WORCESTER – Real estate developer Charles "Chip" Norton has a message for those who believe the Worcester office market will suffer a significant decline as Massachusetts continues to grapple with the coronavirus pandemic.

"Anyone who thinks that all businesses and all industries don't need office space or the same amount of space as before the pandemic is not realistic," said Norton, managing director of 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 Worcester commercial real estate agent that handles leases for several clients, including Norton.

"I'm pretty optimistic things will come back," said Umphrey. "There are good activities. It's much better than a year ago. "

The renovated lobby of the Mercantile Center, 100 Front St., Worcester.

Norton's company 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 its company renovated 100,000 square feet, a loss of 8% of the total space these tenants rented prior to the March 2020 pandemic outbreak.

Those statistics, Norton said, show that employers expected most of their workers to be back in the office as public health measures in the fight against COVID-19 continued.

"The space requirement hasn't changed much," he said.

More optimism

Denis Dowdle is another developer who is optimistic about the current rental opportunities.

More:Life planning: research laboratories in the focus of the 6-story construction project opposite the polar park

"There is considerable interest in it," said Dowdle of the proposed six-story, 200,000-square-foot life science building that his Boston-based company Madison Properties is on vacant land across the south side of. Polarpark wants to build.

Madison Properties plans to build a 200,000 square foot building on the south side of Madison Street across from Polar Park.

Dowdle hasn't signed a single tenant to a contract, saying he couldn't start construction until he had rental commitments.

The building's design could change if the Dowdle team has discussions with potential tenants. He said there is a lot of flexibility in design.

"We'll be monitoring it and working with the tenants to find out what's right for the build," said Dowdle.

Commenting on the entire Worcester office market, Dowdle said the retail side has the "most unknowns" as these companies don't know how much space they will need after the pandemic.

The life sciences sector is growing in Worcester, Dowdle said. Umphrey described it as "piping hot".

Dowdle's company is also planning to build a six-story, 120,000-square-foot commercial building outside of Left Field in Polar Park.

Long drives – good for Worcester?

If employers learned anything during the pandemic, Norton said employees don't want long commutes. Remote working reinforced that thought during the pandemic.

Norton believes this development is a plus for Worcester as companies in and around Boston with employees faced with long commutes will find Worcester – with its lower lease rates and shorter commutes – an attractive landing spot.

The courtyard of the Mercantile Center on Friday.

Some foreign businesses have already set up shop in Worcester. Umphrey cited examples of the First American Title at 446 Main St. and the Keches Law Firm at 100 Front St.

Protection against COVID-19

Another problem is that workers want to feel safe from COVID-19, and this could play a role when companies decide whether to get leases in Worcester.

Employees could feel safer commuting to Worcester in their cars, Umphrey said, than mingling with strangers on public transit trips to Boston.

Sixteen months ago, with the outbreak of the pandemic, the Worcester office market "came to a standstill," Umphrey said.

But things are picking up, especially with rental renewals. Umphrey said Mirick O'Connell, a law firm in Norton's Mercantile Center building, has signed a long-term lease.

Umphrey pointed to another plus – leasing rates remained stable during the pandemic.

However, a building in Worcester could bring those prices down.

The Unum building on Mercantile Street in Worcester.

More:Unum building in downtown Worcester becomes One Mercantile office space

This building is One Mercantile. Norton is working with Kelleher and Sadowsky and others to find tenants to sublet 125,000 square feet of space. Unum, a disability insurer based in Chattanooga, Tennessee, cleared the premises last summer when it announced that 400 employees would be working remotely after the pandemic broke out.

"It has an impact on the market because there is a lot of space," said Umphrey.

The preference is to find large tenants to fill the void at One Mercantile, Norton said, as each floor is over 20,000 square feet.

Most of Norton's other major properties are leased. He said the Worcester Business Center was 90% busy. About 90% of the Mercantile Center is rented.

Contact Henry at henry.schwan@telegram.com. Follow him on Twitter @henrytelegram

source https://seapointrealtors.com/2021/08/09/worcester-office-space-rental-coronavirus-pandemic-boston/

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