Worcester Business Journal

8 Worcester Business Journal | Janurary 10, 2022 | wbjournal.com Worcester's rental market is catering to a high-income tenant, which could be bad news for local workers Luxury BY KATHERINE HAMILTON WBJ Staff Writer S eemingly all of a sudden, a new word is being thrown around in the Worcester real estate market: luxury. For long-term resident, the term seems ill-fitting for the historically downtrodden Woo. For developers, however, it's the perfect buzzword to attract a new kind of tenant. "e people who live and work in Worcester are now competing against people who work in Framingham, Natick, Marlborough, and Hudson," said Realtor Brian Allen, who keeps close tabs on the city's market with his firm WorcesterMulti. "at's the tenant that everybody wants. e more income, the more likely you are to get paid." New developer, new look Allen sees the Worcester rental market in three main categories. On one end of the spectrum is government- and nonprofit-owned affordable housing, and on the other end is high-end complexes like 145 Front at City Square. e majority of units, which lie somewhere in between those two extremes, are smaller multifamilies and triple deckers. While there has been an influx in larger complexes proposed and built in the last five or so years, those in- between multifamilies are where the most transformation has taken place, Allen said. "You used to be able to just get a bad apartment from somebody who didn't need the money," he said, referring to the days when a significant portion of Worcester apartments were owner- occupied. "What you've done in Worcester is you've taken all the bad stuff that was on the bottom and instead of mixing it in and having some bad, all the bad stuff is gone." Out of 43 triple deckers Allen's agency bought this year, five were owner-occupied. e trend blossomed out of a rush on Worcester's housing market from outside investors, mostly hailing from the increasingly unaffordable Boston area. e real estate market in the city has mirrored the rest of the nation during the coronavirus pandemic where demand for housing is outpacing supply, but in its own right has attracted investors who believe they can turn a profit remaking old housing stock or building new developments. Now, Worcester has about half as many multifamilies on the market as is typical, said Allen. is increase in sales provided new buyers the opportunity to renovate the units, which, in combination with heightened real estate prices, has prompted hiked-up rents. "All of this stuff drives your investor into buying the worst house and making it look really pretty," said Allen. "ey're lipstick on a pig. ey're better than the other Worcester apartments that they're competing against. ey're never going to be 145 Front." The new Worcester tenant Developer and property manager Worcester developer Michael Ermani says luxury is a necessity in the city's increasingly competitive market. Mark Rengel, vice president of development at the Menkiti Group, oversaw the development of the 24-unit luxury complex Chatham Lofts. PHOTO/MATT WRIGHT PHOTO/CONTRIBUTED

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