The transition from working at home is just beginning and may take some time to play out, brokers say, but one company’s story underlines why being in the city is vital.
MANCHESTER, NH – Chris Conroy and Kate Marquis of Heartwood Media, a video production company, decided early this year it was time to get back to the office.
The business had operated out of 83 Hanover St. for 17 years before they began working from home in March 2020. Collaboration – with each other, their contractors and clients – is a big part of their business. So, in February, they began looking for office space.
They liked being in Manchester, but “we didn’t think we’d find space downtown again that would meet our needs,” Marquis said. “We looked in Bedford, Hooksett, Amherst, Concord and Goffstown. Nothing felt right for us.”
Conroy, the business founder and owner, said they weren’t desperate for space, so they had time to be patient. That patience paid off. This week, they are moving in at 101 Starks St., downtown on the edge of the MIllyard.
“I suppose we were a bit picky because we didn’t have to have an office,” Marquis said. “So, we waited until we found a space that met our requirements and also felt right. The Stark Street office feels right.”
The afternoon Conroy and Marquis went to look at it with broker Amy Chhom, they ran into at least three people they knew from before they’d left the city. The chance meetings underlined what they’d been missing the past couple of years. “It’s just those connections,” Conroy said.
The connections are fostered when businesses share downtown space with each other, and over time build a connectivity that’s vital, Marquis said.
“You run into people at lunch or when you’re out for a walk,” she said. “It’s the community.”
The Beginning of a Transition
Commercial brokers said that Heartwood Media, and other businesses, moving back downtown isn’t a trend yet, but it is a signal of a transition.
Chhom noted that some businesses never left, and some are gone for good. The return of Heartwood Media, and other businesses, “provides an outlook that is positive and speaks to the myriad of benefits to employees.” She said businesses are also aware that being in downtown Manchester enhances the company brand.
Dan Scanlon, Senior Associate for Collier’s, said the transition will likely gain momentum once leases start to expire.
“There seems to be some general movement by office users back to their spaces, but I don’t think we’ve really seen the full impact yet,” he said. “When [leases] come up for renewal or termination, we’ll really see what will happen.”
Scanlon said other factors affecting the move back is the tension between business owners wanting their employees back in the office and employees wanting to work from home.
“My personal belief is that the human desire for interaction will win out in the long term, but I think that there will be some accommodation, as there are many businesses that just don’t need their employees in the office five days a week,” he said.
Businesses Chhom has been working with are interested in affordability, location, and access to parking. And it’s a tenant’s market, “which enables more options to choose from, greater negotiation in fit-up needs, and other related lease terms.”
With the fear of Covid and its unknown health effects lessening, restrictions on staff have lessened as well. “The challenge for many businesses is a majority of employees prefer both remote and hybrid roles, resulting in the need for the square footage of office spaces to be reduced,” she said. She also sees a return to a more traditional office space layout, rather than hot-desking and open-concept configurations.
Businesses looking for Class A office space in downtown Manchester can likely find it. As of last quarter, there was a 13.4 percent vacancy rate, according to Colliers’ market report. Those looking for Class B space (7.2 percent vacancy rate) or Class C space 4.8 percent vacancy rate) will have a tougher time. The average lease in the third quarter was $19.33 per square foot, ranging from $23.31 for Class A space to $16.51 for Class C.
Businesses looking for industrial or flex space – in any location in the area — are the most challenged. Scanlon said those spaces are in the greatest demand, but there isn’t enough supply. “The situation is worse than I’ve seen it in over 20 years,” he said.
While office space and rental lease prices haven’t changed much, the price of industrial and flex space has more than doubled in the last three or four years.
Location, Location, Location
When Heartwood began looking for space early this year, they cast a wide net. Unlike a restaurant or retail business, they don’t rely on walk-in traffic or a high visibility location for customers. But that doesn’t mean they don’t have specific location needs.
One of the biggest challenges to finding the right space is that they have to be able to easily load their equipment into the van to go on shoots. “[Location of the office] can’t be something that slows us down, we have to get places and do things,” Conroy said.
“There were tons of spaces that were available on Elm Street,” when they were looking, he said. “But it might be second, third, fourth floor.”
Carrying all that equipment in and out was the only consideration. There was also the issue of parking a van on Elm Street to load or unload it.
Video production also brings with it other challenges, Marquis said. “We didn’t have great soundproofing between rooms in our old office. With video conference now the norm, we were looking for some distance between offices within our office as a sound buffer.”
They also liked the historic character of the Hanover Street space in the former Oddfellows hall they’d had pre-Covid. Marquis said they had an eye out for something that would replicate the character and charm of that space.
Marquis said that, while they have clients across the state, as well as out of state, Manchester is a good central location. “Nothing beats Manchester’s ability to be within a quick drive to where we need to film,” she said.
Another vital consideration was that their lease had to allow Conroy’s dog, Roxy, to be onsite.
While they looked in the suburbs, in office parks, and everywhere else, they kept coming back to one conclusion. “We liked being in Manchester,” Conroy said.
All of that made for a seemingly tall order.
They benefited from not being in a rush, Conroy said. “We were open to looking at space as it could be.”
They found what they wanted just a few weeks ago – 1,700 square feet, with rent in the same ballpark as what they’d been paying before the pandemic.
New Residents, Technology Focus
The downtown that’s evolving now likely will look different from the downtown of 2019.
With at least 1,200 new housing units expected in and near the city center in the next two years, thousands of residents will be added, who will spend money, work, eat and more. More housing planned for the rest of the city and suburbs will add to downtown’s visitors, Chhom said.
She noted that restaurants were the hardest-hit downtown businesses, and there are still many empty storefronts.
“But with the arrival of new restaurateurs beginning to make moves to the downtown, as well as the influx of apartments under construction, downtown is sure to grow exponentially over the next year,” she said.
What type of businesses will be looking for space downtown in the future, and in the rest of Manchester, and what type of space they’ll want, is anyone’s guess. “I certainly don’t have a crystal ball,” Scanlon said.
But both he and Chhom said that Manchester’s increasing focus on technology pre-pandemic will likely continue to be the key to downtown’s evolution.
“We may be seeing a significant transition regarding where businesses want/need to relocate, but I think technology is more the driver of that than the pandemic, and it started well before the pandemic,” Scanlon said.
Chhom pointed out that Manchester has been resilient through recessions, as well as the pandemic. “While many of our businesses operate below the radar, Manchester is home to cutting edge technology-based businesses, nationally regarded research and development companies, and highly regarded global and state universities, creating a talented workforce who choose Manchester as their home,” she said.
One big driver will be the $44 million grant the city got in September as part of the Build Back Better Regional Challenge, which is aimed at building a biofabrication cluster in the MIllyard, expected to eventually create 7,000 jobs.
One Small Piece, One Big Move
Heartwood Media, with two full-time employees, one dog, and 1,700 square feet of space to work in, is one small piece of the overall downtown Manchester landscape. Being in that landscape is vital to growing the business, Conroy and Marquis said.
There are the tangibles – for instance, their new digs have a conference room, which will allow clients who want to film an interview in that type of space to do it, something they didn’t have before.
More importantly, they will be able to add staff.
“Providing mentoring and experience are necessary to onboard new coworkers in video production,” Marquis said. “When we were having future business discussions from home, Chris and I couldn’t imagine doing that work without being back in a physical space together. Video production is a team sport.”
Conroy said that the need for in-person collaboration was the driver for getting back together. “What we do is a very collaborative process, and even with all the tools, the Zoom and Teams and Facetime and all that stuff, there’s no substitute for just kind of poking your head around the corner and saying, ‘Hey, can I talk to you for a second?’”
Marquis, who is Heartwood’s main video editor, said she’ll miss things like editing film in her PJs, doing laundry while she worked and not having to drive in the snow. But being back together was essential.
“Not having someone to call into a room to bounce a few alternate edits off of impacts both my creative mental health and the final product,” she said.
Conroy lives in the country, in Weare, and missed the kind of contact the city provides.
“I like people,” he said. While Roxy, a yellow Lab, is a loyal companion, “she’s not a great conversationalist.”
He also missed the vibe and energy of downtown Manchester. He moved to the city in 1990 from Brooklyn. “Manchester’s come a really long way, and it’s been great to see. There’s a lot going on, and I think people are working really hard to make it a good place to live and work and play,” he said. “We’re excited to be here. We’re excited to be together again.”