Downtown Worcester office market vacancy rose to 20% in pandemic
Photo | TMS Aerial Solutions
Downtown Worcester
The office market in downtown Worcester has taken a hard hit from the coronavirus pandemic, with vacancy rates nearly doubling and almost half a million square feet of empty space.
The latest data, from the Worcester Business Development Corp. and presented at a webinar hosted Friday morning by the Worcester Business Journal, is the most detailed sign yet of how much the area's densest neighborhood has been hit by the pandemic.
Downtown Worcester's vacancy rate was hovering at or below 10% in the past roughly six years before the pandemic hit, before rising to 12% at the end of 2019, before the pandemic hit.
The rate then shot past 20% earlier this year, according to the WBDC. It now stands at 18.9%, said Roberta Brien, WBDC vice president of projects, during her presentation at the webinar.
“We started a wave of momentum that continued all the way through the end of 2019," Brien said, mentioning new openings including the AC Hotel and the 145 Front at City Square apartments, and a series of new restaurants.
[Related: Listen to the WBJ's "Future of Real Estate Post-Pandemic" webcast]
The neighborhood has taken other hits beyond the office market. The closed Hanover Theatre has lost $8.5 million in gross revenue, according to the WBDC, and the DCU Center — its convention center used as a coronavirus field hospital for a few months — is projecting to lose 126 events because of the pandemic.
Though the end of 2020, an estimated 370,000 would-be visitors to the neighborhood are expected to be lost.
The office market hasn't been entirely bad. Reliant Medical Group has extended a 55,000-square-foot lease at the Mercantile Center on Front Street, for example.
But there are other signs that the neighborhood may be making a shift more toward residential use.
The nine-story, 324,000-square-foot Commerce Building at 340 Main St. is proposed to be converted into 312 apartments as part of a $54-million project that was announced in September. The building is expected to be 60% vacant by the end of the year, according to the city, with some state offices among those moving out.
Some of those offices are proposed to move to an adjacent empty office building, the former Unum offices at 18 Chestnut St. that shares the same owner: Commerce Associates.
A few blocks away, just off Main Street at the former Performing Arts School of Worcester at 6 Chatham St., the Washington, D.C.-based Menkiti Group is in the process of converting a building to 25 residential units.
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