The six-story building, once home to the Denholm & McKay department store and later modified into an office building, was purchased by the WRA in 2022 for $3 million.
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The Worcester Redevelopment Authority would carry out the $7-million demolition of the Denholm Building and then sell the property to The Menkiti Group for $3 million under a proposed deal aimed at keeping the housing project moving.
WRA had considered putting the entire project back out to bid after Menkiti had trouble carrying out its initial plan, but WRA officials decided to throw the developer a lifeline.
"We are now in a different place than we were last Thursday,” WRA Chair Michael Angelini said. “From my perspective, we've reached an accommodation and an agreement that I can recommend to the authority as a path forward with Menkiti."
WRA held a special meeting on Tuesday to discuss the state of its deal with Washington, D.C.-based firm The Menkiti Group to redevelop the site at 484 Main St. After an earlier meeting on Thursday, where Angelini pressed the firm for concrete documentation of its commitment to the project, he struck a different tone on Tuesday, saying conversations held with Menkiti Group in the interim had yielded progress.
The six-story building, once home to the Denholm & McKay department store and later modified into an office building, was purchased by the WRA in 2022 for $3 million.
WRA selected Menkiti Group’s proposal to demolish the building and turn it into a 233-unit, mixed-use building over a proposal by Connecticut-based RMS Cos. to demolish the building and construct a 200-unit luxury apartment building.
Menkiti Group signed a land disposition and development agreement for the site in September 2024, but the firm has yet to move forward with demolition, citing changes to financing in the development market.
The firm later signed an amendment to the agreement, downsizing the project to about 200 units and establishing a due diligence period set to expire in March. Following the expiration of the agreement, Menkiti Group was required to start making a $7,500 monthly nonrefundable deposit to WRA.
That non-refundable deposit has been an increasing focus for Angelini, who described it in a March WRA meeting as effectively an option payment, allowing Menkiti to hold exclusive rights to the development project while retaining the right to walk away from it.
In the Thursday meeting, Angelini said discussions with fellow WRA members suggested there would not be support to further amend the deal with Menkiti Group and said the authority was tired of delays.
“We do not accuse them of any bad fatih, but we insist on progress,” Angelini said on Thursday.
By Tuesday, an agreement in principle had been reached with Menkiti Group. The agreement, subject to finalization and later WRA approval, would see WRA take over responsibilities for demolition and abatement.
In exchange, Menkiti would lose access to a $2.5-million credit from the city to cover demolition costs. The firm agreed to submit a concept plan for the site in July, which Angelini said was several months ahead of the original anticipations for when the firm would provide a plan.
Under the new proposal, Menkiti will pay $3 million for the property after demolition is complete, up from $500,000 in the original agreement.
The new timeline would see Menkiti submit its plans for the site to the Worcester Planning Board in October, targeting approval by December.
The WRA’s demolition is expected to be completed by July 2027, after which Menkiti would purchase the site. Menkiti then would be given one year following the completion of demolition to begin construction at the site.
Under the terms of the proposed agreement, WRA will move on if Menkiti fails to comply with its terms and put the demolished and pad-ready site back out for bid, with the firm losing deposits made to WRA.
“They have agreed that if they do not meet each and every one of the timelines that we've now imposed, they will forfeit their deposit,” Angelini said.
Peter Dunn, WRA CEO and the City’s chief development officer, said in March he was optimistic WRA could cover the costs of demolition, projected by Menkiti to cost around $7 million.
The tentative WRA agreement comes after the Worcester City Council narrowly awarded Menkiti a tax-increment exemption worth $27 million for the redevelopment of 401-409 Main St., another Downtown property, into apartments. Union advocates and some local residents had pushed back against that TIE agreement, citing alleged wage theft by subcontractors used by Menkiti.
The 2.5-acre site holding the Denholm building received a 2026 assessment of $3.36 million, with the land accounting for $1.29 million of that value, according to City of Worcester property records.
CORRECTION: An earlier version of this article described the Denholm building as being 10 stories. It is in fact a six-story building.
Eric Casey is the managing editor at Worcester Business Journal, who primarily covers the real estate and banking & finance industries.
