by: Darnell Dunn, Director of Business Recruitment, Worcester Regional Chamber of Commerce
At our June Breakfast Club, we had the opportunity to hear from Bo Menkiti, President and CEO of real estate development and investment firm the Menkiti Group.
The firm has developed 4.7 million square feet of real estate, primarily in the greater Delaware, Maryland, and Virginia area, with an additional 3.5 million square feet in their development pipeline.
As one of Downtown Worcester’s largest property owners, we were fortunate enough to hear more about the firm’s neighborhood investment model, details around local projects in the company’s development pipeline, and their thoughts about what is needed to unlock development opportunities in the city of Worcester.
Their model views cities as a collection of neighborhoods with the following characteristics:
• Mixed-income housing
• Thriving commercial corridors with jobs and small businesses
• Vibrant culture
They invest in:
• Cities with strong macro demographics and economic fundamentals
• Neighborhoods that are undervalued or where perception is distorting underlying value
When they encounter a location that fits the criteria, they will pursue opportunities across product types.
Here in Worcester, their focus has been on the downtown core with a focus on mixed-use properties where they can provide centrally located, highly amenitized housing close to traffic generators that can benefit from retail tenancy as population density increases.
Completed in 2024, 526 Main Street is a mixed-use office building that is part of the firm’s portfolio. Last year, the entire second floor was leased by co-working and private office service provider Workbar. In addition, Brazilian steakhouse Alma Gaucho is due to open its first location outside of Boston later this year.
Next door at 554 Main Street, a building the firm also owns, Bowdoin Construction and MassHire are office tenants, and a new coffee shop took possession of ground-floor retail in the building.
With an estimated start of 2026, the redevelopment of the former Denholm & McKay Company building has the potential to transform Downtown Worcester. The Menkiti Group won a competitive bid for the right to convert the one-time department store turned office condo building into 233 units of housing with 10,000 square feet of retail and an outdoor promenade.
The people occupying those units will be the people exercising at the new Planet Fitness, taking in a show at the Hanover Theater, and walking down to Polar Park for a WooSox game.
This is the role real estate development can play in restitching the fabric of fundamentally great neighborhoods.
Though the firm has experienced positive momentum here in Worcester, challenges to development still remain both here and elsewhere.
Construction costs in the form of labor and materials are elevated, making construction projects cost more and take longer. Coming out of the COVID-19 pandemic, interest rates increased dramatically, which impacts developers by increasing carrying costs and lowering returns. Policies like inclusionary zoning and specialized stretch code compliance negatively impact cost, but in slightly different ways. Specialized code compliance adds cost and complexity to the development process due in large part to lack of precedent. Cities like Worcester, which adopted the code in July 2024, were relatively early to adopt the code and have had a limited number of opportunities to work with the code in practice. A lack of examples of code compliance in action makes the process for service providers—who are responsible for code implementation—and staff at the municipal level ultimately take more time and cost more money. With respect to inclusionary zoning, capping rent to 60–80% of area median income (AMI) means that it takes a developer longer to pay back the capital they borrow to build a project. On the margin, that makes a prospective project less attractive to fund and build.
What can we do to overcome these headwinds? Bo provided three suggestions:
- Continue to leverage financial gap-closing tools such as Tax Increment Financings (TIFs), grants, and tax abatements to attract civically minded developers to Worcester.
- Embrace faster permitting and approval timelines, and by-right approvals in strategic locations within the city limits.
- Build upon the existing partnership mindset of local government, non-profits, and private enterprise to maintain a solution-based orientation in our approach to ensure permitted projects turn into shovels in the ground.
According to the City of Worcester’s most recent housing production report, the city needs an additional 12,000-plus units of housing by 2033 in order to meet the current shortfall and projected demand.
We’ll need to take these suggestions, and many others, to heart to ensure the goal is reached.
