A planned seven-story residential development on Shrewsbury Street is the latest Worcester real estate project facing setbacks, hampered by rising construction and financing costs.
Lundgren Equity Partners, an Auburn-based corporation behind a planned 204,413-square-foot, 218-unit apartment building at 225 Shrewsbury St., is requesting another extension of variances issued for the project by the Worcester Zoning Board of Appeals, citing conditions in the commercial real estate market.
The project, which was first granted special permits in October 2022, had already received a six-month extension for the necessary variances in October 2023.
“Lundgren has been forced to delay commencement of work associated with the Project due to challenges with respect to labor and supply chain issues and access to financing and capital related to the rise of inflation and interest rates, instability of the banking system and an overall slowdown in the commercial real estate market,” reads a cover letter submitted to the board by Joshua Lee Smith, an attorney at Worcester law firm Bowditch & Dewey LLP, which is representing Lundgren for this project.
A number of projects in the Worcester area have been impacted by conditions in the commercial real estate market. Developers behind a planned nine-story development at the former site of Fairway Beef at 102 Temple St. requested an extension for variances in March, one of many projects impacted by interest rates, construction, and labor costs.
Lundgren first announced its plans to construct the multifamily high rise at 225 Shrewsbury St. in September after purchasing the parcel for $5.5 million in 2017.
