A market still moving forward - by Michael Harrington

If you’re like me, the last year has felt a little different than the years immediately following the pandemic. The market is no longer moving at the same pace across every property type, and buyers, tenants and lenders are taking more time to make decisions. But that doesn’t mean the market has stalled. In fact, I believe Southern New Hampshire is entering a healthier and more sustainable period of growth.

The big change from a year ago is that the market has become more selective. Location, quality, functionality and pricing matter more than ever. The good properties are still getting attention, while older or functionally obsolete properties are being challenged to find their place in the market.

Industrial continues to be the strongest commercial sector in Southern New Hampshire, although the market has clearly become more balanced. Industrial vacancy increased year-over-year to approximately 6.5%, but smaller users and companies looking for well-located, functional space continue to drive activity. Warehouse and distribution space has posted positive absorption, particularly along the I-93 corridor. 

What I’m seeing is consistent with what we experienced in 2025: strong demand for smaller contractor bays, flex space and well-located industrial buildings. The large-box market is more challenging, and the cost of new construction continues to make existing buildings attractive. I expect this trend to continue into 2027. New construction will remain limited unless the project has a strong tenant, excellent location or a compelling long-term development story.

The office market continues to evolve, but I believe we are finally seeing evidence that the worst may be behind us. Southern New Hampshire office vacancy declined year-over-year in the first quarter of 2026, with Manchester and Concord among the stronger markets. 

Medical office and smaller professional users remain active, while companies continue to evaluate how much space they really need. At the same time, obsolete office buildings are increasingly being converted to residential or mixed-use properties. That is an important part of the recovery. We don’t necessarily need to fill every square foot of older office inventory. Some of that inventory needs to be repositioned.

Medical office continues to be one of the more sought-after segments of the Southern New Hampshire commercial real estate market. While traditional office users are generally reducing their footprints or taking longer to make decisions, medical users continue to need physical space and are actively seeking well-located, functional properties. Smaller medical practices, specialty providers and healthcare-related users have been particularly active. 

I believe this trend will continue into 2027. An aging population, expansion of outpatient healthcare services and the continued growth of regional healthcare systems should support demand for medical office space. In my view, medical office represents one of the more defensible segments of the Southern New Hampshire office market and should remain a preferred asset class for both users and investors. 

The shortage of housing continues to influence virtually every part of the commercial real estate market. New residents create demand for retail, restaurants, medical services, offices and industrial employment.

One project that captures this trend is The Village on Technology Hill in Londonderry. The 110-acre development is combining approximately 440 apartments with employment, manufacturing, office, childcare and retail uses. The project is designed around a three-acre village green and is creating a true live-work environment. This is the type of development I expect to see more of — projects that recognize that housing and commercial development are interconnected.

Looking ahead to 2027
My prediction for the coming year is that Southern New Hampshire will continue to grow, but at a more measured pace. Interest rates and construction costs will continue to influence development decisions, and buyers will remain disciplined. However, the fundamentals haven’t changed. We have a strong workforce, access to Boston, a favorable business environment, improving infrastructure and communities that are increasingly willing to work with developers to accomplish good projects. I also expect more redevelopment, adaptive reuse and mixed-use projects. Southern New Hampshire has always been a market that adapts. 2026 has shown us that the market isn’t slowing down — it is getting smarter. I believe that sets the stage for another positive year in 2027.

Research basis
The 2026 update reflects current Colliers market research showing industrial vacancy at 6.5% and office vacancy at 11.7%, along with positive warehouse absorption and continued office stabilization. The Technology Hill discussion is based on the town of Londonderry’s approved PUD and current project information.

Michael Harrington, CRE, CCIM, RPA, is a principal of Harrington & Co., Manchester, N.H.