The Southern New Hampshire office market is not in free fall. It is not recovering sharply either. What it is doing is something more nuanced — and for owners, tenants, and investors who understand what is actually happening, there are real opportunities on both sides of the table.
Here is a clear-eyed look at where the office market stands across Southern NH heading into the second half of 2026.
The Headline Numbers
Statewide office vacancy in New Hampshire ended 2025 at 13.8% — essentially unchanged from the prior year, despite nearly 216,000 SF of office space being converted to residential use during the year. That conversion activity absorbed a meaningful amount of inventory, and vacancy still held flat. That tells you something about where underlying demand stands.
The picture varies significantly by submarket. Dover is the outlier, with vacancy at 38.9% at the end of 2025 — largely driven by the former Liberty Mutual campus at 150 Liberty Way, which Brady Sullivan Properties has acquired and is converting to a mixed-use residential project. Strip that out and Dover looks more manageable. Portsmouth sits at 17.2%, Nashua at 13.3%, Salem at 11.9%, Concord at 10.5%, and Manchester at 8.8% — the tightest major submarket in the state.
Average asking rents posted modest growth of 0.6% to reach $21.75 per SF modified gross. Class A rates actually declined 9.4% as landlords competed harder for tenants in a well-supplied segment. Class B rates rose 6.8%, partly because newer listings to hit the market carried higher asking prices than older inventory.
What Is Actually Driving the Market
The dominant theme across Southern NH office in 2025 and into 2026 has been what Colliers Research Director Kristie Russell described as “caution and conversion.”
On the caution side: companies facing lease expirations have largely chosen to renew in place, upgrade to better space, or downsize modestly rather than make bold moves in either direction. The wait-and-see posture reflects genuine uncertainty about hybrid work patterns and what companies actually need from an office going forward. Tenants without imminent lease decisions are holding onto space they may not fully need rather than giving it back.
On the conversion side: the most economically distressed office buildings are increasingly being repositioned as residential or mixed-use. Manchester has seen over 360,000 SF of older office space come offline for apartment redevelopment downtown, which has meaningfully helped keep the city’s vacancy rate at 8.8% — the best in the state. The Liberty Mutual campus conversion in Dover is the largest single example of this trend in the Seacoast.
This conversion dynamic is accelerating with the July 1, 2026 effective date of HB 631, which now allows mixed-use and residential development on commercially zoned land by right in urban municipalities. Owners of underperforming office assets in eligible communities have a new repositioning path that was significantly harder to execute before.
The Flight to Quality
One of the clearest trends in this market is the bifurcation between space that is leasing and space that is sitting.
Tenants who are moving are trading up. Companies that previously occupied Class B or older Class A space are using lease expirations as an opportunity to upgrade to higher-quality buildings — better amenities, more efficient floor plates, better HVAC and technology infrastructure. This is consistent with what is happening in office markets nationally: the flight to quality is real, and it is concentrating demand at the top of the market.
For Class B landlords, this creates pressure. Their best tenants are potential defections to Class A buildings where landlords are offering competitive concessions to attract them. The math on Class B can still work, but it requires realistic pricing, willingness to invest in improvements, and understanding that the tenant pool is smaller than it was in 2019.
Small space — under 5,000 SF — remains the most active segment across all submarkets. Demand from professional services, medical, financial, and regional business users for right-sized, well-located small suites is consistent. If you own a multi-tenant office building and your suite mix skews small, you are in the better position.
Medical and Professional Services: The Reliable Demand
The most dependable office tenants in Southern NH right now are medical users and professional services firms — accountants, attorneys, financial advisors, insurance agencies, and similar businesses. These users need physical space to serve clients, they are not candidates for full remote work, and they have been steadily absorbing available inventory.
Medical office has been a consistent bright spot in the broader office market for several years and shows no signs of slowing down. If you own a building that can accommodate medical tenants — adequate parking, accessible layout, plumbing capacity — the value of that optionality is worth understanding when you evaluate your asset.
What This Means If You Own Office Space
The most important question for an office owner right now is honest self-assessment: is your building a flight-to-quality destination or a flight-from-quality candidate?
If your building is well-located, updated, and efficiently laid out for smaller tenants, you are in reasonable shape. Leasing will take longer and cost more in TI than it did in 2019, but tenants are out there.
If your building is older, less efficient, and competing on price alone for tenants who are already uncertain about how much space they need, the picture is harder. The options worth considering are a serious repositioning investment, a conversion to residential or mixed-use where HB 631 applies, or a sale while the market still supports transaction activity.
Financing is an additional consideration. Local lenders have become increasingly cautious about office properties. Owner-occupied buildings with strong financials still find credit available. Investment office deals — especially value-add or vacant — are a harder story to tell a lender in 2026.
What This Means If You Are a Tenant
Tenants have more leverage than they have had in years, particularly at the Class A end of the market where landlords are competing for occupancy. If your lease is within 18 to 24 months of expiration, start the process now. The market rewards tenants who shop their options early and use competing proposals as leverage.
Do not assume your current landlord will give you their best deal without a reason to. The reason is a credible alternative. Get one.
What This Means If You Are an Investor
Office is the most complex asset class to underwrite in Southern NH right now. The risk is real, the uncertainty about demand is genuine, and the financing environment is restrictive. That does not mean there are no deals worth doing.
Manchester, with its 8.8% vacancy rate and active conversion-driven absorption, is the strongest submarket. Medical-anchored or professionally-tenanted multi-tenant buildings in accessible locations are the most defensible investments. Single-tenant office with near-term lease expiration is the hardest underwrite.
The conversion angle is worth watching. For the right building in the right location, the math on an office-to-residential conversion may be more compelling than any office leasing scenario. That is a real estate analysis worth doing before assuming a building has to stay office forever.
The Bottom Line
Southern NH office is a market in transition, not collapse. The buildings winning are those that offer quality, flexibility, and the right suite sizes for the tenants who are actually in the market. The buildings struggling are those waiting for demand to return to 2019 patterns — it is not coming back in that form.
For owners, tenants, and investors who understand that and position accordingly, this market has more opportunity than the headlines suggest.
If you own office property in Southern NH and want to understand current market value, request a broker opinion of value.
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