Worcester Business Journal

28 Worcester Business Journal | December 23, 2024 | wbjournal.com Member FDIC Member DIF Simply Be er. BANKING BUILT FOR YOUR BUSINESS Tailored solutions to drive your success! Commercial Loans, Cash Management, Deposit Accounts, Digital Banking and More! Call our experienced lenders at 800-649-3036 or email us at commercial@saversbank.com. Learn more about business banking at saversbank.com/business-banking or scan the QR code. ECONOMIC FORECAST 2023 Housing according to its website, with more than 50 construction projects slated for completion in 2024 and 2025. e firm has developed 65.48 million square feet of residential space since its founding in 1998, according to CoStar. Wood Partners is majority owned by Fayez Sarofim & Co., a global equity investment management firm based in Texas managing $25 billion for insti- tutional and high net-worth clients, according to the firm's LinkedIn page. When developing e Cove multi- family project with its 173 units in the Canal District, Boston-based V10 Development Pres- ident John Tocco was glad to have the financial sup- port of three banks, led by Lowell-based Enterprise Bank with $58.5 million in financing. Weymouth-based South Shore Bank and Webster First Federal Credit Union also participated. at addition to the project's capital, combined with a bit of fortunate timing, allowed e Cove to get over the finish line and open for some residents this fall. "e market was just really starting to turn," Tocco said. "It started, and it was at that early stage, so we're able to lock in a decent rate. At the time we thought it was high, but … we're in decent shape now with what rates are today." If the project had started just a few months later, it would have been much harder to complete given the changes in the financial landscape, Tocco said. It's too soon to know exactly how fast e Cove's occupancy rate will climb. e building opened an initial phase of 112 apartments, with the remainder expected to come online by the end of 2024. A first-floor restaurant and candle- pin bowling center is expected to follow in early 2025. e building's average asking recent price of $2,468 has caused some sticker shock on social media, particularly from the Central Massachusetts' lifelong residents, who are confronting a rising cost of living. Tocco thinks it's all relative. While the building's tenant demographics have yet to shake out, renters from as far away as California have moved in. ose moving from cities like Boston have noted the Canal District's most expensive digs are a steal compared to rents seen elsewhere. "We recently had a gentleman move out here from the Seaport," he said. "When you're comparing it to the sticker shock of the Seaport, he thinks he's get- ting tremendous value." Moving forward e City of Worcester is doing an ad- mirable job of helping housing develop- ments reach completion, Smith said. "I hold Worcester in high regard with respect to its promotion and support of housing, and I think they do what they can to encourage it in a responsible and fair way," he said. Some ways the City could boost multi-family projects include reconsid- ering minimum parking requirements, which can force developers to build more parking infrastructure than needed and has the potential to run counter to the City's goal of making Worcester more walkable and transit-oriented, he said. Another option would be tweaking the City's inclusionary zoning rules, he said. Regulations say any developer who is choosing to make payments-in-lieu of adding affordable units to their project must pay a fee equal to 3% of their total construction costs. With construction costs already ballooning, developers of large housing projects who are facing large payments may move on to a different municipal- ity, resulting in no contribution to the affordable trust fund. Smith says adding a cap to the total amount of payments-in-lieu or modify- ing the 3% figure may be a win-win. Either option "would entice developers to the city and also potentially add some more dollars to the affordable housing trust," he said. While from Smith's perspective he feels boards were beginning to become weary of giving developers perpetual extensions for projects, Gov. Maura Healey signed the Permit Extension Act in November. In the name of job creation and economic development, this bill takes this decision out of the hands of local authorities in regards to some hous- ing projects, giving them an additional two years beyond its otherwise applicable expiration date. "at's a huge win for developers who may have been at their last ability to request extensions," Smith said. For projects still languishing in the pipeline, Jacobs of NAI Glickman sees two potential sources of relief in the fu- ture: more affordable housing initiatives and banks regaining interest. "e federal government, the state, and cities are offering higher affordable housing incentives in 2025, so that will certainly motivate that sector to continue developing," he wrote. "Many banks and private investors are poised to rejoin the multi-family market rate sector as well, so I believe activity will increase overall next year." Continued from page 27 John Tocco, president of V10 Development W

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