Largest office-to-residential conversion in state moves forward in Worcester

The largest office-to-residential conversion in Massachusetts to date is located in Worcester near the downtown. Photo courtesy of Synergy/MassDevelopment

On March 16, MassDevelopment announced that it has partnered with a lender to provide $51.2 million in loan financing to a real estate development company and property owner for the largest office-to-residential conversion in Massachusetts to date, located in Worcester near the downtown.

The loan will be used to redevelop and convert the former Fallon Community Health Plan headquarters at 10 Chestnut St. into 198 market-rate apartments.

Washington Trust provided $47.57 million in loan financing while MassDevelopment provided a $3.6 million Housing Development Incentive Program tax credit bridge loan. The Executive Office of Housing and Livable Communities also provided a $4 million HDIP award and a $3.6 million Commercial Conversion Tax Credit award. The city of Worcester is supporting the project through a 15-year Tax Increment Exemption.

“Projects like this demonstrate how strategic public-private partnerships can unlock new economic potential in our downtowns,” said Economic Development Secretary Eric Paley, who serves as chair of MassDevelopment’s Board of Directors, in a prepared statement.

Paley said the project will bring “new residents, foot traffic, and economic activity to downtown Worcester while making productive use of existing infrastructure.”

The 11-story building will feature 41 two-bedroom units, 85 one-bedroom units, and 72 studio apartments. The building will have amenities such as a fitness center, swimming pool, rooftop deck and underground parking. Construction is expected to finish in August.

Worcester Mayor Joseph Petty said the rehabilitation of the building “in the heart of Worcester” will spur additional activity in “an area that’s seeing a resurgence in vitality.”

MassDevelopment, the state’s development finance agency and land bank, offers financing solutions, real estate expertise, and other assistance. The agency partners with businesses, nonprofits, developers, banks, and municipalities, providing resources to help create jobs, build housing, and foster vibrant communities.