Study: Manchester could support more rental housing downtown


MANCHESTER — There is "evident marked-based support" for the potential construction of several dozen apartments for renters of a variety of incomes, about 10,000 square feet of commercial space and perhaps a few condominiums in downtown Manchester, according to a recent study.

The 75-page report, prepared by research firm Doug Kennedy Advisors for the town government, relies on past studies, quantitative analyses and interviews with "persons directly involved with real estate and development activities" in the area to arrive at those findings, which set the stage for a second study to determine where exactly such a project — which, at least at this juncture, remains theoretical — might best be located.

The completed study was funded partly by a $10,800 grant from the Vermont Agency of Commerce and Community Development, which more recently awarded a $15,750 grant to the municipality for the follow-up inquiry. The town is prepared to seek proposals from consultants interested in spearheading the second phase. The results of both efforts eventually "will be combined to develop alternative viable project plans that can then be pursued by the town and interested community stakeholders to realize housing and vibrancy goals" for downtown Manchester, according to a news release announcing the first phase's completion.

More jobs than workers

In Manchester, there are about 1.79 jobs for every worker who lives there, according to the report.

"Because there are more jobs than workers living in Manchester, the community attracts a net inflow of commuters," according to the report. "While some of these commuters may prefer to live in their current community, a segment would probably opt to move to Manchester if suitable or affordable housing were to

become available."

Commuters who work in Manchester are primarily concentrated along the Route 7 corridor, the report states, though they can also be found in communities in Washington County, N.Y. and along the Route 30/11 corridor.

Compared with statewide values, the Manchester area has relatively high concentrations of workers in construction, non-durable manufacturing, retail, educational services, and leisure and hospitality, according to the report.

From 2010 to 2017, the region has seen significant increases in the number of establishments and employees in the professional and business services and health care sectors, growth that "is typically an indicator of increased demand for office space," the report states. Though the number of tourism-oriented businesses decreased in that time period, the industry added 237 jobs.

The labor force of Manchester and nearby towns declined by more than 8 percent, from 12,534 to 11,513 workers, from 2010 to 2018, according to the report, citing Vermont Department of Labor statistics. Bennington County's labor force declined by nearly 10 percent during the same time period.

"These decreases are related to the aging of the work force and the ongoing 'aging out' of the baby boom," the report states.

Low vacancy, high prices

A number of data points suggest the Manchester rental housing market has room to grow.

While about 66 percent of renter households in Bennington County include only one or two people, that figure drops to 44 percent in Manchester, the report states, citing U.S. Census Bureau data. "This is quite unusual in the region and likely reflects a rental housing stock that is not suited to small households."

Nearly 70 percent of households in what the study deems Manchester's primary market (the area within an approximately 26-minute drive of downtown Manchester), secondary market (within a 26- to 36-minute drive) and the town itself include only one or two people — "a critical factor to consider when assessing the market for a housing project," since "the great majority of households are seeking small housing units," according to the report.

Rental housing represents just 29 percent of occupied housing units in Manchester, according to the report. That figure is 40 percent in Bennington, 46 percent in Rutland, 49 percent in Middlebury and 58 percent in Burlington.

Second homes represent about 28 percent of all housing units in Manchester, the report states. That's higher than the corresponding Bennington County (23.3 percent) and Vermont (16.3 percent) figures.

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"The pace of new residential development has slowed in recent years," according to the report. Excluding its approval in 2018 of the conversion of the Inn at Willow Pond to 40 rental units, the town of Manchester on average has issued only 11 to 12 residential building permits annually between 2015 and 2019.

Rental-listing surveys conducted by the consultancy in May and August of last year found a vacancy rate of 1.8 to 2 percent. "A vacancy rate at this low level is an indicator that the available supply is not meeting demand," the report states.

The surveys also found that the median gross rent, including utilities, for a one-bedroom apartment in Manchester is $1,240 — about 36 percent higher than what the U.S. Department of Housing and Urban Development says is fair market rent.

Short-term rentals

Online services that facilitate short-term rentals "are increasingly a factor in the Vermont housing market," the report states.

In April 2019, the consultancy found "156 active short-term rental properties, with an average rate of $369 per night." Later that same year, in November, it found 198 listings at a $350 nightly rate. A map of these listings included in the report shows them distributed throughout the town.

There were only about 50 short-term rental listings in 2016 in Manchester, according to the report.

"Developers and building owners active in the short-term rental market note that they are typically able to realize higher gross revenues than they would achieve if they rented the property on a year-round basis," according to the report. "Although definitive values are not available, it is apparent that at least a segment of the short-term listings are either apartments or single family units that might otherwise be available to the year-round market."

Commercial market

Manchester's downtown has not been immune to the nationwide decline of brick-and-mortar and outlet retail amid the rise of e-commerce.

The trend has "resulted in a notable decrease in retail space in Manchester, accompanied by dramatically lower rents per square foot and a decline in retail employment," according to the report. But the town nevertheless remains a shopping destination, and "it is realistic to project that there will be demand for well-located and configured retail space," especially for "highly specialized" businesses that "tend to include a significant service component and may have production facilities on-site and visible to the public."

Similarly, while Manchester "is unlikely to attract a major office user in the near term," there remains "steady, incremental demand" from commercial tenants for smaller spaces of about 250 to 1,500 square feet, especially in the consulting and health care sectors, the report states. There may also be opportunity for alternative uses, like amusement centers or conference facilities.

Project recommendations

The report recommends that a future mixed-use project downtown contain 40 to 45 rental units, which would be made available to households earning as little as 60 percent of the area's median income.

The development would consist of studio (450 square feet), one-bedroom (700 square feet) and two-bedroom (1,050 square feet) apartments, which, at full market rate, would cost between $1,360 and $1,720 per month.

If the project were to incorporate ownership units, which might appeal to retirees, each condo would have two bedrooms, 1,100 square feet of living space and cost between $355,000 to $425,000 to purchase, the report says.

Finally, about 25 percent of the project's 10,000 square feet of commercial space should "be focused on office use, with the remainder focused on retail, service or other public-oriented commercial use," according to the report.

A copy of the full study can be obtained through the town's website or from its planning and zoning office at 40 Jeff Williams Way, Manchester.

Contact Luke Nathan at


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