CitySquare redevelopment sees progress
By Lisa Eckelbecker TELEGRAM & GAZETTE STAFF
WORCESTER - Demolition, a new occupant and perhaps some momentum are coming to CitySquare.
Workers are due to begin cutting away parts of a parking garage on Foster Street to make way for the downtown redevelopment project in the next three to four weeks, and a second entity has stepped forward to occupy a new building near Washington Square.
The changes mean that CitySquare, first described in 2004 as a sweeping downtown makeover, soon will be more than a pretty drawing on marketing materials. That could, over time, spur additional development, said Councilor-at-Large Frederick C. Rushton, chairman of the City Council's economic development committee.
"Once the infrastructure is in place, it's easier for the less-than-visionary to see what's going to happen," he said.
CitySquare is a swath of about 21 acres downtown now covered by a shuttered shopping mall, parking garages and office buildings. Berkeley Investments Inc. of Boston bought the property in 2004 and proposed tearing down the mall and creating new buildings for offices, stores, entertainment and luxury residences.
City and state officials lined up $94 million in public money for new roads and other improvements. Then nothing happened.
Last year, the investment arm of Hanover Insurance Group Inc. acquired about half of the CitySquare area from Berkeley for $5 million. Tennessee-based disability insurer Unum Group, which had been negotiating with Berkeley Investments to lease space at CitySquare, quickly closed the lease with Hanover and its development partner, Leggat McCall Properties LLC. Unum plans to relocate workers next year from its downtown complex of older buildings to a new structure that Hanover is developing at a cost of about $85 million.
Last week, the project got its second occupant. St. Vincent Hospital signed an agreement to buy a parcel of land in CitySquare from Hanover and build a 40,000-square-foot cancer treatment center at a total cost of about $21 million. St. Vincent, which treats about 1,300 cancer patients a year, expects to open the center in January 2013.
The activity is taking place against a backdrop of an improved commercial real estate market in Worcester, according to some observers.
Uncertainty over the economy and taxes has dissipated, and companies have seen their business stabilize, said James G. Umphrey, executive vice president of Kelleher & Sadowsky Associates Inc., a Worcester commercial real estate firm.
Kelleher & Sadowsky is marketing space at a building under construction at Gateway Park at the northern edge of downtown and made presentations to at least three potential tenants before workers broke ground, according to Mr. Umphrey.
Between the Gateway Park building and the two buildings planned at CitySquare, "that's probably more activity than any city of this size in the country you could find right now," Mr. Umphrey said.
Frederick H. Eppinger, Hanover chief executive, said he believes the economy is improving, the decision by CSX Corp. to expand its freight yard in Worcester is positive for downtown, and St. Vincent's cancer center will bring more people to the city center.
"I'm as optimistic as I've ever been," he said.
Mr. Eppinger has maintained that the market will dictate what happens at CitySquare, although he said last week he still supports the original mixed-use vision of the development. Mixed use refers to a combination of offices, housing or other buildings in one area.
Hanover deserves credit for its realistic approach to development in Worcester, said David P. Forsberg, president of Worcester Business Development Corp., a real estate development organization. Developers have to make projects and expectations fit the market's relatively small size and modest land values, he said.
"I think one of the missteps from the original CitySquare approach was to think you could do the number of luxury condos they were hoping to do," Mr. Forsberg said. "The market's not big enough to absorb that or those prices."
A more intangible factor may be contributing to commercial real estate. Mr. Eppinger described both Unum and St. Vincent Hospital as companies committed to Worcester. Mr. Forsberg described that quality as a force in development, too.
"It really helps to care about the future of the city," he said. "I think that has been driving some of the developments which are on the front edge of this simmering recovery."