One Chestnut Place in downtown Worcester. Photo courtesy of Kelleher & Sadowsky
The biggest office-to-residential conversion in Massachusetts right now isn’t happening in Boston. It’s in Worcester.
The 10 Chestnut St. tower is being converted into 198 apartments by Boston-based developer Synergy, which also owns Worcester’s Glass Tower office building at 446 Main St. nearby. Synergy is also behind a project that will overtake 10 Chestnut St., also known as Chestnut Place, as the state’s biggest conversion if it gets financed: the 255-unit 294 Washington St. in downtown Boston.
“Downtown Worcester is becoming a prosperous area where there’s a ton of vibrancy, restaurants, bars. At 446 Main St., we’ve got a ton of leasing traction and so we’re really excited about this project and what Worcester’s got going on right now,” said Synergy Senior Vice President Will Grosvenor.
“Our belief is that people want to live where they work, so we’re seeing a lot of that resurgence in downtown Worcester,” he added.
State economic development agency MassDevelopment and Rhode Island based bank Washington Trust are providing the $51.17 million in financing for the project.
Washington Trust provided $47.57 million in loan financing while MassDevelopment provided a $3.6 million Housing Development Incentive Program tax credit bridge loan. The state Executive Office of Housing and Livable Communities also provided a $4 million HDIP award and a $3.6 million Commercial Conversion Tax Credit award. The city of Worcester is also supporting the project through a 15-year tax increment exemption.
The most obvious appeal for tenants will be its sheer height: the 11-story building towers over almost everything else downtown, giving both the two-floor penthouse apartments being carved out of former boardrooms and executives suites, and the common roof deck, sweeping views.
The amenity package will also include features commonly associated with upper-end new construction, like an outdoor pool and bar. Grosvenor characterized the building as “a different product” than many of the conversions currently on offer downtown.
Since the neighborhood’s first large, modern luxury complex at 145 Front St. rapidly leased up in 2019, large developers have been increasingly scouring the area and its adjoining Canal District – home to the Worcester Red Sox – for development opportunities. The most recent example: a 19-story, ground-up luxury tower from a New York City developer proposed without parking for a nearby empty lot. That proposal is currently working its way through the city’s approval process.
These new buildings in part take advantage to the area’s proximity to an MBTA Commuter Rail station and easy freeway access to job centers like Marlborough, said James Umphrey, president of the Worcester-based commercial brokerage Kelleher & Sadowsky. Renters who work in Boston are able to use the train ride to get work done, and often take advantage of flexible in-office requirements at their jobs.
“It’s a place that is very different than what it used to be,” he said in a February interview. “Worcester was always thought of as kind of a an older mill city, and it’s really not like that anymore. There’s 35,000 college students, the the largest driver in the market is really healthcare. Worcester’s become a much more dynamic city.”
Umphrey and brokerage managing partner William Kelleher IV also credited city leaders with having a more “pro-development” attitude and approvals structure that’s attracted new construction.
“The the city manager, the chief development officer, they put together a whole team of people that developers can come in and meet with before they go in front of a public hearing, so they can understand [any] sticking points and be able to address them more effectively,” Umphrey said.
The city is likely to see a new spurt of development, Kelleher said, as the most recent set of projects is absorbed and interest rates come down. Some projects are considering modular construction practices to lower project costs, he said.
Delivery of Synergy’s tower conversion is expected this summer, but the company has yet to release planned rental pricing.
