Nazar Vincent saw a need for more upscale apartments in downtown Manchester at rates more reasonable than Boston.
Grand Central Suites will be built at the site of the Athens Restaurant and Central Ale House on Central Street. The bottom floor likely will include a bakery and a new restaurant.
The “mid-luxury” units will include stainless steel appliances, washers and dryers, and wood or plank flooring. Vincent is talking to a cabinet maker in Italy about importing products. He says the rents will not be exorbitant.
“What I want to give people is being able to come to their home — whatever size that is, a one-bedroom or two-bedroom — and say, ‘You know what, I enjoy my home. I love how it was done,’” said Vincent, of Massachusetts-based Bridgewater Company.
Downtown Manchester is seeing an influx of more apartments through new construction and the conversion of underused mills or office space. Nearly a dozen projects to bring more market-rate units downtown or close are in the works. Some wonder how the higher rents will help address the city’s need for more affordable housing options.
Manchester’s apartment vacancy rate is below 1%, when housing experts say about 5% is a healthy figure. The city would need to add 1,800 units to achieve that vacancy rate, according to the city’s 2021 affordable housing report.
Rents in Manchester increased 9.6% between 2020 and 2021, according to the report.
Manchester Economic Development Director Jodie Nazaka said the city needs all types of housing. Younger workers who are taking technology and biofabrication jobs in the Millyard have the means to afford higher rents and enjoy all that the city offers for dining and entertainment.
“Things are market-driven, and there is definitely a market right now for these types of units that are being developed,” she said.
As for affordable housing, less expensive units could open up when people move into the newer units, a concept known as filtering.
“I think the challenge with a lot of our communities is that there is just not enough supply that is being built, so I think that challenges that sort of thinking that it will naturally filter down,” said George Reagan, community engagement manager at the New Hampshire Housing Finance Authority. “Housing at the higher end is not going to filter down enough” to help renters with lower to moderate incomes find rentals, he said.
The five “Ls” — lumber, labor, land and lots, loans and law — all contribute to the increasing cost of construction, which make lower-end projects tough for developers to build.
The 77 one- and two-bedroom units at the eight-story Grand Central Suites will include technology to schedule housekeeping, dry cleaning pickup, room service from in-building restaurants, concierge service for mail and packages and possible valet parking for certain times of day. Penthouses on the top floor will offer increased security and balconies.
Competition is just a few blocks away.
Red Oak Apartment Homes, one of the largest operators in the city, is building new apartments at 409 Elm St., across from Market Basket. Another Massachusetts developer is set to break ground on 249 units nearby.
The six-story, 95,288-square-foot building at 409 Elm St. will have a 90-unit mix of studios, one- and two-bedroom apartments, along with a fitness club, office space, cafe and co-working space. Other amenities include a pet-washing station and charging stations for electric cars.
“I don’t want to be on the highest of the highest ends,” said owner Ron Dupont. He expects to be a “few bucks” under any of the new competition arising downtown. The company’s 1,800 units across southern New Hampshire are about 98.5% full.
The company offers units for a wide range of tenants, from those watching every penny to high-paid tech workers.
On a recent afternoon, Carolyn Gamache was pulling drywall off a third-floor wall at 530 Chestnut St. The 1960 office building is being turned into 12 apartments, complete with plank flooring and stainless-steel appliances. Each unit will have a dishwasher and its own washer and dryer.
The same was done to 540 Chestnut, with units now renting for between $1,650 and $2,000. The $2,000 units include two bedrooms and two baths.
The new units are expected to be done this fall after being completely gutted.
“We went with the times and noticed (the office space) wasn’t working anymore,” Gamache said.
The company also is converting parts of two other commercial buildings on Lowell Street into apartments, including 50 units at the Wellington Trade Center.
The second bedroom in some of the units can be used as an office. Developer Ben Gamache said some of the tenants in 540 Chestnut receive stipends from their companies to work from home.
The tenants like being near downtown and having at least one parking space, said Shawna Lavoie, property manager. A second space goes for $60 extra a month.
“The building has a lot of younger workers,” she said. “I think a lot of them are 50/50. They work both from home and from the office.”
Brady Sullivan Properties plans to add 155 units to Brady Sullivan Plaza at 1000 Elm St., one of the tallest buildings north of Boston. The units are expected to draw the highest rents in the company’s portfolio, according to co-owner Arthur Sullivan.
The units will be “first-class all the way” and feature a modern design with bright colors.
“Lots of people are looking forward to living in the central business district these days, in terms of restaurants and things they can do,” Sullivan said. “What is so unique about it is the floor-to-ceiling glass in every single unit. When you walk in it’s going to be bright and beautiful.”
The company also is converting part of the Jefferson Mill into apartments and will soon break ground on a 160-unit building on a vacant 4.5-acre lot on Dunbar Street along the Merrimack River. Sullivan said the increased units are good for the workforce.
“It doesn’t matter if the units are upscale or affordable,” he said. “In general, we have such a shortage of apartments and a need for apartments, that’s what the big issue is in the city.”
A decade ago, the city had few living options downtown. The conversion of the Citizens Bank building at 875 Elm St. into 91 units in 2016 helped spur growth, with new restaurants and shops popping up.
Nazaka, Manchester’s economic development director, said companies going to a work-from-home or hybrid model may have fueled some of the conversions.
“It will be interesting to see how that plays out,” she said. “There has to be that perfect balance of residential, commercial and amenities such as restaurants and activities.”
Across from the Red Oak project under construction on Elm Street, a Massachusetts developer plans to tear down several commercial buildings to make way for 249 units.
Jones Street Investment Partners, a private equity real estate firm focused on multifamily developments, expects to break ground on the $48.5 million project this summer. Representatives of the company declined to comment.
Red Oak’s Dupont said construction costs have caused a bump in rent, with the cost of some materials rising 20% to 40% in the past year and a half.
“How can you build affordable housing?” Dupont said.
Regulations in some towns and cities also can significantly increase the cost of projects.
Grand Central Suites will be priced for those in the middle class, Vincent said. The rents have yet to be disclosed.
“We are still gauging our competition,” he said.
He hopes plans to build a commuter rail station come to fruition. The project could draw workers who commute from Manchester to Boston.
Vincent foresees his company taking on more redevelopment projects in downtown Manchester and other Southern New Hampshire communities.
“The whole idea is to start here, and we have other projects we are eyeing in the next year or so,” he said.