Despite Office Space Argument, Downtown Ordinance Goes to Council

Despite a local developer’s request for more housing in the downtown area, the Planning Board will pass its updates to the Central Business District (CBD) and Traditional Business Overlay District (TBOD) on to the Town Council for approval, without changes. The revised ordinance calls for a mixed use model for downtown only, with commercial/retail allowed on the first floor, offices on the second floor, and residential on the third floor. Ron Dupont, principal in Red Oak Properties, spoke during the public hearing and urged the board to make more provisions for housing on the second floor.

The public hearing May 6 was the second in a series and related to amendments to Article II, Section 165-5, adding definitions, amending definitions and amending permitted uses for density, building height, parking and buffer zones. Planning Director George Sioras noted that the revisions were the result of many weeks of work, including a subcommittee.

Dupont was the only speaker in the public hearing. He said he has been in the real estate business for 31 years, starting off with a three-family in Hudson, and now owns and rents 1,100 apartments, including 73 units in Derry. He wasn’t sure that second-floor offices would fly. “You need to understand the market, and allow the market to dictate what happens downtown,” Dupont said.

He is contemplating a project in downtown Derry and has worked with Sioras and his assistant, Elizabeth Robidoux, on preliminary studies. “I just invested $10,000 to $15,000 to have the land surveyed,” Dupont said. And if he’s forced to put offices on the second floor, “As politely as possible, I’ll stop the project,” he said.

Dupont said that office space is hard to rent in southern New Hampshire. He gets $10 per square foot for his historic Daily Mirror building in Manchester, next to the Palace Theater, but that’s an iconic building in an historic district. “To build new, it would be at least $20 per square foot,” he said. And that doesn’t guarantee the units will be rented, because there’s a surfeit of office space in the region.

“If you force us to put office space on the second floor we’ll have a hard time renting it,” Dupont said. “It will stay empty.”
The markets have changed, Dupont said. “I’m looking at a building now and I was initially told that it would be $100 per square foot to build,” he said. “Then the contractor came back to me and said $148 per square foot. The labor costs have changed.”
There is also a greater demand for one-bedroom apartments, Dupont said. “When I first started out it was 25 percent one-bedroom, 75 percent two-bedroom,” he said. “Now it’s half and half. The market has changed.”

He was also critical of the revised parking specs for the CBD and TBOD, which have 2 1/2 spaces allotted per unit. “That is too much parking,” Dupont said. “It’s more to plow, more asphalt.” He would recommend 1.1 or 1.2 spaces per unit, he said.
And Dupont questioned the board’s determination to control density, noting, “Density is vital in a downtown, as long as you have parking. Density brings people in.” It benefits businesses, Dupont said, and increases safety.

“The more people you have walking around downtown, the safer it is,” he said. “The market has to be allowed to play itself out.”
But chairman David Granese said that depended on who was living downtown. With some downtown apartment buildings, “I see the police there all the time,” he said.

The other issue is blight, Granese said, and while a Property Maintenance ordinance and committee are addressing that, it takes time. “People own buildings, they’re falling down, and the town has to take them to court,” he said. “Another owner has multiple empty buildings, and he doesn’t want to sell.”

“If a downtown apartment is empty, there’s a reason for it,” Dupont said. “I have 73 units in Derry, and they’re 100 percent occupied.”
There is a huge demand for multifamily housing, Dupont added.

But it has to be the right kind of housing to build up a downtown, board members said, noting that the two senior complexes right on Broadway have not brought an influx of shoppers and diners. Vice-chair John O’Connor asked if Dupont accepted Section 8 housing and Dupont said he did. He believes in mixed income, he said, and Section 8 allows low-income clients to have a better say in where they live. Most of his projects have a public housing component, he said.

Dupont continued to advocate for housing, noting that “the office leasing market is cutthroat and brutal.” Only special uses such as medical complexes are thriving, he said.

The only New Hampshire town with a thriving office space market is Portsmouth, Dupont said. “They have this ‘little pond’ called the Atlantic Ocean,” he said. “If you put in this requirement, you are putting a roadblock in front of me and every other developer,” he warned.

When Dupont brought up several thriving high-rises in Manchester, Granese noted, “They have public transportation.” Dupont countered that those units rent for $1,500 to $1,800 a month, “and these renters don’t take public transportation.” O’Connor and Sioras reminded the group that the New Hampshire Department of Transportation has revived its CTAP, or Community Technical Assistance Program, in light of the widening of Interstate 93 getting a green light. It’s a build-out analysis that will give data on how the widening will affect the towns along the corridor, including the possibilities for small business, O’Connor said. Sioras reminded the group and television audience that after the workforce housing law came in, Derry was shown to have “more than our fair share” of workforce housing.

On a personal note, Mark Osborne, Town Council representative to the Planning Board, said if he lived in an apartment he would be pleased to have a business just under him. “There would be no noise in the evening,” he pointed out.
Alternate Marc Flattes said the town needs to stay the course, with office space available on the second floor. “We need to market our community, and our downtown is marketable,” he said.

Member Michael Fairbanks agreed but also played devil’s advocate, noting, “You can’t force the market to invest in something that won’t make them money.” And downtown is coming back into its own, Sioras said. From his office window, he can see people walking downtown from the courthouse next door. There are state police, attorneys, and even once a judge in a robe, all looking for a place to have lunch or coffee.

“If you’ve got two people working in an office, they are going to go downtown,” Sioras predicted. Newer, hipper businesses such as The Grind coffee shop, the Drae tapas bar, the Drinkery and Cask and Vine have the potential to draw customers.
Downtowns are coming back as a reaction to urban sprawl, Randy Chase, Town Administrator’s representative to the board, said. “This document is where we have to start.” The board voted 7-0 to approve the ordinance and pass it on to the Town Council for final acceptance.