HCA, and Exeter Hospital has aligned with Beth Israel Lahey Health — bringing outside capital and expanding healthcare delivery across the region.

From primary care practices to retirement communities, healthcare is shaping up to be one of southern New Hampshire’s most durable long-term growth sectors.

Shaped by Uncertainty

Beyond the sector-by-sector dynamics, Choate points to a broader shift in market sentiment as 2026 unfolds. Tariffs have already hit some small businesses hard, with companies that relied on imported goods facing sudden cost increases that have forced painful operational decisions. Combined with lingering questions about interest rates, fuel costs, and the broader direction of the economy, many investors and tenants are adopting a wait-and-see posture — willing to move, but cautious about timing.

It is a mood that fits the New Hampshire market well. A region that has always grown steadily rather than dramatically is perhaps better positioned than most to weather a period of uncertainty — and to reward, once again, those willing to be patient.

About the Expert: David Choate is Executive Vice President at Colliers International, where he has spent more than three decades working across New Hampshire’s seacoast and southern commercial real estate markets.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.