Construction of massive warehouses begin as economic uncertainty looms
May 20—Massive distribution centers are starting to rise across southern New Hampshire after years of planning, at the same time that some say the market for such spaces is cooling as the pandemic-fueled e-commerce boom wanes.
The sites include a shuttered golf course in Hudson, a former construction yard in Merrimack a few miles away from the Manchester-Boston Regional Airport, and land once pitched for a concert venue off Interstate 93 in Hooksett.
Construction of a 323,750-square-foot industrial building can be seen off the F.E. Everett Turnpike south of Exit 10 in Merrimack. Trammell Crow Company held an official groundbreaking ceremony at 50 Robert Milligan Parkway last week. The company says the building can accommodate multiple tenants from 50,000 square feet up to the entire building.
Trammell Crow Company and Diamond Realty Investments closed on the 43-acre site in December.
The industrial market in greater Boston is "severely supply constrained," making it hard for some businesses to enter or expand in the region, said Elisha Long, senior vice president with Trammell Crow in Boston. The Merrimack site is about an hour from Boston.
"The site is accessible to a Class A freight system via the Ayer Intermodal, as well as Manchester-Boston Regional Airport that serves as a major cargo hub," she said in a statement.
The market for such buildings has begun to slow, but not because of demand, said Dan Scanlon, senior associate broker at Colliers, a commercial real estate firm.
"The economy is in the strangest place I've seen in my entire career," he said. "You have very low unemployment. It is hard to find workers. Interest rates have doubled over the last couple of years."
Such uncertainty in the economy and labor costs have caused some companies to scale back.
One example is Amazon pulling out of plans to lease two of three buildings originally proposed at the Hudson Logistics Center at the former Green Meadow Golf Club. The e-commerce giant has backed out of other projects across the country and has started subleasing some properties.
"For a while there, Amazon was a lead candidate for any distribution facility anywhere in the country, and they scaled back dramatically," Scanlon said.
Target Corp. will now operate a single 1.4-million-square-foot distribution center on the former golf course property to support its stores. Permits for the scaled-back project have yet to be pulled for work to begin, according to the town's building department.
Big projects, big risk
In northern New England, it can be tough to find a spot to build, especially close to highway interchanges. Sometimes wetlands and topography create challenges.
"We just don't have these flat pad-ready sites like other parts of the country do," Scanlon said.
Many developers wait to find tenants before they break ground on approved projects.
"It is really hard to justify going into the ground unless you have at least one tenant for a building like that," Scanlon said. "It costs so much construction-wise, and it is a big risk."
These types of buildings typically bring in high tax-value and good paying jobs, John Krebs, a planning consultant, wrote in a letter to Hudson officials.
Other projects in the works:
—Developer Port One Companies broke ground last fall on the Granite Woods Commerce Center, a 500,000-square-foot building off Exit 11 of Interstate 93 in Hooksett. The site was once pitched as an outdoor music venue with other entertainment options.
"We are approximately 95% complete with site work and expect to proceed with foundations soon," said Peter W. Bartash, CEO of Port One.
The project is expected to be completed by the spring of 2024.
Another 150,000-square-foot industrial building has been removed from the plans. Port One is now looking at options to build housing.
—Life is Good, an apparel and accessories company, will consolidate four buildings in New Hampshire and Massachusetts into part of a new 500,000-square-foot building on Friars Drive in Hudson.
Life is Good partnered with Boston real estate developer GFI Partners on the project. Life is Good will occupy 350,000 square feet of the building. The remaining space will be leased to another tenant.
Occupancy is planned for December of this year.
