Worcester Office-To-Apartment Project Gets Big State Funding Award

WORCESTER, MA — One of the state's largest programs subsidizing market-rate apartment projects in so-called Gateway Cities will contribute millions to a planned 198-unit building in downtown Worcester.

A $2.5 million Housing Development Incentive Award (HDIP) will help a developer convert the former Fallon Health building along Elm Street into apartments. Developer Synergy Investments proposed the office-to-residential conversion earlier this year, and is in line to also receive a 15-year tax increment exemption worth close to $4 million from the city of Worcester. The project will likely also receive assistance from a new state program designed to turn underused or vacant office buildings into residential properties.

The Worcester project is one of 13 that will share about $27 million in HDIP awards this year, the highest single HDIP funding round ever. Gov. Maura Healey and state lawmakers expanded the program as part of a larger tax cut package approved in 2023. HDIP, however, has been criticized for subsidizing projects that aren't affordable for low-income renters in Gateway Cities — a group of 26 cities like Worcester, Holyoke, Springfield, Lowell and Pittsfield that saw manufacturing industry jobs dry up in recent decades.

The Fallon Health building would include a mix of studio, one-bedroom and two-bedroom units, with rents projected to start near $2,000 for studios. Synergy would also develop a four-story building attached to the Fallon tower into 22 condominiums that will be affordable for buyers earning 80 percent of the area median income.

Synergy expects to spend about $73 million on the renovation, and could begin construction this summer, with a completion date sometime in fall 2025. Fallon Health said in November that it would vacate the Elm Street building by the end of 2024 to move into a smaller space at the former Unum headquarters adjacent to the Mercantile Center.