Business & Tech
Another Worcester Development Delayed Due To Commercial Real Estate 'Slowdown'
The developer behind the proposed 218-unit apartment building is the latest in Worcester to say economic issues are delaying construction.
WORCESTER, MA — The developer behind a planned 218-unit project along Shrewsbury Street is the latest to cite economic factors in seeking more time to start construction.
Lundgren Equity Partners LLC in 2022 sought permission to build a seven-story residential building at 225 Shrewsbury St. next to the shopping plaza that contains InHouse Coffee and a DCU branch. The Zoning Board of Appeals in October 2022 granted special permits and a variance for the project.
Last month, the developer asked the ZBA for an extension until October of a zoning variance the project received for the height of the building. The developer had already received an extension in October 2023 for several special permits.
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In a letter to the ZBA, a Lundgren representative used the same exact language that several other developers have used recently in seeking an extension of zoning approvals.
"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," attorney Joshua Lee Smith wrote.
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Other projects that have used that language in seeking extensions include the residential tower planned for the site of the former Fairway Beef market and a 375-unit development next to Polar Park on the site of a former barbecue restaurant. The developer behind the Worcester Boys Club senior housing development last month sought more time to use a city subsidy for the project.
The commercial real estate market — which includes multifamily, office and industrial properties — slowdown has largely hit the office sector, but banks have been hesitant to lend to commercial projects due to high interest rates, and because many existing commercial loans are set to mature in 2024, according to experts.
The ZBA will likely decide whether to extend the 225 Shrewsbury St. variance at the May 6 meeting.
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