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Over its first 100 years the Town grew steadily, becoming the "Shire Town" of Lunenburg Township and the focus of a bustling economy based on farming, fishing, shipbuilding, and ocean based commerce, particularly in the West Indies trade. But by the mid 19th century, the Town had outgrown its old boundaries and, in 1862, parts of the surrounding Common Land were subdivided to facilitate expansion. Areas immediately to the east and west of the Old Town were laid off in building lots and other larger parcels and an area further west beyond the head of Lunenburg harbour was subdivided to create the core of what became known as the "New Town".
The New Town area quickly became fashionable, and wealthy merchants and professionals built impressive new houses there.