WORCESTER — A Boston-based real estate company envisions building 198 apartments in the red-brick 11-story building on Elm Street, commonly known as the Fallon Building or One Chestnut Place, where renters could pay from $1,950 to $2,900 Between dollars, depending on rental type and size.
In a letter of intent submitted to city officials by a subsidiary of real estate company Synergy Investment, the company also said the 22 apartments planned at the adjacent four-story Two Chestnut Place would be limited to 80 square meters of affordable housing . Percent of area median income over 30 years.
It is the latest project to redevelop another Worcester landmark into apartments in the city. Just a block away, another developer is considering a mixed-use redevelopment of the Slater Building with affordable and moderate-income housing.
For the two-pronged project on Elm Street, Synergy is pursuing a tax increment abatement program under the state’s Housing Incentive Development Program that includes an average annual abatement of 44 percent over 15 years and is expected to save the company $3.96 million.
The incentive program, administered by the state Department of Housing and Community Development, provides private developers with modest incentives to promote the production of market-rate housing in cities historically designated as centers of poverty and racial inequality, also known as gateway cities.
Worcester is considered the largest gateway city in the state.
“Together, the One Chestnut Square and Two Chestnut Square developments will help alleviate the city’s housing supply shortage and provide economic vitality for businesses in the area,” Synergy said in its letter of intent.
“A for-sale apartment development of this scale has not been attempted in Worcester city center and delivering 100 per cent of the apartments at affordable prices is unprecedented.”
Last year, Synergy purchased the One Chestnut Place building at 22 Elm Street and the adjacent Two Chestnut Place building for $10.5 million and began renovations less than a year ago.
One Chestnut Place was built in 1990 at a cost of $33 million to house Fallon Health’s headquarters. Although Fallon is still there, he plans to move to the other side of Main Street later this year into the One Mercantile building (formerly the Unum building).
The developer estimates that the cost of converting the 196,380 square feet of space into 74 studios, 84 one-bedroom units and 40 two-bedroom units will cost approximately $73,300,000.
A breakdown of the apartments shows that studios are expected to be about 487 square feet in size and sell for an average of $1,967 each; one-bedroom units are expected to be about 720 square feet and sell for about $2,404; and two-bedroom units are about $1,086. sq. ft. for approximately $2,841.
Synergy added that rents “are subject to change while operating.”
The buildings at One Chestnut Place will also feature common amenity areas such as co-working spaces, fitness centers, rooftop decks, outdoor pools and lounges with an expanded landscaped plaza area, and more.
Synergy also outlined that the building will adhere to “sustainability initiatives” to reduce its carbon footprint, such as the use of electric hot water and cooking, electric heat pump source heating and cooling, LED lighting, water-saving fixtures (such as low-flow toilets, steel structures) and the use of recycling Materials made of metal stud structures, etc.
Across the courtyard, 2 Chestnut Place is a 50,900-square-foot, four-story building that dates to the 1920s and was once home to Worcester Federal Savings.
Synergy estimates that renovations to convert the office building into six one-bedroom apartment units, 13 two-bedroom units and three three-bedroom units will cost about $14 million.
The project will also provide tenants and owners with approximately 211 garage parking spaces that Synergy purchased last year. Twelve of them are electric vehicle spots.
As part of the project, Synergy vowed to maintain the “architecturally appealing” colors, window styles and other elements of the letter of intent.
The project will next go before the Economic Development Commission and then back to the City Council for approval.
Work will begin this summer, with construction expected to end in September 2025.