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From textiles to high-tech: No. 13, Manchester, N.H.

Nature walks. No income tax. (But a steeper property tax.)

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A Manchester farmers' market

(FORTUNE Small Business) -- The Merrimack River once powered the old brick textile mills that built Manchester, N.H. More than a century later Brett Rosner, 48, chief operating officer of Oasys Technology, found the river the perfect testing ground for his high-tech scopes.

"We used to open up the windows and take advantage of the unobstructed views along the water," he says of his first headquarters.

His firm, which designs and manufactures electro-optical devices (such as enhanced vision systems for aircraft pilots), has benefited from the area's mix of old and new. Once a crumbling factory town, Manchester continues to revive itself. A decade and a half ago visitors started flocking to new galleries, restaurants, and boutiques housed in former mills. More recently an expanded airport and the Verizon (VZ, Fortune 500) Wireless Arena have generated additional consumer traffic.

When Rosner's partners Vadim Plotsker, 41, and Mike Couture, 46, launched Oasys in 2004, the New Hampshire Business Resource Center helped them find real estate and obtain business permits. Oasys also attributes its growth to the concentration of skilled engineers who work along Route 128 - a stretch of highway between Dedham and Gloucester, Mass., an area that supports a range of technology businesses, from established players such as Raytheon (RTN, Fortune 500) and Sun Microsystems (JAVA, Fortune 500) (which maintains satellite offices there) to upstarts such as Constant Contact (CTCT), an e-mail marketing provider.

Property taxes, at 1.67%, are nearly a percentage point higher than towns in neighboring states, but there's no sales or state income tax, and real estate is a relative bargain. A 3,000-square-foot house in Manchester costs about $400,000; in Boston, 50 miles south, you can easily pay $800,000 or more. Oasys now rents a 25,000-square-foot industrial space that accommodates a machine shop and areas for optical fabrication, assembly, and environmental testing.

With revenues growing 250% a year, the owners have little time for vacations, but they don't mind. Couture and his family bodysurf at Hampton Beach, an hour away by car. Plotsker skis with his kids at Crotched Mountain, a 25-minute drive from home. Rosner raves about the fall foliage along Route 3. And it's easy to break away on the bike trails around Lake Massabesic Watershed.  To top of page

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