Photo courtesy of the city of Worcester

New York City developer SilverBrick Group is proposing to buy a Worcester office building from downtown landlord Commerce Assoc. and convert it to 312 units of housing.

SilverBrick has previous experience renovating historic Springfield buildings into multifamily properties.

The $54.45 million project would include 80 studios, 183 one-bedroom units, 39 two-bedroom units and 10 three-bedroom units. Rents are projected to be $1,250 for the studio units, $1,350 for one-bedrooms, $1,575 for two-bedrooms and $1,900 for three-bedrooms. The project would be built in two phases, with the first 204 residential units on floors five through nine plus first-floor amenities and an exterior renovation in the first phase. The second phase with the remaining 108 units would be built a year later.

The 9-story, 324,167-square-foot office building at 340 Main St. was built in 1906 and until recently was host to several large office leases with state agencies, according to a report from city officials to the City Council released Friday. With its vacancy projected to hit 60 percent by the end of 2020, Commerce Assoc. decided to sell the property instead of repeating its recent success with a 55-unit mixed-income office-to-multifamily project nearby at 332 Main St., city official said.

Commerce Assoc. plans to redevelop its nearby 18 Chestnut St. property into office space and relocate the building’s remaining tenants there.

SilverBrick and city officials are asking councilors to approve a tax exemption for the all-market-rate building. Under the terms of the deal, the property’s bill would be cut in half post-renovations, then scaled up to 70 percent of the post-renovation total over 10 years before topping out at 90 percent of the total for the last five years of the 15-year deal, saving SilverBrick $3.4 million over the life of the deal. SilverBrick will also seek investment tax credits from the state and make a $100,000 contribution to seed a city affordable housing trust fund.

City officials are trying to increase the amount of housing in downtown Worcester as a way to boost the area’s vitality and support local small businesses. At the same time, the city is seeing its biotech sector grow thanks to increased demand for production facilities in the area. A 2019 Worcester Regional Chamber of Commerce report cited by city staff in their report identified up to $1.5 billion in potential multifamily projects in downtown Worcester to meet then-current demand. The study estimated Worcester was producing 1,900 fewer housing units a year than what the market demanded.