Downtown a fast-growing place to live

Downtown Worcester was once quite a busy center for commerce, with all sorts of retail stores and office buildings lining its streets

Few people lived downtown back then, largely because there were not many places where people could live.

The downtown was considered a place to visit and do business, not a place to live.

But that is all changing.

Former office space in the central business district, some of which has been vacant for years if not decades, is being converted into housing.

Even the former Worcester County Courthouse at the north end of Main Street is being converted into housing, as is a former church (the old Mission Chapel on Summer Street) and the former Performing Arts School of Worcester on Chatham Street.

The way things are going, the downtown is on track to becoming one of the fastest-growing neighborhoods in Worcester - in terms of its number of residents.

Now, who would ever have imagined that happening 40 or 50 years ago?

But it’s happening.

That was underscored last week when City Manager Edward M. Augustus Jr. notified the City Council that a New York City-based developer has reached a tentative agreement to purchase the Commerce Building - once hailed as the downtown’s first "skyscraper" when it was built in 1906 - and pursue a substantial redevelopment project for the nine-story Main Street office building.

The Commerce Building had long been considered one of downtown Worcester’s premier office addresses and now the plans are to convert it into housing.

SilverBrick Group, LLC is looking to invest $54.45 million to create 312 units of market-rate housing over two phases, with commercial uses on the first floor.

The units will comprise 80 studios, 183 one-bedroom units, 39 two-bedroom units and 10 three-bedroom units. The projected monthly rents for the units are studios, $1,250; one-bedroom, $1,350; two-bedroom, $1,575 and three-bedroom, $1,900.

The Commerce Building isn’t the first major downtown office building being eyed for a change over to housing.

The seven-story Central Building reopened last year after a $26 million renovation that produced 55 apartments as well as retail spaces on the ground level.

Also, on Main Street, the upper floors of the former Elmwood Adams Hardware Store are being converted into housing, as are the upper floors of the historic Cheney-Ballard building at 517 Main St., which previously housed a Metro PCS store and for many years earlier was the home of the former Toupin’s Bakery.

In both cases, the upper floors of both those buildings have been vacant for years.

Meanwhile, Northeast Properties is renovating and converting vacant former office space in the upper floors of some of its Front Street buildings, across the street from City Hall, into housing as well.

All that is in addition to the housing that has already been created in the Grid District and the 370 units of new housing that was built in the CitySquare area.

It’s really quite something.

Augustus said the proposed Commerce Building project further contributes to the revitalization of the downtown and the momentum in the city, despite the unprecedented pandemic the city has been dealing with over the past six months.

"The project further validates the city’s value proposition as a space to invest, and a place to live, work and play," he said.

Augustus said the new housing production in the downtown is aligned with the findings of the 2019 Housing Study commissioned by the Worcester Regional Chamber of Commerce.

He added it is also aligned with the Baker administration’s Housing Choice initiative, which has a goal to increase housing production by 135,000 units across the state by 2025.

"More specifically, the new density and vitality created by this project will contribute feet on the street for North Main Street, and support our small businesses in the neighborhood that have been struggling through the pandemic and who have been increasingly competing with online shopping," Augustus said. "The project further complements the North Main Street area by adding market-rate housing adjacent to the affordable units at the Central Building and the former Worcester County Courthouse."

Converting major downtown commercial properties into housing means they will be taxed at the much lower residential tax rate. Some fear that, in turn, could generate less tax revenues from those buildings.

But Peter Dunn, the city’s chief development officer, said the Commerce Building has been seeing its vacancy rate trend upward of late, with some large state office leases expiring recently or coming up for expiration soon. By the end of this year, the 340 Main St. building will be more than 60% vacant.

Dunn said the vacancy rate affects the cash flow of the property and puts stress on the owner’s ability to operate the property and keep up with the necessary building improvements. That in turn affects the assessed valuation of the property.

With the project resulting in most of the Commerce Building being converted to the residential tax rate, the total taxes to be received from the project will be about $1.1 million more than what would be otherwise received as a commercial building, and that’s even with a tax break that the city manager has recommended for the project.

The current assessed value of the Commerce Building is $9.3 million. Dunn said the total value after construction has been projected by the city assessor to be about $29.2 million.

Meanwhile, Commerce Associates, which owns the Commerce Building, is looking to trigger the redevelopment of the 300,000-square foot property it owns at 18 Chestnut St., the  former Unum building, by relocating a number of its remaining tenants at 340 Main St. to that property while recruiting additional office tenants.

With the demand for office buildings and space seemingly ebbing these days or stagnant at best, the conversion of underused downtown office buildings into housing could give those buildings a new life.

Unum announced in July its decision to vacate its downtown office in CitySquare.

The disability insurance company, which became the first major tenant of the CitySquare downtown redevelopment project, said its 400 employees who had been working remotely because of the COVID-19 pandemic will continue to do so and not return to the company’s office building.

District 5 City Councilor Matthew E. Wally said it is disappointing to lose those 400 employees because it weakens the downtown, while District 1 City Councilor Sean M. Rose said the loss of those employees from the downtown will likely impact other businesses, including restaurants and food-service businesses.

But with more people living in the downtown it will likely trigger a need for new businesses that can provide various services for those residents.

Yes, downtown Worcester is changing and with more people living there that change can be for the better. It’s certainly better than having a bunch of vacant or underused office buildings.

Contact Nick Kotsopoulos at nicholas.kotsopoulos@telegram.com. Follow him on Twitter @NCKotsopoulos