The Amoskeag Mills in Manchester, circa 1895.
It’s been 80 years since Amoskeag Manufacturing, at one time the largest textile facility in the world, shuttered its doors in Manchester, leaving a huge void in a robust industrial hub that once employed a melting pot of tens of thousands of first-generation immigrants.
The Amoskeag plant and Manchester would never reclaim its dominance as a textile giant, but the mills they occupied are now a melting pot of a different sort, housing apartments, offices, manufacturers, restaurants, fitness centers and medical providers, to name a few. And that scenario is playing out in over one thousand mill buildings in cities across NH.
The revitalization has mostly taken place in the last few decades as preservationists push to honor the legacies of these historic landmarks, and real estate developers work with city planners to lift restrictive zoning ordinances and take advantage of the prime downtown locations. But doing so has a high price tag and requires patience as old buildings come with historic preservation rules and environmental contamination.
Still, many developers have decided it’s worth the effort. “Whenever I talk about the city as a marketable place [for business] the millyard is a huge recruiting tool for the city,” says William Craig, economic development director for Manchester.
A Love of History
Eric Chinburg of Chinburg Properties Inc. in Newmarket “caught the mill bug” in the mid 80s. He loves the history and as he likes to remind people, “you can’t beat the locations.” Often on the water’s edge and in the heart of downtowns, their crimson-brick facades have striking architectural features, such as wood plank flooring, exposed beams and big windows that let in natural light.
“These structures are not reproducible at any reasonable cost,” says Chinburg, who has renovated mill properties in Dover, Laconia, Newmarket, Portsmouth and Somersworth. Chinburg estimates he has invested $60 to $80 million in mill renovations over the last 10 years, and on average, maintains a 10 percent vacancy rate for his commercial properties. However, his residential units turn over without any gaps in rental income.
In 2012, Chinburg bought the vacant Cocheco Mill complex in Dover overlooking the Cocheco River dam for $6 million. He spent three times as much restoring the industrial site and adding a business center and cafe to lure a variety of tenants. They include VF Corporation (the company that acquired Timberland), NEMO Equipment, Rewards Now, Blue Latitudes Bar and Grill, a pilates and fitness gym, attorneys and psychologists. On the upper two floors, Chinburg Properties added residential apartments.
Manchester-based Brady Sullivan Properties is known for the five mill buildings it owns in NH, encompassing 1,400,000 square feet statewide. It specializes in repurposing older mills like the turn-of-the-century Waumbec Mill with its 14-foot ceilings on Commercial Street, which it bought 20 years ago for $210,000 at a time when developers were less eager to invest in ramshackle buildings.
Last year, Brady Sullivan purchased the Colony Mill Marketplace in Keene and Center at Keene for $4.5 million. The buildings came with a 240-year narrative, including a trail of financial hardships and a 50 percent vacancy. Arthur Sullivan, a principal of Brady Sullivan, says they invested about $1 million to preserve the buildings’ characters and to refurbish sidewalks, driveways, irrigation, heating systems, landscaping, signage and parking.
Like other mill owners, Brady Sullivan goes to great lengths to respect the historical integrity of the mills. For example, workers at Brady Sullivan punch down each nail in the reclaimed wood floors of the mill buildings before refinishing them. Sullivan says it can cost up to $2,000 each to rehab the hundreds of windows in a mill to meet historic preservation codes.
Incentivizing Mill Space
For history buffs like Chinburg and Sullivan, there is more than love to guide them through complex renovations. There are also some financial incentives, both historic tax credits and grants to address environmental issues.
The National Park Service and the IRS give a tax credit for 20 percent of the rehabilitation costs.
The Cotton Mill Project in downtown Nashua has 109 apartments.
Since 2000, NH developers have invested more than $87 million in rehabilitation projects that qualified for these tax credits, according to Peter Michaud of the NH Division of Historical Resources. They include the $6.5-million Page Belting Company mills in Concord, the $27.7 million Monadnock mills in Claremont, and the $23.5 million Newmarket mills projects.
To qualify for the historic tax credit program, developers must retain ownership of a building for at least five years. “It is one of the few government programs that makes money for the treasury,” says Michaud. He says every dollar spent in tax credits returns $1.26 to the treasury because the income tax derived from the success of a rehab increases the owner’s tax liability.
Owners refurbishing historic buildings get another break on taxes in towns and cities that adopt the state’s Community Revitalization Tax Relief Incentive, (RSA 79-E), a law that lets them delay property tax increases for up to five years. Less than 30 municipalities have deployed this incentive, mostly when they want to get projects with blighted buildings off the ground.
John Stabile, head of The Stabile Companies, used both federal and state tax incentives on the $27 million Cotton Mill project, a 160,000-square-foot cotton storage warehouse in downtown Nashua. Stabile bought the property in 2006 for $2 million from the Nashua Corporation, which had last used the facility in the early 2000s to house its toner products for printers and copiers.
The project spanned six years and treaded through 13 state and federal agencies, including the Federal Emergency Management Association, NH Housing Finance Authority and the Community Development Finance Authority. The historic cotton storage warehouse on Front Street now has 109 apartments and is fully occupied with a 50/50 split of market-rate and affordable housing for those earning between 50 and 70 percent of the median area income.
“It’s the most complicated thing I’ve ever done,” he says with a laugh, but says he persevered because of the tax incentives and the low interest, 40-year amortization from the U.S. Department of Housing and Urban Development. As part of his agreement with the city, Stabile had to lower the floodplains in the Nashua downtown area by 11 feet near the Jackson Falls Dam, “which takes this building and 98 others out of harm’s way.”
Stabile also used a $660,000 loan through the city of Nashua’s Brownfields Cleanup Revolving Loan Fund to clean up the site from hazardous waste. The more recent mill projects that received brownfields funds were used for demolition.
But not all developers choose to use tax credits or other grant funds. Before Steve Dumont of Dumont Property Group revamped the 176,000-square-foot Gonic Mills in Rochester, he decided not to apply for any government-based grants or incentives. “Too much paperwork,” he says. He paid $1 million about 10 years ago and spent another $1.5 million retrofitting the building for a passenger elevator, a dance studio, a restaurant, a dog training center, a music school and 27 furnaces.
Dumont says he maintains the historical integrity but not at the expense of excessive stipulations: “If a tenant needs to move in and something needs to change, we have to do it,” he says.
Mixed Use
Allowing mill buildings to house an eclectic mix of occupants invigorates a cavernous complex that may otherwise remain dormant, explains Robert Forrant, professor of history at the University of Massachusetts-Lowell.
These buildings are often too large to accommodate a single use, which is why developers typically divide a site for multiple functions. Forrant adds that if not “hedging your bet on one part of the economy, you’re less in trouble if the housing market comes down.”
In Manchester, the areas around the millyards achieved zoning approval for mixed-use occupancy early on, as far back as the mid-1990s. Segway inventor and CEO of DEKA Research & Development, Dean Kamen was a pioneer in transforming the rambling mills in Manchester into an epicenter for high tech, retail and research and development. The company overseeing Kamen’s real estate holdings, Gateway Technology Corporation, now owns seven mill buildings, providing office space to companies like Texas Instruments, AutoDesk and Philips Teletrol Systems.
UNH-Manchester has long been housed in Manchester’s Millyard, but earlier this year, the campus received a makeover when it moved to the Pandora building, the former site of Pandora Industries, which spun 60,000 sweaters per week in its prime. Kamen paid $3.1 million for the University’s former location at 400 Commercial Street.
As part of the agreement, Kamen is leasing the Pandora building to UNH for $2 million a year. The university is committing another $8 million in improvements and signed a seven-year lease with an option to purchase the six-story building for $16.5 million, according to business director Kathy Braun.
The Gonic Mills in Rochester
UNH-interim dean Michael Hickey says the warm, welcoming blend of old and new architecture attracts students and he expects will help UNH-Manchester grow its student population from 750 to 1,000 in the next three years. On the busy intersection of Commercial and Granite Streets, the remodeled campus has high visibility. Hickey says it will help “foster relationships with nearby businesses for internships and in-kind donations.” The campus overhaul expands the number of classrooms by 40 percent, making room for new programs in STEM, biotech, homeland security and engineering technology.
The Lofts at Mill No. 1, renovated by Brady Sullivan, contain 110 apartment units.
Challenges Ahead
Reinventing mill buildings for new purposes is not as formulaic as fixing them up and making them habitable, cautions Forrant, the college professor.
“If developers run too fast and too far ahead in what the community will support, they can run into expensive empty space.” He advises mill developers to begin with “small phase-ins,” so when medical offices or high tech companies move into newly refurbished buildings, their employees become patrons of other tenants, like owners of lunch cafes or convenience markets.
Likewise with mill conversions to residential condos, says Forrant, “if there isn’t anything for people to do after they move in, the development slowly grinds to a halt.”
Mill buildings, in general, have their share of challenges, acknowledges Chinburg. In addition to retooling or replacing old plumbing and heating systems, contractors retrofit infrastructures to meet up-to-date building and environmental codes. But, when a ceiling height constraint dictates removing the floors, “sometimes it’s impossible to get old structures to meet every intention of a new code,” Chinburg says. And that’s when developers discuss with stakeholders new interpretations that don’t sacrifice safety, he says.
Unwarranted parking ordinances also wreak havoc on the best-laid plans. “We’ve been successful working with communities who had outdated parking requirements,” Chinburg says, mentioning Dover and Newmarket as two examples where towns reduced their parking needs for mixed-use sites “based on our empirical experience data about what is really needed.” As he explains, mixed-use buildings are adjacent to parking facilities that share patrons: office workers claim spaces during the day that apartment dwellers take over in the evening.
“All mill buildings have some sort of parking problem,” acknowledges Sullivan of Brady Sullivan Properties, since mills were built at a time when people walked to work.
In recent months, Brady Sullivan, which owns around 3 million square feet of real estate in Manchester, is focusing on apartment rentals. Brady Sullivan paid $1.9 million for the previously vacant 300 Bedford St. mill in 2011, now known as The Lofts at Mill No. 1. To transform the dilapidated structure into contemporary digs, Brady Sullivan spent about $12 million restoring the building to create 110 apartments with an artistic bent, using tax credits to defray 20 percent of the renovation expense.
Across the Merrimack River is Mill West on McGregor Street, which Brady Sullivan bought for $16 million in 2007. Bifurcated into residential and commercial wings, the $20 million renovation project will be done later this fall. Mill West residents pay up to $2,550 in rent, double the monthly costs of median gross rents in the Granite State, and most all units are occupaid. In the spring, concerns about high lead levels led to testing and cleaning of apartment units.
Mill buildings don’t necessarily lend themselves to cookie-cutter layouts. But such design dilemmas are also windfalls to developers targeting high-end clientele who want a customized, upscale look with antiquarian charm. “In a [mill building] reuse, there’s always extra room to do things we couldn’t in an [apartment] complex,” says Sullivan. In one building, an old boiler room with high ceilings is converted into an indoor basketball court.
Mills of the Future
“A lot of our mills are being rehabbed for housing,” says Michaud of the Division of Historical Resources. With so many young working professionals delaying the purchase of a home, the demand for apartment rentals is accelerating, according to a study commissioned by the NH Housing Finance Authority.
Ideally, says Michaud, Millennials want to live where the action is, walk to work, and have easy access to public transportation. They don’t mind giving up a spacious room in exchange for shared common space and lower monthly fees. And although less likely to rent than own, aging empty nesters are also finding these loft-style mill apartments attractive for downsizing.
Tom Galligani, Nashua’s economic development director, continually hears from Main Street merchants that for businesses to thrive, they need more downtown housing where residents can walk to shops. Retailers are feeling the positive impact of the Cotton Mill project, says Galligani: “We have 250 to 300 new residents who weren’t here a year ago.” Galligani says the apartment complex, with its combination of market rate and affordable housing “blazes a trail for developers looking to renovate other buildings downtown.”