Worcester eyes footing in post-pandemic world

Photo | State House News Service Worcester City Manager Ed Augustus (bottom) and Menkiti Group CEO Bo Menkiti discuss what makes Worcester an attractive city for developers, residents and businesses during a virtual event moderated by Opus Investment Management President Ann Tripp.

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By Colin A. Young, State House News Service

Worcester has changed a lot over the last decade and a half. Not only has its downtown been physically transformed through a half-billion-dollar revitalization project, but City Manager Ed Augustus said the city in the heart of the commonwealth is carrying itself with a refreshed attitude.

"We're the second-largest city in New England and we're acting like it," Augustus, a former state senator who has served as city manager since 2014, said Tuesday in a forum entitled "Worester Emerging" put on by Worcester Business Journal and State House News Service.

"We are carrying a sense of confidence about who we are, what we are, the kind of talent that we have here in the community, the great institutions that are the backbone of this community," Augustus said.

The city has several billion dollars of construction, development and revitalization investments underway, is about to open a new ballpark for the AAA Worcester Red Sox and is home to one of the hottest restaurant and arts scenes in New England. Local officials are now hoping the combination of an economy anchored by higher education and the medical field, transportation access, a vibrant cultural sector and relative affordability will position Worcester to truly establish itself in the post-pandemic world.

Augustus credited the demolition of the old Worcester Common Outlets and its parking garage, which contributed to a 1980s Soviet bloc vibe downtown, as a catalyst for the city's physical and emotional rebound through the CitySquare project.

"It was also a psychological barrier in the city; it represented a failed experiment of the 1970s in urban renewal," he said. "Bringing that down and creating development parcels, almost all of which have been reactivated to housing and hotels and restaurants and offices, has really brought back some vibrancy in the core downtown area and we've been able to kind of build off of that."

During the "Worcester Emerging" virtual event Tuesday to discuss Worcester's self-described renaissance with other municipal and business leaders, Bo Menkiti, whose Menkiti Group development firm is a major player in Worcester development, said people from other parts of the country often ask him why he's investing in Worcester and why the city should be seen as an attractive option for developers.

"You've got the second-largest city in New England strategically located right in the heart of New England -- 45 minutes or 50 minutes from everywhere, from Boston, Providence, Hartford -- you've got this emerging market where folks on this call have helped facilitate over $2.3 billion in recently executed and planned private and public investment," he said. "And there's this opportunity, with 36,000 young people coming through the colleges, to start to retain some of that both human and intellectual capital in the city as it as it goes forward."

Worcester is also more affordable -- the overall cost of living in Worcester is 21% more affordable than Boston and the cost of housing is 41% more affordable than in Boston, Menkiti said.

Taken together, Augustus said, Worcester is in a good place to convince young workers to put down roots. The proliferation of remote working during the pandemic and the sense that many companies will allow workers to telecommute even after the public health crisis abates could help attract young people who work for Boston-area companies but who don't want to live in or around that city.

"That young demographic who might be priced out of the greater Boston area, maybe they are one of the 1,500 people who take the commuter rail back and forth to Boston in non-pandemic times, maybe they are folks who are working from home now three or four days a week and that will be an option that's going to be available to them," Augustus said. "They've got affordability and they've got a quality of life here."

There are challenges to the city's vision of its future. Worcester Regional Chamber of Commerce CEO Tim Murray said the difference between the city's residential and commercial tax rates has grown so wide that it's presenting a problem. It's also been a challenge to get National Grid to complete the work necessary to have the infrastructure in place for larger projects, he said.

Murray, the former lieutenant governor and former Worcester mayor, said housing is also cropping up as a potential issue. The city has seen rents rise in recent years and should try to avoid having to play catch up like Boston, Murray said, when it comes to having enough housing for its residents and the workers it wants to attract.

"The single biggest issue we hear from our chamber member businesses, regardless of the size of the company or the sector that they're in, is access to talent. They need that workforce. Well, accordingly, we need the housing for that workforce," Murray said.

Worcester needs housing of all types, he said, from quality affordable housing to high-end quality rentals. But it also has to get to the point where there are downtown condos that empty-nesters can downsize into and that younger people can afford to buy to cement their place in the city.

Opus Investment Management President Ann Tripp, who moderated Tuesday's discussion, said she hears from people at nearly every public meeting she attends who say they would move downtown if only there were condos available. She said she expects that condos would sell fast if a developer could make the economics of such a project work.

"For any developer out there right now who's watching, the [Economic Development Coordinating Council] and team will pre-sell half those condos," Murray said. "We need that pioneer investor willing to do condos in and around the downtown."

Menkiti, who is in the midst of a project that will put 24 apartments in a six-story building near City Hall, said the numbers just don't work yet for downtown Worcester condos.

"When we think about where, economically, downtown Worcester is, we're still a couple of clicks of value away from the cost of building being something that works economically for a condo market," he said. "If you were to develop and deliver high-quality condos in the downtown right now, you wouldn't be able to charge a price that would cover the cost of that."

The Worcester Business Journal-State House News Service series on Worcester will continue March 16 with a session focused on the city's civic and cultural life, and will conclude on March 23 with a panel of some of Worcester's top investors.