Commercial <b>real estate</b> experiencing rebound | SeacoastOnline.com

PORTSMOUTH — A new report on the New Hampshire commercial real estate market shows the Seacoast overall has fared better than other regions of the state and New England.

Released by CB Richard Ellis/New England, the 2011 New Hampshire Commercial Real Estate Market Outlook for office and industrial space found the overall office market vacancy rate for the Seacoast/Interstate 95 area dropped from 20.3 percent in 2009 to 18.3 percent in 2010 — which was the level at the end of 2008. The industrial market saw the vacancy rate increase from 9.7 percent in 2009 to 12.9 percent at the end of 2010, but the report said the region continues to hold its own when compared to other parts of the state, New England and the nation.

Kent White, a vice president with CBRE in Portsmouth, said demand for the office space market in particular shows the bottom of down cycle looks to have been passed.

"The Seacoast is doing much better than most other markets," White said. "Most companies have weathered the storm."

What White has seen for past nine months is a return of the "C" word — commitment from potential clients to make a commercial real estate deal.

"For a period from the fall of 2008 to the spring of 2010, there was virtually no demand," White said. "By summertime (2010) we saw an increase in activity. It's one of the largest investments a company can make and we are seeing more of them make a commitment and take advantage of opportunities for good values."

The CBRE report said that when it comes to office space, no Seacoast locations are more popular than downtown Portsmouth and Pease International Tradeport. Dan Plummer, a principal with Two International Group, said despite the severity of the recession, his real estate development company has kept busy with leasing deals at Pease.

"We're doing all right," Plummer said. "We have better than 90 percent occupancy, which is off some from three years ago, but in this market and economy, it's actually been a lot of activity. Pease is where people want to be."

Like White at CBRE, Plummer said not all the activity over the past few years led to signed deals.

"It was very hard to get deals done and closed, but starting in November, we started getting them done and signed," he said.

One recent lease involved 11,300 square feet of office and industrial space for the German-owned technology manufacturing company Kiefel.

The economic downturn put on hold major office developments by Two International Group. Before the recession, Two International Group had built some 850,000 square feet in rentable space, 16 buildings and developed some 70-plus acres within the tradeport. Plummer said the company has plans for potential developments but those remain in the planning stage only. The focus now, he said, is on expansions and tenant-requested upgrades of existing facilities.

At The Kane Co., Chief Executive Officer Michael Kane said business has picked up dramatically for the brokerage, development and property management company.

"We've had more activity in the last four to five months than we've seen in the past two years," Kane said. "It's been in Portsmouth mostly, but all over the region."

A few of the Kane deals include brokered sales of former auto dealerships on Lafayette Road in Portsmouth, signed retail and industrial space lease deals in Portsmouth and Seabrook, and brokered sales of industrial properties in Raymond, Rochester and Newburyport, Mass.

At CBRE, White said the increase in commercial activity over the past nine months has led to brokering a major sale for investors in downtown Portsmouth. Along with partner Margaret O'Brien, CBRE also brokered a large lease deal for more than 27,000 square feet of space in Newington for the national retail chain Savers and 30,000 square feet of Class A office space on Corporate Drive at Pease for the national headquarters of the investment consulting firm Prime Buchholz and Associates, which relocated from downtown Portsmouth.

Kane believes the rebounding of the commercial market corroborates with more evidence of an economic recovery. White at CBRE isn't quite as certain about the depth of the recovery. Some of the commercial real estate markets in the greater suburban areas such as Rochester and Somersworth have not recovered, he said.

"We are encouraged by a lot of positive signs here on the Seacoast pointing to a turn around," White said. "Yet, so much uncertainty still exists."

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