A modernist icon in Manchester’s skyline, Brady Sullivan Plaza, could soon see a large slice of its office square footage given over to apartments.
Office-to-apartment conversions of all sizes are gathering steam in Manchester as the office market continues to experience softness.
A pair of projects slated to come before the next city Planning Board meeting show the range of how developers are responding to a pair of markets on opposite trajectories: office and multifamily. Local developer Ben Gamache is proposing to convert a 2-story downtown office building constructed in 1960 into 12 apartments. And local commercial titan Brady Sullivan Properties wants to swap a huge swath of retail, office and parking space in its 20-story Brady Sullivan Plaza property for apartments and dorms.
Gamage’s proposed redevelopment of 530 Chestnut St. will be – if approved – his third such project in the area. He previously converted a similar building next door at 540 Chestnut St. into 12 apartments and the second floor of a building at 62 Lowell St. into nine.
The Chestnut Street property sits one block off Elm Street, the city’s historic heart, and backs on to a large parking lot. No amenities are listed in plans filed with city officials. Neither are prospective rents, but space in Gamache’s 540 Chestnut St. building is being advertised at $1,950 per month for a 620-square-foot one-bedroom apartment and $2,100 per month for an 855-square-foot two-bedroom-one-bath unit.
At the opposite end of the spectrum: Brady Sullivan Plaza, at 1000 Elm St. Documents filed with city officials say nearly half the property’s 328,610 square feet of space is currently unleased, with substantial vacancies in both the ground-floor mall and the property’s 20-story office tower.
The conversion will see eight of the tower’s floors – the highest will be the 14th – a former restaurant, dorm rooms and street-facing parts of the property’s parking garage converted into 155 residential units, although build-out of the final 21 may change depending on tenant turn-over. No exterior changes are planned to the tower, which was built in 1972 in the modernist “international style.”
The units will be large, too. Brady Sullivan’s application shows mostly two-bedroom units, with an average size of 1,000 square feet.
Although the Brady Sullivan project will remove 114 parking spots, the project only needs site plan review and a conditional use permit to allow multifamily units in the city’s Central Business District zone as the neighborhood has no parking minimums. Gamache is seeking the same permissions.
Office Buffeted by Pandemic
The projects won’t be the first office-to-apartment conversions in the city. The city has seen a steady pace of office-to-apartment conversions in the city’s downtown among class B and C properties over the last two years. Other notable projects include prominent local multifamily developer Red Oak Real Estate’s plans to renovate the upper floors of the Odd Fellows Building at 73 Hannover St. into 43 apartments.
Brady Sullivan has even proposed and carried out its own in the past, and company executives told The Registry Review last summer that the 1000 Elm St. project started planning before the pandemic. Its latest, approved this summer, will see 61 units carved out of the Jefferson Mill building in the Millyard.
These conversions come as the office sector has come under uneven pressure thanks to the pandemic, and the growing popularity of downtown living proved lucrative for developers, even pre-pandemic.
The statewide market saw 373,000 square feet of negative absorption through the third quarter from large downsizings in Hookset, Concord and Nashua, for a total vacancy rate of 11.2 percent according to Colliers International. Yet asking rents have stayed relatively stable and office property prices have returned to pre-pandemic levels.
Manchester’s overall vacancy rate sits at 9.1 percent, according to Colliers, with class A space seeing the worst tumbleweeds with a 14.4 percent vacancy rate through the end of the third quarter.
Meanwhile, multifamily complexes in Manchester have been scoring eye-popping sale prices as far back as 2019, when Red Oak Apartment Homes dropped $39 million on the former Citizens Bank building at 875 Elm St. in spring 2019. Operating these properties has been lucrative for even longer, with Brady Sullivan helping lead the way with mill conversions earlier in the decade. Apartment listings portal site Zumper reported last month that the average rent for a one-bedroom apartment citywide was $1,380, up 9 percent year-over-year, with downtown units going for a median of $2,265.
