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Inside Citizens Bank. Kelly Sennott photo.




Urban Living
A look at the upscale apartment complexes popping up in NH cities

06/02/16
By Kelly Sennott ksennott@hippopress.com



New Hampshire’s three largest cities — Manchester, Nashua and Concord — are in the midst of a renaissance of sorts. They’re changing physically, economically and through quality-of-life amenities like restaurants, arts and entertainment venues and vibrant, walkable downtowns. 

Naturally, the demand for market-rate downtown housing has grown enormously. People want to get up, walk to work, go out to eat afterward and then walk home. Or, if they’re closer to retirement age, they want to forget about commutes and lawn care and focus more on experiences.
So, as cities and the businesses within them work to create the kinds of urban living opportunities that people are looking for, building developers, too, have tapped into this demand, and the supply of downtown market-rate housing is growing fast to fit the need. 
 
Downtown Manchester
The projects
During the past several years, a couple major projects have been hinting a downtown Manchester market-rate housing boom was possible.
Market rate housing units are rented or owned by people who pay market rent or paid market value when they bought the property. They contain top-of-the-line amenities and there’s no subsidy, unlike with some affordable housing projects aimed toward alleviating costs and expenses for those with low incomes. 
Having more people living downtown in market rate homes can only benefit an economy because they’re more likely to have incomes that allow them to spend money downtown at restaurants, coffee shops and shows.
But of course, before developers build these market rate homes, there have to be people who can and will want to live there. Manchester Economic Development Director Will Craig said those waters were tested with Brady Sullivan’s lofts in the millyard and the Residences at Manchester Place. Now there are lots of players in the mix, and one of the highest-profile projects this year is the Citizens Bank building on Elm Street, which was purchased by Seacoast businessman Bill Binnie last summer. There were at least 10 other substantial offers. 
“I think one of the reasons demand was so high is that a great many people — and I’m one of them — think Manchester is on the move. There’s a lot of opportunity and a lot of potential for growth and renewal,” Binnie said via phone. “It’s very hard to find tens of thousands of square feet of empty square footage in the City of Manchester. They don’t come up that often.”
Binnie said he also liked the building’s location in the heart of the city and its history as New Hampshire’s first skyscraper. Its purchase included a 270-space parking garage and courtyard. He said the plan is to convert it into 91 market-rate one- and two-bedroom apartments priced between $1,600 and $2,900, depending on square footage and window views. Sizes range from 576 to 872 square feet for one-bedrooms, 753 to 1900 for two-bedrooms. Commercial space on the first floor will be filled by two restaurants and a “nationally-branded well-known franchise coffee shop” on the corner, with Citizens Bank remaining a major tenant. Tours of the apartments begin this summer and they’ll be ready for move in Nov. 1.
Another high-profile project is the Flats at Hanover Commons at 235 Hanover St. by Elm Grove Companies, which is halfway through completion with a slated August finish. The 32 units in the Flats will be tiny, between 280 and 410 square feet, but they’ll feature high-end amenities like granite countertops and smart furnishings, plus on-site bike storage, a fitness center, cafe, courtyard and rooftop solar panels.
And, last but not least, a little farther from the city center but still downtown, SMC Management Corporation is planning a few projects in the Queen City (and one in Nashua). One is the Riverwalk Apartments, a three-building, 150-apartment complex near Northeast Delta Dental Stadium, which will be completed one at a time, said Stephen Chapman, principal partner at SMC Management Corporation —  the first will be finished in September, the second October, the last in December. Units will be studios, one- and two-bedrooms ranging in size from 700 to 1,100 square feet, with amenities like a business and fitness center. Construction began six months ago.
SMC has also owned the Sundial Center, the mill complex of the former McElwain shoe mill built in the early 1910s, since 1986, and it received approval to convert the former Mount Washington College dorm into 87 apartments, and to build and lease another 48 upscale apartments in an adjacent lot. 
“We think there’s a robust demand, and we’re phasing the delivery of the units to keep up with the supply of interested people,” Chapman said via phone.
 
Who’s moving in
Property owners interviewed, for the most part, said that the demographic moving into their downtown Manchester properties is varied, but most mentioned baby boomers, high-income professionals, millennials and out-of-staters.
The Elm Grove Companies project in particular is designed with young professionals in mind, and the marketing plan reflects this. 
“Typically we’d wait for it to be done and then have the apartments become available and get rented. In this case, we are putting together some great marketing material, and at the end of the month, we’ll be engaging with companies to try to master lease some number of units in advance,” said Elm Grove Companies CEO Newton Kershaw via phone. 
Part of the aim is to draw more young talent to the city.
“I haven’t had anyone tell me they won’t work for SilverTech because they can’t find an apartment. But I will say that the employees I talk to, the young professionals under 30, are dissatisfied with the amount of quality housing stock in downtown Manchester,” said Gray Chynoweth, SilverTech executive vice president and COO. 
When Chynoweth himself moved to Manchester in 2004 after law school, he was disappointed with what was available.
“You saw some good options popping up outside the city … but downtown, at the urban core, there were very limited high-quality options at a reasonable cost,” Chynoweth said.
The Flats represents the kind of place Chynoweth would have liked at the time because of its proximity to downtown, high-end amenities, compactness and efficiency (complete with solar panels) and, most importantly, its price, with studios going for less than $1,000. It’s a model that Kershaw said has succeeded nationally and internationally but hasn’t really been implemented in New Hampshire just yet.
“It fills in a super important niche for the professionals coming out of college or who are early in their careers, who are coming into Manchester wanting a nice, modern place to live with amenities that are designed for the urban experience and millennial taste,” Chynoweth said.
Chynoweth said that whenever he’s recruiting, he’s not only pitching SilverTech, he’s also pitching Manchester’s strengths. It used to be the millyard tech hub he emphasized, but now it can be cool downtown housing. The Flats’ millennial identity will be furthered with Stay Work Play moving in as an office tenant.
Chapman said via phone he thought the entire apartment living demographic was changing. 
“It used to be that people lived in apartments because they couldn’t swing a down payment to buy a house. But now upper-class apartment living is a lifestyle choice. That’s what’s creating a demand now, and there aren’t enough Class A apartments yet in New Hampshire,” Chapman said.
He also credited the demand to big companies that moved up here, like Cigna and Fidelity, and the growing hospitals and medical centers that get turnover every May and June with interns and residents coming in from all over the country.
Norri Oberlander, property manager at the Pembroke Building, said that about half of her building tenants are young professionals in their 30s, the other half baby boomers or divorcees. Ninety percent, she said, are from out of state. Most people relocate into her apartments because they get a job nearby — at Dyn, Deka, Velcro, even companies outside of Manchester, like Fidelity.
“I think if somebody’s applying to Dyn or Deka, or any of these major companies, the first thing they do is check out downtown. When you don’t know anybody, you want to be walking distance to different places,” Oberlander said. “You want to be where everything is happening.”
David Preese, executive director of the Southern New Hampshire Planning Commission, said he also saw baby boomers trickling toward downtown to relinquish the responsibility of home ownership. 
“The boomers are getting older, and if they can sell their houses, they’re looking for areas where they can have access to services. … They’re looking for areas where they can again be close to where the action is and where the jobs, restaurants and coffee places are,” Preese said. 
And, to be frank, Preese suspects many boomers are also trying to avoid the alternative — senior communities, or what he calls “55-plus ghettos.”
“They’re out in the suburbs, and you have to get in your car to go somewhere, and believe me, that’s the last thing you want to do,” Preese said. “I had family in their 80s and early 90s move into one of these senior apartment complexes. … The biggest complaint was that there are too many old people!”
 
Working with the city
The City of Manchester has its challenges for developers — New Hampshire’s not a state with a lot of hard financial incentives, Craig said — but developers and people with the city noted there have been improvements. For example, Craig said, the city decided to relax zoning requirements in the millyard in the mid-’90s to make development easier. He also said the Chamber of Commerce is in the midst of working with city officials and developers to create a general dialogue about the hard incentives they find useful in development, and how the city can do better. Craig also pushed for RSA-79E to be re-adopted in Manchester in 2014, a tax break that, if the municipality agrees, allows developers to pay taxes on a historic building on the pre-developed value for an allotted period. He said both the Citizens Bank and Hanover Commons project have utilized it. 
Developers of both large and small projects whose work began within the past two years said there was great ease in working with planners.
“There are a lot of things [the city] could do to make it easier. But in our case, the complexity of the project is the biggest challenge, not the city,” Binnie said. 
Indeed, when you have to work on projects involving very old buildings, you don’t always know what’s going on between walls. Craig said the city has a large collection of records that go back far, but sometimes those original building plans aren’t available.
But Chapman said the overall process takes longer in New Hampshire than in, for example, Houston, where his company has worked before. There’s so much history, so many things to work around. In Houston, there are constantly new apartments being built.
“The permitting process [in southern New Hampshire] is grueling. Lots of people are already living in these communities, and they don’t want change. Which is why, when someone does have permits and approvals, they’ve created value in that dirt even though there’s nothing there yet,” Chapman said. 
On the bright side, it means less competition on his end. And the deliberate process means people in the city care about what’s happening in it.
 
Tackling parking, branding a neighborhood
Manchester’s still a city most developers see as a place where you want to have a car. Manchester city planners said during an interview at City Hall that all major projects right now have parking incorporated in some way — except for the Flats at Hanover Commons. They’re anxious to see how well those units fill up. Its success could change the game for future developers.
Kershaw didn’t seem worried;  he said the apartments are a four-minute walk to Elm Street and the Victory Garage. Also within reasonable walking distance is Market Basket. Because he expects tenants will be millennials — perhaps with student loans to their names — he suspects many will choose to work downtown and opt out of a car. 
Kershaw’s also been putting a lot of outside effort in drawing people to the living space. The company hosted a chalk art competition with Studio 550 last fall in Bronstein Park adjacent to the property, and he’s been working with individuals in the city (like New Hampshire Institute of Art President Kent Devereaux) to brand this neighborhood as Manchester’s cultural district.
Getting more people to live downtown, he said, will only benefit its businesses.
“I think the type of people that will be attracted to this [project] will have more disposable income, and that’s a benefit to area businesses. People will spend more time in retail, at restaurants,” Kershaw said.
 
Downtown Concord
The projects
The first big market-rate housing project in Concord was The Endicott Hotel, completed in 2013, a historic renovation by CATCH Neighborhood Housing. It comprises 24 market-rate units and is located in the heart of downtown at the corner of South Main and Pleasant Street. Rent prices range from $975 to $1,350. The one- and two-bedroom apartments, ranging from 475 to 975 square feet, filled within three months of completion — and this was before the Complete Streets Improvement Project was even a thing.
“Nobody had done a market-rate housing project really in downtown Concord since the mid-1980s. Somebody had to go first to prove it would work,” said Matt Walsh, director of redevelopment, downtown services and special projects for the City of Concord.
Today, there are two major downtown Concord market-rate housing projects in development. One is Remi’s Block, which, located at the corner of North Main Street and Loudon Road, will comprise 20 two-bedroom market-rate apartments and three commercial storefronts. Developer Remi Hinxhia recently started construction after securing loans from the city and Sugar River and Merrimack County Savings Banks, according to the Concord Monitor. The 32 upstairs apartments traditionally housed low-income tenants and squatters. 
The other major project in development is Bienvenue, led by Jon Chorlian, who is reconfiguring the Sacred Heart Church, a Gothic structure built from stone across the street from the federal court house on Pleasant Street, into 10 high-end condominiums sized between 1,700 and 2,000 square feet, which will sell for between $300,000 and $400,000. Chorlian hopes the name will underscore the building’s new chapter (translating to “Welcome,” to go with the building’s French-Canadian tradition, according to the brochure). Renovations start in July with completion slated for April 2017.
Historically, most of the downtown housing in Concord has been subsidized, partly because of the financing tools available to develop that kind of housing, Walsh said. Downtown buildings are typically pricy, older historic properties that, as a result, are expensive to renovate. The Endicott Hotel, for example, was also previously made up of subsidized housing. 
But Walsh and City Councilor Byron Champlin are optimistic about the projects going forward and the potential they bring.
“One of the images Remi threw out when he appeared before the planning board was people sitting on a balcony, across from the State House, having coffee in the morning, then sitting there in the evening and having a glass of wine.” 
They’re market rate units, he said, and they’ll be filled with people with a disposable income.
“It would be a very positive thing for the city,” Champlin said.
 
Who’s moving in
In Concord, it’s mostly baby boomers.
This is according to Chorlian, a lawyer-turned real estate developer who’s worked on a handful of smaller projects in Concord’s West End before this one. Most of his buyers were people downsizing, moving less than a mile from a large home to a smaller one.
As a developer, he likes seeing the transformation of a building, and with the Sacred Heart Church, complete with enormous stained glass windows and high-arching ceilings, he and architect John Jordan have their work cut out for them.
Chorlian said his developments naturally fit better with baby boomers because they’re more likely to spend $300,000 to $400,000 on a condo than a young professional due to price. And in Concord, condos over apartments just make more sense.
“These rehab projects are so brutally expensive. And while it sounds like a lot of money to pay $1,600 a month for an apartment, that’s not nearly enough money to support the development of a luxury-quality unit. It just isn’t — $2,600 might be, but the people who want to pay $2,600 a month for an apartment are few and far between here,” Chorlian said during an interview at the church. “If we had a mill building in Concord where I could do 80 units, maybe the economics would make more sense. But in a Gothic church, you’d lose money. … If you Google ‘converted churches,’ you will see a bunch of examples of this being done. What you won’t find is one where the median house price in the community is where Concord’s is.”
Chorlian’s seen a lot of demand for Bienvenue, but unlike with his other projects, he said a third of interested parties are from Concord, a third are from the Greater Concord area — Bow, Hopkinton, Canterbury — and a third are from considerable distances, as far as halfway across the country.
“To sort of slightly over-generalize, their feedback tends to be, ‘We’re town shopping before we’re looking for a piece of property. We’re looking for a community that has the right sort of feel. And Concord, with this new Main Street, that has a nice feel, a nice balance of culture and activity.’...  And that’s been a very encouraging thing,” Chorlian said. “Concord’s downtown has gotten to the point where it’s probably enough of a hook itself, a place where people would want to live.”
Rosemary Heard, president and CEO of CATCH, and its VP of real estate development, Caite Foley, said via phone the people who moved into the Endicott Hotel are a mixed demographic, made up of older and younger professionals. But unlike the Flats at Hanover Commons, there aren’t any developments targeted specifically to millennials. 
“I think the whole idea of market-rate housing means they’re going to be filled by people who are professionals and working. One of the challenges is, what do we do about millennials? How do we also provide housing options for people in the early stages of their professions? I don’t know that’s a nut we’ve solved yet in Concord,” Champlin said. “There are lots of people who work in Concord but live in Manchester. … I would like to see more housing that aligns with their pocketbooks and where they are in their life.”
 
Spurring development
Chorlian is also optimistic about the future of downtown Concord living, mostly because of the Complete Streets Project, which is setting the stage for a more vital downtown.
“There are a lot of things that other people have done in the last decade to make these things possible and they deserve a lot of the credit,” Chorlian said. “The developers who have done a lot of downtown redevelopment in Concord, for one — and then the businesses and institutions that have relocated or started up in downtown Concord. Red River Theatres, the Capitol Center for the Arts — you wouldn’t see projects like this if it weren’t for those things.”
Walsh and Champlin said the city is working hard to further incentivize downtown development, with a revolving loan program, which both the Endicott Hotel and Remi’s Block used and more relaxed standards for historic building code. Both the Endicott Hotel and Remi’s Block utilized tax incentives like RSA-79E, and downtown, there’s also the opportunity to waive residential and school impact fees that other new developments might have to pay, which Walsh reasons is because most downtown projects involve moving into spaces already there.
These are all things that help, but Chorlian says demand is king.
“There’s a lot of talk of, ‘Oh jeez, is your city hard to develop in? Does it make it hard on the developer?’ Honestly, there are a lot of steps. There’s a whole process that is involved in development,” Chorlian said. “But it boils down to, if there’s the demand for the product and you can deliver that at a cost structure where you can sell it at a price that’s higher than the price to buy the thing and do the construction, you’ll see people will persevere and battle their way through it.”
 
Capital challenges
“One of the challenges that I think every historic downtown has is the price tag involved [with market-rate housing development], and that’s part of the math of deciding whether or not to make an upper-story space, for example, into a residential space,” Champlin said.
Chorlian agreed.
“It’s a lot easier to figure out how much it costs to build a building from scratch on a blank piece of land than just to figure out how much it costs to turn an existing building into something else,” Chorlian said.
The Endicott Hotel wasn’t so bad because CATCH already owned the building when it was made up of subsidized housing. Its changes didn’t need to be enormous because it was already suitable for residential living.
There’s plenty of room for more Main Street development in the upper stories of buildings whose bottom floor is used for commercial purposes, but the other problem is that these properties are owned by a small number of people whose inclination is not to develop them into housing.
“Some of these buildings have been owned by two or three generations. Some of these property owners are reluctant to sell off any of these buildings because of family pride. Some of them are not comfortable with residential and are just comfortable with office tenants. They’re worried about phone calls in the middle of the night,” Walsh said. 
 
Downtown Nashua
The projects
The most recent successful apartments project in downtown Nashua was The Apartments at Cotton Mill, which opened in 2014 and contain studio, one- and two-bedroom units that range in size from 600 to 1,500 square feet. Prices range from about $1,200 to $1,900. Apartments filled fast.
Tom Galligani, former economic development director with the city, said during an interview last summer that downtown market-rate housing development had been slow going because it seemed developers were uncertain about demand, so most of the market-rate housing developments were smaller ones until the Cotton Mill project was completed.
“When you get these larger projects … it demonstrates to others it’s safe to invest in a given area,” said Nashua Downtown Specialist James Vayo via phone.
It’s likely the Cotton Mill apartments will be getting new neighbors; last fall, a developer connected with the Clocktower Place set an agreement to purchase the Picker Building with the goal of transforming it into market-rate apartments. The developer is part of a new company yet to be named, and Nashua attorney Andrew Prolman confirmed via phone the same architectural firm that designed the Clocktower Place apartments will design the building plans for the Picker Building. The goal is to present these plans to the City of Nashua this fall. Prolman said they’ll likely be smaller apartments with smaller price points compared to other mill apartments in Nashua.
And, right down the street, a company affiliated with Brady Sullivan Properties — Lofts 34 LLC — also acquired a long, vacant, 310,000-square-foot, 19th-century mill building on Franklin Street last summer, according to reports from The Telegraph and New Hampshire Business Review, for $100,000, though the company could not be reached for comment on its specific plans. The Union Leader reported it would be renovated into 175 one- and two-bedroom apartments and include parking.
SMC Management Corporation also has its eyes on Nashua at the Residencies at Riverfront Landing, with 228 units of Class A apartments, with apartment plans similar to those in the company’s other development projects. Chapman said he expects construction to begin in July.
 
Who’s moving in
Clocktower Place senior property manager Tia Phillips said these apartments contain lots of young professionals who work at nearby companies and newly retired people who liked the downtown living experience. 
“I’ve seen a fair amount of people considering that option because of the convenience that apartment building gives,” Phillips said. “You don’t have to do your shoveling, your lawn care, all those things that go along with owning a house.”
Vanessa Roy, property manager at The Apartments at Cotton Mill, said the apartments draw both high- and low- income families and individuals because of an affordable rental tax credit program.
“Cotton Mill is an interesting project because it really appeals to both user groups. There’s an affordable component to that building, and that’s a tricky thing to execute,” Vayo said. “What Brady Sullivan is doing in the Franklin Street Mill, depending on what amenities are in the building, may also appeal to different user groups.”
But the city could certainly use more variety, Vayo said.
“Somebody who’s downsizing from a single-family home into something downtown is likely looking for a condo rather than a place to rent, and there’s little product like that [in Nashua’s] downtown,” he said.
 
Potential for more
People with the City of Nashua are now aware of this demand for more downtown housing — and also the importance of drawing people downtown — which is why they created a new position in the mayor’s office, the downtown specialist, which Vayo holds.
Vayo noted several exciting sites via phone that could house more people downtown, from Railroad Square to the Tree Streets neighborhood. There’s plenty of potential.
“There are buildings that are vacant that could be demolished and redeveloped,” Vayo said.
Just as in any city, there exist challenges around parking, which could be solved with innovative development designs, but he said the City of Nashua has zoning that allows for flexible consideration of parking. 
“The market can decide whether or not to bundle parking with development. ... I don’t think people are moving to eliminate car ownership. … But one of the benefits that downtowns have [is that] you can have two people who only need one car.” 





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