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July 3, 2024

Plan to convert former Fallon HQ into 198 apartments receives $2.5M from state

Photo | Edd Cote Plans to convert the One Chestnut Place office building into a 198-unit apartment building has received a $2.5-million award from the state.

The $87-million effort to convert the former headquarters of Fallon Health at One Chestnut Place in Worcester has received a financial boost, as the project has been awarded $2.5 million as part of the Massachusetts Housing Development Incentive Program.

The 198-unit apartment conversion was the only Central Massachusetts project to receive an award as part of the state initiative to support housing development in Gateway Cities. In total, $27 million was awarded to 13 projects in what the Gov. Maura Healey Administration is calling the largest amount in the program’s history. 

“We expanded the HDIP program in our tax cuts package because it has a proven track record of spurring housing development in Gateway Cities and lowering costs,” Healey said in a Tuesday press release announcing the awards. “Our Gateway Cities are vital centers for industry and culture while also being positioned to help provide the housing we need to meet the demand.”

The plans to convert One Chestnut Place into 198 apartment units is one of a handful of attempts to convert former office space into much-needed housing, a task that can be both financially and logistically challenging

Synergy Investments, the Boston-based real estate investment firm behind the project, told the City of Worcester in February it expects the conversion to cost $73 million. 

Photo | Courtesy of Kelleher & Sadowsky
One Chestnut Place and Two Chestnut Place (at right) in Worcester

Synergy, which also operates the Glass Tower building at 446 Main St. in Worcester, has requested a tax increment exemption for the project, which includes the $14-million conversion of nearby Two Chestnut Place into 22 affordable units.

The issuance of a tax increment exemption is a requirement for a project to receive funding from the state’s Housing Development Incentive Program. The City Council approved the plan to submit a HDIP application for the project by a 10-0 vote during a March 12 meeting. 

Other office-to-multifamily plans in Central Massachusetts include an attempt to convert a long-empty Marlborough office building at 130 Lizotte Drive into an apartment complex and an effort to convert the Slater Building in downtown Worcester into a mixed-use apartment building.

Construction at One Chestnut Place is scheduled to begin sometime this summer, although many housing-related construction projects in Central Massachusetts have dealt with delays or outright cancellations due to the challenges brought about by labor and supply costs, as well as difficulties accessing funding

Eric Casey is a staff writer at Worcester Business Journal, who primarily covers the manufacturing and real estate industries. 

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