Worcester Telegram & Gazette
August 2021

Worcester’s Office Market Came to a “Halt” 16 months Ago at the Start of the Coronavirus Pandemic. But Now It’s Bouncing Back, According to Some Observers.
Real estate developer Charles “Chip” Norton has a message for those who think the Worcester office market will suffer a significant decline as Massachusetts continues to grapple with the coronavirus pandemic.

“Those who think all companies and all industries will not need any office space, or the same amount of space they had before the pandemic, is not realistic,” said Norton, managing director at Franklin Realty Advisors LLC in Wellesley Hills.

Norton is one of several real estate professionals who see a bright future for Worcester’s commercial office buildings.

Another is Jim Umphrey, a principal at Kelleher & Sadowsky, a commercial real estate broker in Worcester that transacts lease deals for several clients including Norton.

“I’m pretty optimistic things are coming back,” Umphrey said. “There’s good activity. It’s a lot better than a year ago.”

Norton’s firm owns or manages several large office buildings in Worcester — Worcester Business Center (intersection of Interstates 190 and 290); Mercantile Center (100 and 120 Front St.); and One Mercantile (1 Mercantile St.).

During the pandemic, Norton said his business renewed 100,000 square feet of space, representing a loss of 8% of the total floor space those tenants leased before the pandemic’s outbreak in March 2020.

That statistic, Norton said, shows that employers anticipated most of their workers would be back in the office as public health measures continued in the fight against COVID-19.

“Space requirements haven’t changed much,” he said.

More Optimism
Denis Dowdle is another developer who is optimistic about current lease possibilities.

“There’s a fair amount of interest in it,” Dowdle said of the planned six-story, 200,000-square-foot life sciences building that his firm, Boston-based Madison Properties, plans to build on vacant land across from the south side of Polar Park.

Dowdle hasn’t signed a single tenant to an agreement, and he said he can’t start construction until he gets lease commitments.

The building’s design could change as Dowdle’s team has conversations with prospective tenants. He said there is a lot of flexibility in the design.

“We’ll monitor it, and work with tenants to figure out what the right thing to build is,” Dowdle said.

Commenting on the overall Worcester office market, Dowdle said the retail side has the “most unknowns,” because those businesses don’t know how much space they’ll need coming out of the pandemic.

As for the life sciences sector, it’s growing in Worcester, Dowdle said. “Piping hot” is how Umphrey described it.

Dowdle’s firm also plans to construct a six-story, 120,000-square-foot commercial building outside left field at Polar Park.

Long Commutes — Good for Worcester?
If there’s one thing employers learned during the pandemic, Norton said it’s that employees don’t want long commutes. Remote work reinforced that notion during the pandemic.

Norton believes that development is a plus for Worcester, because businesses located in and around Boston with staffs that face long commutes will see Worcester – with its lower lease rates and shorter driving distances — as an attractive landing spot.

Some out-of-town businesses have already settled in Worcester. Umphrey cited examples of First American Title at 446 Main St. and Keches Law Firm at 100 Front St.

Protection Against COVID-19
Another issue is workers want to feel protected against COVID-19, and that could play a role as businesses decide whether to sign leases in Worcester.

Employees might feel safer commuting to Worcester in their cars, Umphrey said, compared to mingling with strangers on public transportation trips into Boston.

Sixteen months ago, at the outbreak of the pandemic, Worcester’s office market came to a “halt,” Umphrey said.

But things are picking up, especially lease extensions. Umphrey said Mirick O’Connell, a law firm in Norton’s Mercantile Center building, signed a long-term lease.

Umphrey pointed to another plus — lease rates remained steady during the pandemic.

However, one Worcester building could drag down those rates.

That building is One Mercantile. Norton is working with Kelleher and Sadowsky, and others, to find tenants to sublease 125,000 square feet of space. Unum, a disability insurer based in Chattanooga, Tennessee, vacated the space last summer, when it announced 400 employees would work remotely after the onset of the pandemic.

“It’s having an impact on the market because it’s a lot of space,” Umphrey said.

The preference is to find large tenants to fill the void at One Mercantile, Norton said, because each floor has more than 20,000 square feet of space.

Norton’s other major properties are mostly leased. He said Worcester Business Center is at 90% capacity. The Mercantile Center is approximately 90% leased.

By Henry Schwan