New Hampshire’s office market last year ended on a slow leasing note with an ever-so-small “flight to quality” shift to class A spaces.

It wasn’t a big migration to class A office space for a simple reason: There wasn’t a lot of leasing activity in general last year, according to two new fourth-quarter office market reports covering the state.

According to research by commercial brokerage Cushman & Wakefield, the fourth quarter of 2025 saw only 44,000 square feet of signed office leasing activity in southern New Hampshire.

But what little activity there was in the fourth quarter mostly involved tenant moves to class A spaces, Cushman & Wakefield reported.

Indeed, two of last year’s largest new deals involved companies vacating class B space in favor of class A space, said Riley McMullan, senior research manager at Cushman & Wakefield.

The shift is partly the result of a softening in class A rents while rent growth for class B offices has accelerated, said McMullan.

“As the gulf [between the two] has shrunk, price-conscious occupiers no longer face a significant premium for higher-quality space,” she said in an email statement to the Registry Review.

She noted that the shift has resulted in very little, if any, damage to class B space in general.

Researchers at commercial brokerage Colliers International found roughly the same trends in 2025: a general late-year slowing in lease activity and a small shift to class A spaces.

“Companies took a cautious approach to real estate decisions, focusing on lease renewals and strategic relocations rather than major expansion plans,” the brokerage’s fourth-quarter report states. “This wait-and-see mindset created a comparatively quiet fourth quarter with tenants fine-tuning their space rather than pursuing aggressive growth. [But] those whose leases required decisions often chose to relocate to higher quality space.”

Class A Vacancy Rate Nearly 17 Percent

Class A office owners definitely needed all the help they get last year.

According to Cushman & Wakefield, the overall office vacancy rate in New Hampshire stood at 12.6 percent by the end of the year, up about 50 basis points compared to the same period in 2024.

But the statewide class A vacancy rate stood at 16.8 percent – with much of that open space tied to larger companies, such as Liberty Mutual, recently shrinking their real estate footprint in the state in recent years.

That higher class A rate could substantially come down if developer Brady Sullivan Properties has its way.

The CRE powerhouse last year bought the vacant 590,000-square-foot Liberty Mutual office campus in Dover for $16.3 million, or about $27 per square foot, and hopes to reposition the property into a mixed-used development with potentially hundreds of new residential units.

Such a conversion would take a huge chunk of class A office space off the market, thus lowering the overall class A vacancy rate.

According to Colliers, office-to-residential conversions, particularly in the Manchester and Portsmouth areas, have played a key role in recent years in reducing the glut of vacant office space in New Hampshire – and the trend continued right through the fourth quarter in 2025.

“Conversions slowed a little bit last year compared to prior years,” said Robert Rohrer, managing director and principal at Colliers New Hampshire. “It was spotty and more opportunity driven than in the past. But you’ll continue to see more conversions.”

New Amenities Make Up for High Vacancies

But will “flight to quality” and conversions be enough – and in time – to help the class A market more fully recover in the near future?

Probably not.

And that’s why some landlords are providing, or touting, certain facility amenities in hopes of attracting tenants.

Chris Norwood, head of NAI Norwood Group, said landlords are providing new indoor gym facilities and outdoor basketball and pickle-ball courts as lease extras for tenants.

Landlords are also touting parking, if properties have a sufficient amount of spaces available, as a way to entice employers to sign leases, particularly companies that are trying to woo reluctant remote workers back to offices.

Parking has become a key amenity for many return-to-office employees, Norwood said.

Besides parking, tenants want more collaborative spaces within offices – and smaller office spaces in general if they’re pursuing a hybrid workplace strategy for their employees, Norwood said.

“The trick is getting offices designed the way tenants want,” said Norwood. “Not all class A office space is equal. Some require more work than others – and it can get expensive to make changes that tenants want.’”

Caitlin Burke, a partner in Boulos Company’s Portsmouth office, said landlords are trying different things to attract tenants, such as agreeing to some tenant improvement allowances.

They’re also agreeing to smaller sized leases in the 5,000-square-foot range, she said.

Asking Rents Not Budging

But there’s one thing landlords are extremely hesitant to do: lower their lease rates.

“Some tenants assume they’ll be getting [rate] deals in today’s market, but there’s not a lot of price-cutting going on,” said Burke. “Despite the higher vacancy rates, pricing remains stagnant.”

Indeed, Cushman & Wakefield reported that average asking rates at the end of last year stood at about $22.24 per square foot, down only 80 cents from the prior year, even though there was a negative office absorption rate of 781,400 square feet in 2025.

Burke said she’s seeing some “flight to quality” moves – but not much.

“It’s still hard to fill these larger spaces,” she said. “In general, the larger [class A] spaces are more difficult to fill.”

Collier International’s Rohrer agreed that a shift to class A is occurring – but not in significant numbers.

“It’s muted because the amount of movement in the office market in general is sort of muted,” he said.

Overall, the Manchester area, the state’s largest submarket, had a vacancy rate of 8.8 percent as of the end of last year, according to the Colliers report. But Manchester’s class A vacancy rate stood at 13.9 percent.

Even though it’s considered one of the more vibrant office submarkets in the state, the Portsmouth area had an overall office vacancy rate of 17.2 percent – with a class A vacancy rate of 22.3 percent.

Other submarkets are faring a little better.

The Nashua area’s overall office vacancy rate stood at 13.3 percent at the end of the year – while its class A vacancy rate was only 11.1 percent, according to Colliers.

The Concord submarket had a 10.5 percent overall office vacancy rate at the end of 2025, but its class A vacancy rate stood at only 3 percent, according to Colliers.

Will New Hampshire’s office market dynamics significantly change in 2026?

Most CRE observers think not.

“I see the market kind of holding its own this year,” Rohrer said. “I don’t see major changes coming.”