AFTER PARTY: Developers face new challenges after proposing more than 4,000 residential units in Worcester

AFTER PARTY: Developers face new challenges after proposing more than 4,000 residential units in Worcester

Worcester is growing fast — it passed the 200,000 mark in the 2020 census — and developers are trying to build housing fast enough to keep up.

But rising costs for everything from construction loans to building materials are slowing some projects and delaying the start of others.

The statewide housing shortage has become so prominent that the governor created the new Executive Office of Housing and Livable Communities, headed by Ed Augustus, the former Worcester city manager.

Just a few years ago, the outlook looked rosy. With Worcester’s rapid population growth, low lending rates and developer-friendly city government, developers have flocked to Worcester. Among these developers were large national companies such as the New Jersey-based Michaels Organization and Atlanta-based Wood Partners, which had the power and money to build hundreds of apartments in one go.

The sprawling city of Worcester had a lot of land to offer, former factory grounds that served businesses like Wyman Gordon and Table Talk Pies, the site of a former church declared structurally unsound, and a cluster of abandoned buildings steps from the rapidly changing canal. Distract.

Dozens of projects proposing thousands of new apartments have been approved by Worcester’s Planning Board, allowing the public to see impressive building designs by architecture firms such as ICON Architecture of Boston, The Architectural Team of Chelsea, and Maugel DeStefano Architects of Harvard University. .

Developers must now revive these designs at a time of rising interest rates, construction and labor costs.

While many projects were in progress and some were about to open, not every proposed project would be built, and some may be smaller than originally proposed. Many projects have reappeared before the Worcester Planning Board or Zoning Board of Appeals to request extensions of prior approvals.

Multifamily development plan

almost

There are many residential projects under construction and some of them are preparing to start renting out apartments.

Just steps from Polar Park, home of the Worcester Red Sox, the finishing touches are being put on the Rivington Building, a seven-story, mixed-use building with 228 apartments, as it prepares to open this fall. The project was built by Boston’s Madison Properties and managed by Atlanta’s Gables Residential. It features a mix of studio to three-bedroom apartments starting at $1,993, according to the Gables website. The project includes many commercial spaces on the ground level for restaurants and shops.

Madison Properties began construction on the site in 2021. It is part of a multi-phase development of land previously owned by manufacturer Wyman Gordon. The larger project has shrunk since its original conception, but is expected to include a hotel and additional residential building as well as a commercial building targeting the life sciences industry behind left field at Polar Park.

Across the street from The Revington is Table Talk Lofts, a seven-story workforce housing project that will contain 83 affordable apartments. The project, which is being built by Boston Capital Development, received assistance in the form of $19 million in bonds arranged by MassDevelopment, $7.1 million in permanent loans from the Massachusetts Housing Partnership, funds from MassDevelopment’s Underutilized Properties Program, and tax credits for Low income housing.

While Boston Capital has not announced an expected date for the project’s completion, the building’s structure is ready and work on the facade is continuing.

Across from Polar Park, the seven-storey, 173-apartment building The Cove has begun framing work on its timber levels. It was originally proposed in May 2021 as a 13-story, 300-apartment project and was approved by the city in February 2022 in its scaled-down form.

The project includes 16,000 square feet of retail space which will include a bar and bowling alley concept. It will also feature two patios overlooking Polar Park.

John Tocco, managing partner and chief operating officer of V10 Development at Everett, the project’s developer, said he expects construction to be completed by Aug. 1.

Tocco gives credit to the company’s financing partners to start the project.

“We had a collaborative team of lenders, led by Enterprise Bank, who shared our enthusiasm for the project and worked diligently with our team to get the deal done,” Tocco said in an email to the WBJ. “In terms of equity commitments, we were fortunate that we planned this project as an opportunity zone investment, which means the capital is committed for the long term and therefore helps investors look beyond short-term market turmoil.”

While these projects are getting a lot of attention because they surround Polar Park and are new additions to the skyline, on the other side of Main Street, an adaptive reuse project is about to begin leasing in the first phase of a 165-unit development. From the main street.

Built by Rossi Development of Newton, Sudbury Street Lofts is located at 13 Sudbury Street in a five-story former school building that was renovated in 1988 to provide office space.

Andrea Castinetti of Castinetti Realty Group in Shrewsbury said in an email to WBJ that the project is on track to gain occupancy within the next few weeks.

Rossi has other things in the fire, having received approval to redevelop a 43-unit Table Talk Pie building on Green Street, and a 251-unit mixed-use building proposal on Harvard Street near the Sudbury Street Lofts.

Pre-leasing has begun for the 370-unit Alta on the Row apartment complex on the former site of Our Lady of Mount Carmel Church near Shrewsbury Street. Atlanta Developer Wood Partners proposed the project in the spring of 2021.

Move forward

Many of the projects that have been proposed are still in the early stages of development, but are moving forward.

SMC Management Corp. Watertown affiliate construction work on Poet Hill Residences, a 216-apartment complex on Hemans Street in Worcester. The project was proposed in 2021 and the developer expects occupancy in 2025, according to Michael Barrett, the company’s director of investor relations.

SMC is finalizing architectural plans for another Worcester project — its 110-unit Residences in Madison at 5 Madison St. Barrett says construction bids will open for the project soon and he expects construction to begin in April.

Two 55-plus condo projects have recently made moves that indicate developments are moving forward.

WinnDevelopment of Boston announced Nov. 2 that it will move forward with the redevelopment of the former Boys Club building on Lincoln Square in downtown Worcester into 80 affordable apartments for residents 55 and older.

The project was originally approved by the city in 2021. The $53 million project will receive city, state and federal money.

WinnDevelopment has its eyes on another property in Worcester city centre. In June, the company announced it intended to purchase the Slater Building at 390 Main St. It will be renovated and converted into mixed-income apartments and commercial spaces amounting to 30,000 square feet.

On the city’s west side, the Arbella at Bramble Hill, a 122-unit senior housing project, appears to be moving forward after its developer, the United Corporations Group of Troy, New York, secured a $53 million construction loan from a private equity fund. Washington. Westerly Co., Rhode Island.

Not so fast

Other projects were delayed due to macroeconomic conditions.

Another senior living community has been proposed by Goddard and Hall Senior Living, Inc. of Worcester on the site of the former Saint Peter-Marian High School on Grove Street in Worcester. It received approvals from the city for its three-story, 170-unit senior housing complex in 2022.

In July, the company requested an extension of its approvals until the summer of 2024. According to a letter from Mark Bornstein, a partner at the Worcester law firm Bowditch & Dewey on behalf of Goddard and Hall, the company hopes to begin construction in early 2024.

“Goddard was forced to delay the start of work associated with the project due to challenges in obtaining financing and capital associated with high inflation and interest rates, banking system instability, and a general slowdown in commercial real estate,” Bornstein said in a letter to the Worcester Planning Board.

Lundgren Equity Partners, based in Auburn, faced similar challenges with the seven-story, 218-unit apartment building it proposed at 225 Shrewsbury St. The project was originally approved in October 2022, but the company has requested that site plan approval be extended until October 2025.

Joshua Lee Smith, a partner with Bowditch and Dewey, used language similar to Bornstein on behalf of Lundgren in a letter to the Planning Board, describing the challenges the developer faces in terms of inflation and a slowing market.

Plans were approved in October for an additional development by Lundgren across Shrewsbury Street from 225 Shrewsbury. This project will include 87 apartments in addition to retail space.

Another high-profile project that has been granted an extension of approvals is the nine-story, 105-apartment project proposed for the former Fairway Beef site at 102 Temple St. The project was proposed by AKROS Development of Boston. Demolition of the historic meat market building has not been completed.

One project that did not survive the changing economic conditions was Silverbrick’s proposal to redevelop the office building at 340 Main St. to SilverBrick SkyHouse, a 312-unit apartment building. It purchased the site in 2020. In September 2022, Worcester’s Executive Office of Economic Development told the City Council that due to rising material and construction costs, the project was on hold.

There are several other large proposed projects whose construction has not yet begun in the city.

Franklin Lofts, a 364-apartment project being developed by the Michaels Organization with Worcester’s GoVenture Capital Group, is navigating the complex process of demolishing several vacant industrial buildings and their accompanying infrastructure additions.

The next two years will be a demonstration of how much housing development proposed in Worcester will be achieved. Although the city has paved the way for developers, macroeconomic forces are putting its resourcefulness to the test. All eyes are on the construction sites as the city tries to address the housing shortage.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *