Durham Market Analysis Focuses on Opportunities Associated with the University of New Hampshire

On Monday evening, April 11, 2011, the Durham Economic Development Committee received a long-awaited presentation from Mr. Ian Colgan of Development Concepts, Inc. regarding the recently completed Town-Wide Market Analysis for Durham.  The report was written by Mr. Colgan, Dr. Ross Gittell from the University of New Hampshire, and Dr. Charles Colgan from the University of Southern Maine.  The purpose of the report is to help the community better understand the economic market in which we exist with the long-range goal of capitalizing on available opportunities to enhance the vibrancy of Durham and broaden the local tax base in a desirable manner.  While the full report may be viewed on line at http://ci.durham.nh.us/generalpdfs/town%20wide%20market%20survey.pdf  (please ignore the “draft” stamp across the front – we await a non-PDF version from the consultant), highlights from the report follow:
• The Town of Durham’s population is 14,638 according to the 2010 Census.
• Approximately 58-60% of the Town’s total population is made up of UNH students. 
• Utilizing 2010 Decennial Census data the consultant estimates a UNH student population of 8,323 and a full time Durham resident population of 6,527.
• Durham residents are highly educated - more than 40% have professional or graduate degrees. 74% of the Town’s population has a bachelor degree or higher.  The population average of all other geographies in Southern New Hampshire is between 20-30%.

• Median Durham family income is significantly higher than surrounding areas - at $114,757. This number reflects the non-student population only.
• Durham’s housing market, which the consultant deems affordable for current residents, may act as a barrier to new residents wanting to relocate from other parts of the Region.
• Even with a national recession affecting housing cost, the median annual sales price of single family homes in Durham have increased 15% over the last two years, with the median annual price of all for-sale product increasing by 11%. Regional trends and the pressure on the local market will influence the local housing market, maintaining a relatively high housing cost.
• Amenities and availability of land have significant influence on the cost of housing  --more than Durham’s relatively high tax rates.
• Housing is not affordable for low to average wage workers in Durham, who would need to average $48 per hour ($100,000 in annual salary) in order to meet average housing cost.
• The Town’s highly rated school system and the location of the University of New Hampshire within proximity to downtown Durham provides ample amenities that attract residents.
• The Oyster River Coop School District is ranked 10th in the State of New Hampshire for all school districts with 1,000 or more students (ranking is based on test scores.)  The strength of the district is an asset to the community which helps to bolster housing prices.
• University of New Hampshire students exert the most pressure on the housing market. The lack of on- and off-campus housing opportunities for students has forced many to seek alternative housing options within residential neighborhoods and in surrounding communities.
• It is estimated that approximately 2,600 UNH students live in off-campus housing within the Town of Durham, while 4,300 UNH students live outside of the community.
• It is estimated that as many as 30% of all UNH students live outside of Durham. Given the appropriate circumstances, there may be an opportunity to broaden the tax base by attracting some of these students back into town via new and/or updated housing offerings.
• The potential to expand Durham’s retail market exists, but on an incremental level. The Town should focus on “enhancement” over “expansion,” aiming to add an additional 25,000 – 35,000 square feet.
• Durham should focus the majority of its “enhancement” on retail targeted to the resident and employee populations.
• At the time of this Study, much of Downtown’s businesses were aimed at University students, marked by the high numbers of limited service restaurants, student services, and college themed stores. With the existing student housing demand unfulfilled, the potential to add student-focused retail should only be encouraged when the demand for student housing is met with additional units in the Downtown area.
• Downtown Durham is the best location for retail enhancement due to higher than average population densities and traffic counts.
• Currently a $30 million dollar retail gap exists for Durham residents and employees ($ spent outside of Durham which could realistically be spent here instead). Some of this leakage maybe recaptured by increasing the goods and services targeted towards these two population groups.
• There appears to be an opportunity to attract 25,000 - 35,000 sq. ft. of new retail, much of which will materialize as smaller scale “storefront” retail that draws upon residents, employees and residents of nearby towns like Newmarket and Lee.

• Currently there are two hotels in Durham with a total of 91 rooms.
• The number of hotels located in communities surrounding Durham is evidence that there is a sufficient market to support additional hotel space in Durham.
• There is currently a high supply of conference / meeting space in Durham. However, with the New England Center vacating 12,000 square feet of space it is plausible additional space could be absorbed in the market.

• One of Durham’s best opportunities for non-university based employment growth is to focus on incrementally increasing job opportunities in the health care sector. If the market continues at a similar rate, Durham could expect to add 51 jobs in the health care sector alone.
• The largest hurdle to growth in the employment sector is Durham’s short supply of available office space.
• The lack of immediately developable land does little to help the deficit of available office space.
• While sites exist in Durham, very few exist that are development ready, and many lack utilities and other infrastructure needed for development.
• Durham should focus on a long term strategy to add office space on the land that is ready for development, such as the Durham Business Park, but the Town will require a corresponding economic development strategy to attract businesses due to the lack of speculative office / industrial market.
• The lack of available office space makes it difficult to gauge demand for this type of space in Durham. Demand may exist, particularly from University commercialization efforts, but without an inventory of available space, trends in the office or industrial market are difficult to predict.
• Existing vacant office space is currently the only option for growth opportunities for new businesses in Durham.
• One major reason for Durham’s lack of available space, is the lack of development ready land.

• The core of a university based commercialization strategy exists and Durham is likely to be a key player in the regional context.
• Start-ups and university-led commercialization initiatives will present a limited opportunity for the Town. But without the necessary space to compete for businesses, the start-ups will eventually out grow Durham and seek alternative communities for the 2nd and 3rd Phase growth.
• A strategy to increase space will allow Durham to be competitive in the regional market. This opportunity will most likely be centered on real estate development, and it is up to Durham to decide how aggressive an approach to take.
• UNH’s Research & Commercialization and InterOperability Laboratory are poised for upcoming growth.
• The IdeaGreenhouse and Innovation Commercialization Center (ICC) will likely be crucial first stage components of a University commercialization strategy.
• University R&D led development efforts surrounding UNH are too nascent to be able to predict specific real estate impacts and growth. Opportunities exist, but local efforts in engaging UNH will need to be proactive in order to capitalize on future commercialization growth and expansion should it happen, as well as prevent a significant percentage of that growth from moving to other communities.
Residents can also watch the April 11, 2011 EDC meeting on line at http://dcat.pegcentral.com