Is Worcester in danger of an Urban Doom Loop?

Who wants office space in Worcester?

Apparently not the investors.

Here is an interesting article about vacant office space in Philly.

https://www.dailyitem.com/busi...

Basically here is the scenario.  No one wants office space.  This causes the value of office buildings to drop.

Here is case and point with the 2 tallest buildings in the City:

In September of 2019 600 Main st, the White residential building was sold for $28.8mm

Looking at the City assessed value:

2018 $17.9mm

2019 $18.5mm

2020 $19.8mm

2021 $24.6mm 

2022 $28.8mm

In November 2019 446 Main st, the Blue Worcester Plaza office tower sold for $16.5mm

Assessed value:

2018 $24.3mm

2019 $15.1mm

2020 $25.8mm

2021 $17.7mm. 

2022 $14.8mm

For these 2 buildings you have an increase of $9.9mm on the residential building and a decrease of $9.5mm on the commercial building in 4 years!

Now consider another thing that is happening.  Owners are changing Office or Commercial space into housing.  Isn't that great?

Worcester has a dual tax rate system:

Residential $15.21 per $1000

Commercial 33.33 per $1000

So if you have a $1mm building that switches from Commercial to residential that is a drop of $33,330 in taxes to $15,210 a loss of $18k

Multiply that for a small sample of $50mm and you are talking almost a $1mm drop in collected taxes.

The other thing that is happening is NON Profit companies are buying up land and buildings, and instead of growing the tax base it is shrinking.  Yes they may make Payments in lieu of taxes (PILOT) it doesn't make up for the loss of taxes and stunts further growth.

Just look around and you can see it happening.

81 Chatham street bought by Teen Challenge of New England, in 2021 the City got almost $50k a year in taxes here, now they get $0

630 Plantation street bought by Worcester Housing Authority, in 2021 the City got close to $180k in taxes now they get $0

520 Park ave/111 Maywood Street - Bought by Clark University, Clark continues to pay taxes, but will they increase the payments if they put a building on this parcel?

This is the spiral that is happening as more and more companies pull out of worcester due to high commercial tax rates and are replaced by non profits and tax exempt entities.

After a while all we will have left are homeowners to pay the tax bill.  

As an owner of residential property in the City.  Please raise my taxes and lower the taxes of commercial properties so we can continue to have businesses in the City.