WORCESTER — Residential housing could rise from the last two vacant lots in the $565 million CitySquare project in downtown Worcester.
A 1.69-acre lot at 5 Salem Square, at Church and Franklin streets, and a lot at Front and Mercantile streets across from the AC Hotel and above a city parking garage have piqued some interest over the years and more recently as a property to develop residential housing.
Worcester Regional Chamber of Commerce President Timothy Murray said over the last several years developers have knocked on the city’s and investment firm Opus’ doors inquiring about the parcels, but the decision to choose the “right development” weighs heavy on their shoulders.
“Certainly residential has been a big focus, both market-rate and affordable for us to create an 18-hour downtown seven days a week,” he said. “You want density and so the right type of residential that may include market-rate and affordable (housing) is something we would be generally supportive of and have been. But I can’t comment on what specifically they’ve agreed to or not,” he said of the city and Opus’ search for a developer.
Beginning in 2003, the CitySquare projects took the place of 22 acres that were formerly a parking garage, an office complex and the Worcester Galleria in the heart of the city. The idea was born in 1999 by local architect Daniel R. Benoit, who suggested tearing down the failed Worcester Galleria — then called the Worcester Common Outlets as a last resort to rebrand the mall — and replacing it with a new street grid and development parcels.
Murray was mayor when the mall was brought down. He said for years before he’d heard Worcester residents advocating for the Galleria to be torn down in an attempt to redevelop downtown and reconnect it with the East Side neighborhoods in the city, which were cut off from downtown because of the structure of the mall.
When the CitySquare project was proposed, a large part of the property was sold to Worcester-based investment firm Opus, an arm of Hanover Insurance that worked with the city and state to develop the downtown space for the CitySquare project.
Opus and Leggat McCall Properties, a real estate development and advisory firm hired to develop CitySquare for Opus, could not share details on the future of the parcels.
“Efforts continue toward selling the properties,” Pamela Jonah said on behalf of Opus and Leggat McCall Properties.
Jonah did not specify what the parcels would be used for, but based on Murray’s perspective, downtown can always use more residential properties.
“Things take time, and we’ve now created what people indicated they wanted in a mixed-use district of the property,” Murray said of the completed CitySquare developments.
“There’s still some opportunities with the two parcels to further that and build it out,” he continued. “It’s been a team effort, but these things take time and I would argue that the fact that the city was able to move forward on a challenging, complicated project gave a level of confidence that we could continue to do projects of size and significance.”
Nearly two decades in the making, the downtown project has produced six major staples to the heart of the city. The Unum building, St. Vincent Hospital’s Cancer and Wellness Center, a 550-space underground municipal parking garage, the AC Hotel, the 145 Front Street apartments and 110 Grill were all products of the CitySquare project.
Like any major development, CitySquare has not been cheap.
Murray said the construction of the Unum building was a $72 million investment, the St. Vincent Hospital Cancer and Wellness Center was around $30 million, the 168-room AC Hotel was $33 million, the 145 Front Street apartments was $92 million, and redevelopment of the other CitySquare lots on Front Street cost an estimated $70 million.
CitySquare provided a demand for high-end housing units that wasn’t seen in Worcester before. Developers took note of the demand, especially after Roseland Residential Trust invested more than $90 million to develop the five-story apartment complex at 145 Front St.
The 145 Front Street apartments proved the demand for that market in Worcester. Within one year the building filled up quickly, with 99% of the 365 units rented in that first year. As of Jan. 13, the building was 98% occupied, with only seven units in the building vacant or soon to be vacant in the next month, a representative of the building said.
Roseland proposed tearing down the Notre Dame des Canadiens Church in 2017 to build 85 more apartments, but backed out of the plan before the church came down.
The ideal development will provide a significant amount of density, Murray said, complementary to other downtown hubs such as the upcoming Mercantile Rooftop Bar and Restaurant and Ruth’s Chris Steakhouse planned at the Mercantile Center.
According to the parcel’s listing, the 1.69-acre lot at 5 Salem Square is a $2.4 million investment, previously occupied by the Notre Dame des Canadiens Church, which was torn down in September 2018.
Real estate broker Sandra Annunziata said the demand within the rental industry is strong, especially with Boston residents relocating to Worcester, finding the downtown luxury apartments appealing.
Annunziata, who owns S & R Properties in Leicester, said she has rental clients who favor big apartments but in recent years have been getting priced out as buildings are bought and taken over by higher-end managers.
“There’s a big demand for apartments but unfortunately the apartments have skyrocketed in price,” she said. “With the prices of the big buildings rising, they need more money in rent to offset the cost of it so it’s a tough situation.”
Annunziata said clients often call her to find apartments or homes west of the city where prices are lower as Worcester loses any affordable downtown housing.
“What we’re seeing is the ones who are renting them at this higher price, they’re coming from the Boston area because a lot of them are working remote now,” she said. “They’re being priced out of the Boston market. Our area is much lower in price and there’s a lot going on in Worcester so it is very appealing, but the people that were born here and live here are having a hard time paying for sure.”
Luxury apartments downtown such as 145 Front, the 6Hundred and the Grid are culprits of the rising median price of housing downtown. Annuziata said she suspects many of the people occupying the buildings aren’t Worcester natives but more Boston transplants looking for higher-end housing at a fraction of Boston’s price, while Worcester residents continue to be priced out of their homes.
Worcester City Manager Edward M. Augustus Jr. said with the current lasting strength of the housing market, the city has seen more interest around housing than the office market over the past couple years.
“The original plan was for an office building,” Augustus said of the vacant parcels. “There’s been some talk about potentially residential. I think we all like the idea of some retail on the first floor of any building whether it’s residential or office. You want that activation, given the location, and you want it to interact with the hotel, 110 Grill, the two new restaurants coming. You want to keep that energy and to keep stoking that foot traffic on the streets there.”
With the housing market continuing to thrive and Worcester’s population steadily growing, residential developments remain in demand. Worcester’s Canal District is being transformed with the presence of new housing, and Augustus said there’s enough space for development across the city for such projects.
“We’re seeing tremendous demand for developers across the city,” Augustus said. “People recognize the increase in our Census count, they see the strength of the housing market and the market is reflecting that. So developers are coming in and pitching projects that are trying to meet the demand that exists to live here in Worcester.”
Annuziata said rental activity has been slow over the past year with rising prices, but if a new apartment building were to open downtown activity would pick up and residents — such as those from Boston — would occupy the building.
Both Augustus and Murray said the city is waiting for the right developer to come into the picture before making plans for the parcels central to downtown.
“You want to get something that’s going to be consistent and complement what’s already been in place there,” Murray said. “There have been developers that have knocked on the door and come up with proposals but if they don’t fit what the concept or the vision is, then Hanover, Opus or the city don’t see this as a fit.”