Published: September 2026 | Author: Patrick Frazer, Commercial Real Estate Advisor | NH & Southern Maine
We are through the first half of 2026 and into Q3. The Southern New Hampshire commercial real estate market has not made any dramatic moves in either direction — and that stability, after years of volatility, is itself a story worth telling.
Here is an asset-class-by-asset-class look at where things stand.
Office: Quietly Tightening
The headline from the Q2 Colliers report is one most office owners did not expect to be reading in 2026: the market is tightening. Statewide office vacancy dropped to 10.9% in Q2, down from 11.7% in Q1 and down significantly from 13.7% a year ago.
The driver is not a surge in demand. It is the absence of new supply. No new office construction is in the pipeline. The wave of office-to-residential conversions — which removed meaningful inventory from the market over the past two years — has largely run its course, with few additional buildings expected to convert going forward. The result is a flat supply base against steady if modest demand, and that math is slowly moving vacancy in the right direction.
The I-93 corridor is emerging as a particular bright spot, drawing both office and industrial users looking for highway-accessible space with proximity to the Massachusetts border.
What does this mean in practice? If you own office space and have been holding on through a difficult stretch, the market underneath you is improving. If you are a tenant with a lease expiring in the next 12 to 18 months, the window of maximum leverage may be narrowing. The time to be in the market for your next space is now, not when your lease runs out.
Industrial: Measured Resilience
The industrial market continues to be the most consistent performer in Southern NH commercial real estate. The Q2 characterization from Colliers — “measured resilience” — is accurate.
Demand is broadening. Massachusetts-based companies relocating north for lower costs and better available space remain a consistent source of activity. In-state expansions from existing NH businesses are adding to that baseline. The result is a market that is not booming the way it was in 2022 and 2023 — but one that continues to absorb space and attract capital.
Elevated interest rates and longer financing timelines have added caution to deal pace, particularly on the investment sales side. Buyers and sellers are not always aligned on pricing, and deals are taking longer to close than they did two years ago. That said, stabilized multi-tenant industrial product continues to attract institutional and regional investor interest. NH’s tax advantages, business-friendly environment, and logistics access along I-93 and Route 101 remain genuine differentiators.
The size dynamic covered in our earlier industrial deep dive continues to hold: small-bay space under 25,000 SF moves consistently. Large blocks over 100,000 SF require more patience and more competitive pricing.
Mixed-Use and Zoning: The HB 631 Effect
July 1 came and went, and HB 631 is now in effect. Municipalities across Southern NH are working through what it means for their zoning and planning processes. Developers are evaluating commercial parcels with new eyes.
It is still early. The first HB 631-driven projects are in the planning and permitting stages but have not yet broken ground at scale. What is visible is the change in how commercial property owners are thinking about their assets. Buildings and parcels that were previously viewed purely as commercial plays are now being underwritten with residential and mixed-use optionality.
The Liberty Mutual campus conversion in Dover — now known as the Village at River’s Edge — is the most visible example of this trend at work. Brady Sullivan Properties is redeveloping the 218-acre site into up to 500 apartments with commercial space, restaurants, and outdoor amenities. That project predates HB 631 but reflects the same logic the law is now enabling at smaller scale across the state.
If you own commercially zoned property in an HB 631-eligible municipality and have not yet had a conversation about what the law means for your specific parcel, that conversation is overdue.
Retail: Selective Strength
Retail in Southern NH is not a single story — it depends heavily on location, format, and tenant mix.
Service-oriented retail — medical, dental, personal services, food and beverage, fitness — continues to perform. These are uses that e-commerce cannot replicate and that generate consistent foot traffic. Well-located strip centers anchored by service tenants are among the more stable assets in the market right now.
Destination retail in strong corridors — Route 28 in Salem, the Mall of New Hampshire area in Manchester, downtown Portsmouth — maintains occupancy and draws regional traffic. Inline retail in weaker locations, or centers that have lost anchor tenants, are working harder.
The story for retail investors is the same one it has been for several years: underwrite the tenant, not just the real estate. A retail building is only as stable as the businesses inside it.
Investment Sales: Patience Required
Transaction volume across all asset classes in Southern NH has been constrained by the rate environment. The bid-ask spread between buyers and sellers has not fully closed, and financing costs continue to make some deals that would have worked in 2021 or 2022 harder to pencil today.
That said, deals are getting done. Investors who are willing to underwrite at current rates rather than betting on rate relief, and sellers who are pricing to the market rather than to peak 2022 values, are finding each other. The deals that are closing tend to be stabilized assets with strong in-place income and credit tenants.
The NH investment market continues to attract capital from Massachusetts and beyond, drawn by the state’s lack of income and sales tax, relatively lower entry prices compared to coastal markets, and the ongoing demand fundamentals that make NH a stable long-term hold.
What to Watch in H2 2026
A few things worth tracking as the year closes out:
Interest rates remain the single biggest variable. Any meaningful rate relief in the back half of 2026 would unlock transaction activity that has been sitting on the sidelines. If rates hold or move higher, expect more of the same patient market.
HB 631 implementation will start to generate real projects and real conversations about commercial land value. Watch how municipalities respond and which parcels start moving.
Office absorption, if it continues, will be a genuine positive story for the market heading into 2027 — and one that positions well-located, quality office buildings for a better leasing environment than owners have seen in several years.
Patrick Frazer is a commercial real estate advisor covering New Hampshire and Southern Maine across all asset classes. If you are trying to make sense of what the current market means for your property or your next investment, reach out.