Photo | Grant Welker
The Commerce Building at 340 Main St.
September 19, 2020
Downtown Worcester office building proposed for $54M conversion into 312 apartments
Photo | Grant Welker
The Commerce Building opened in 1906.
By Grant Welker
Worcester's Krock family is looking to sell a century-plus-old office building at 340 Main St. in Worcester to a New York City developer proposing a $54-million conversion into 312 apartments to take advantage of a shift in demand downtown from office space to residential.
The nine-story, 324,000-square-foot Commerce Building has included state and other offices but is seeing rising vacancies, according to city officials, who detailed the project Friday in a report to the Worcester City Council. By the end of the year, the building will be 60% vacant, with a number of anchor tenant leases expiring, said Peter Dunn, the city's chief development officer.
Commerce Associates, the building's owner, is proposing to turn the building into 312 apartments in a mix of studios, and one-, two- and three-bedroom units. All will be market-rate. Commercial uses totaling 18,000 square feet on the first floor and basement levels will remain.
Office tenants could be shifted to an adjacent vacant office building that Commerce Associates owns at 18 Chestnut St. The building has been vacant since the insurer Unum moved into a new building a few blocks away on Mercantile Street.
City officials are looking to help the project by requesting the City Council approve a tax break for the project estimated to save the developer $3.4 million. The site's value is estimated to rise upon completion of the project to $29.2 million, from $9.3 million today.
The project is also seeking $4 million in state investment tax credits, the city said.
[Related: Worcester courthouse apartments to open in phases this fall]
Commerce Associates, which is owned by Worcester's Krock family, has already found success downtown with another residential project at the adjacent 332 Main St. That project opened in 2019 with 55 apartments, most of which were leased at restricted affordable rates. The firm also owns 244 Main St.
The firm has been working with city officials and the Worcester Business Development Corp., a quasi-public business agency, to come up with a master plan for its group of buildings, the city said.
Commerce Associates plans to sell 340 Main St., which was built in 1906, to SilverBrick Group, a New York City firm, according to city officials. The firm, which has expertise rehabilitating historic properties, plans to brand the project as SilverBrick SkyHouse.
Units are proposed to range from $1,250 for a studio to $1,900 for a three-bedroom. The first 204 units are planned to open in a first phase by the end of 2022 and the last 108 units a year later.
A 2019 study commissioned by the Worcester Regional Chamber of Commerce found Worcester to be short by about 1,900 housing units each year compared to demand. Office demand, at least downtown, may not be quite as strong. A report by the Worcester Regional Research Bureau in February sampled a dozen large downtown office buildings and found a vacancy rate of 12%.
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