WORCESTER, MA – Another high-profile development in downtown Worcester is being slowed by the tumult in the real estate sector, according to documents filed with the city.
AKROS Development is petitioning the Board of Zoning Appeals for further zoning approvals for a planned 105-unit mixed-use construction for the former Fairway Beef along Grafton Street.
The reason: economic problems such as inflation and financing difficulties.
“[AKROS] has been forced to delay the start of task-relevant work due to demanding situations such as hard work and supply chain and finance and capital issues such as inflation and emerging interest rates, instability in the banking system, and a general slowdown in the advertising real estate market,” indicates a letter sent to the ZBA.
Developers of a 375-unit residential construction site on the site of Kelley Square’s former factory Table Talk Pies gave that precise explanation for why when they implemented an extension of zoning approvals in late February, as first reported via Worcester Patch.
Commercial real estate has been hit hard by the Federal Reserve’s interest rate hikes, a move aimed at curbing inflation. Advertising properties, mainly buildings, lost more than $500 billion in price in 2023 alone, according to research firm Capital Economics. The volatility has caused banks to rethink how they fund advertising projects, according to reports.
“For example, about two-thirds of U. S. banks recently reported stricter lending criteria for advertising structure and land progression loans, compared with fewer than five early last year,” the International Monetary Fund reported in January.
In its letter, AKROS Development said it expected paintings to begin on the Fairway Beef Tower in 2024. The developer is asking the ZBA to extend the special rents until September before they expire on March 12. The developer first obtained zoning approvals for the assignment in September 2022. The nine-story construction would feature 1,000 square feet of advertising space, as well as a “semi-automatic puzzle stacker” parking lot with capacity for 72 vehicles.
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