The vibrancy of Manchester’s commercial real estate market – as well as its high-tech sector – is facing its biggest test in more than 10 years. 

Oracle Corp., which three years ago bought Dyn Inc., one of the state’s most successful tech companies, plans to soon vacate about 100,000 square feet of office space in Manchester’s Millyard, as it lays off workers and effectively puts on the market one of the largest chunks of available space in the city since the 2008 recession. 

Most industry observers are cautiously optimistic that the Oracle-Dyn space at 150 Dow St., within the Millyard, should eventually be filled by other firms. The question is: How fast and by whom? 

The betting is that no single tenant is big enough to lay claim to the entire space, now being marketed by Colliers International, according to industry officials. More than likely, it will take a number of tenants to fill the 100,000 square feet.  

“They might have to carve it up a bit,” said Kyle York, the former general manager at Oracle-Dyn who left the company this past summer to form York IE, a strategic tech investment and consulting company in Manchester.  

York’s family owns commercial space throughout the city – and York said he knows of numerous firms in need of space. 

“The ecosystem is strong in Manchester, so I’m confident they’ll fill it,” York said of 150 Dow St. 

Office Market Softest in State 

Others agree, but the commercial numbers in Manchester indicate that it may not be as quick a turnaround for the property’s owner, businessman Bill Binnie, as many hope. 

The office occupancy rate in Manchester stood at about 84 percent entering this past summer, according to a second quarter report by Colliers International. That’s below the occupancy rates Colliers found in Concord, Nashua, Portsmouth and Dover, indicating that Manchester’s market is softer, though not ominously so.  

The total available class A and class B space in Manchester was nearly 600,000 square feet entering the third quarter, Colliers’ data shows. Manchester has more than 7.5 million square feet of all classes of office space, easily making it New Hampshire’s largest office hub. 

Throughout this year, Oracle-Dyn, whose lease at 150 Dow St. is due to expire within the year, has been slowly laying off workers in the Millyard. No exact numbers are available, but published media reports and industry insiders suggest the number is around 100 – so far. 

That means roughly 300 workers remain in the Millyard, while Colliers is actively marketing Oracle-Dyn’s entire chunk of space in the Millyard. 

Robert Rohrer, managing director of Colliers International New Hampshire, said his firm is “just getting started” in trying to find new tenants, as Oracle-Dyn prepares to depart. He expressed confidence that the space will be filled. 

“In a perfect world, we’d rent it to one tenant,” he said. “But this isn’t a 100,0000 square foot market [for just one tenant]. It likely it will be multiple tenants.” 

He noted that the Millyard has “always been preferred by tech companies,” whose workers here and elsewhere tend to love old brick-and-beam buildings in urban centers. While not naming names, Rohrer said there’s strong interest in the Dow Street property. 

Millyard Has Strong Fundamentals 

Chris Norwood, president and owner of NAI Norwood Group, is one of those who is confident the Millyard space will find tenants relatively soon.  

“I don’t think [Oracle’s Dow Street] departure will budge the needle,” he said. 

The reason, according to Norwood and others: Over the past decade, Manchester, driven largely by the popularity of the Millyard, has become an attractive place for young tech companies, many of whose employees crave “live, work, play” environments that include office, retail and residential components – and in recent years downtown Manchester has added all three. 

Meanwhile, the commercial markets in other nearby communities, such as Bedford and Concord, are doing relatively well, suggesting there isn’t a lot of regional slack out there to impede refilling the Millyard. 

Nevertheless, Michael Simchik of Capital Commons LLC said all commercial landlords are dealing with companies downsizing the amount of space they need, even as they add new employees. The reason: Telecommuting and flex schedules are reducing the demand for centralized corporate work space. 

Yet, Simchik added, Oracle-Dyn’s layoffs appear to be driven more by normal corporate activity in the years following a merger, as companies eliminate staff overlaps and find post-merger efficiencies.  

“It’s not unexpected,” he said of the Oracle-Dyn cutbacks three years after the takeover. 

Joe Razcka, a managing partner at York IE and a former top executive at Dyn before and after its merger with Oracle, said he remains bullish on the Greater Manchester tech sector, especially since office leases are so affordable compared to commercial real estate prices in nearby Greater Boston, where rents of $60 or more per square foot are roughly triple the rents in Manchester. 

“If you’re a start-up company, why wouldn’t you consider coming up here, with the prices so much lower?” he asked. “The momentum and tailwinds are certainly in our favor. Manchester has become a hotbed of jobs.”