Outsiders have Worcester trending up
In October, two of the three tallest buildings in Worcester, a couple blocks from each other on Main Street, were sold to investors from Boston and Los Angeles, indicating the growing level of interest in the market from outside the region will continue for the foreseeable future.
First, the 24-story Sky Mark Tower on Main Street – the tallest residential building in the city – sold for $28.8 million to Los Angeles-based real estate investment firm Benedict Canyon Equities, which was founded by Bob Hart, a 1979 graduate of Worcester Polytechnic Institute. The sale price boils down to about $140,000 for each of the building’s 206 apartments, which is a far cry from what the Greater Boston market fetches per unit. The relatively low price probably speaks more toward the need for upgrades in the building, which was built in 1990, than it does the capacity to achieve solid rental rates and a reasonable return on investment. The fact Benedict Canyon spent $29 million when the city last assessed the Sky Mark Tower for $18 million shows Hart and his team believe the city’s real estate market, especially its downtown properties, are trending up.
Second, the 24-story glass office tower in downtown originally called the Shawmut Tower, but today known as the Worcester Plaza – tied for the tallest commercial building in the city – sold for $16.5 million on Oct. 10 to Boston real estate firm Synergy Investments. The building actually sold for considerably less than the last time it was purchased: for $21.5 million in 2000. Like the Sky Mark, the price is indicative of its need for costly upgrades. Still, Synergy’s choice of a prominent downtown office building to invest in, and its apparent interest in other Worcester properties inside the city’s federal Opportunity Zone qualifying it for significant tax incentives clearly suggests the highly regarded Boston firm sees significant economic potential in the Worcester market.
While neither property is a new development, new ownership brings the promise of investment and significant improvements to these important properties.
Of course, neither Benedict Canyon nor Synergy were the first outside investors in downtown Worcester real estate. The current wave really kicked off in 2015 when Chip Norton and his Franklin Realty Advisors in Wellesley bought 100 & 120 Front St. – also tied for the tallest commercial building in Worcester – for $33 million, with an additional $36 million invested in upgrades to the rebranded Mercantile Center.
While local developers investing in new projects remain a key cog in the region’s growth, the level of outside investment is an important indicator of positive momentum. The more investors the city can attract, the more competitive the development scene becomes, and the more confident all developers are investing where value is strong and opportunity still abundant. Worcester hasn’t had this level of investment in its downtown in a long, long time, and it’s a welcome trend showing no signs of slowing down.
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