When we crafted the One North Central Plan back in 2021, we envisioned it as a roadmap for prosperity in our region. It brought business and community leaders together to design a blueprint for our region’s future.

Our objective has been to inspire the region’s public and private sectors to work together in building an economically sound and prosperous region capable of benefiting from future growth and development.   Never has the need been greater than now.

Emerging out of the pandemic, the One North Central plan has been put to the test. Our region has experienced great challenges, particularly in the real estate market. Historically low interest rates during the pandemic years prompted record refinancing, juxtaposed against a backdrop of one of the highest foreclosure rates in the nation.

The Crescent Street Townhouses in Fitchburg, developed by Nick Pelletier in 2020, transformed an abandoned downtown lot into seven market-rate rental units using Massachusetts’ Housing Development Incentive Program (HDIP)

The “Golden Handcuff” Era

We’re seeing some bright spots.  Inflation, which has gripped the United States for several years, has eased to the point that the Federal Reserve recently lowered the prime interest rate.  This is great news for lenders as the potential promise of future Fed rate cuts means mortgage loan rates can further ease downward.  We may never see pandemic-era rates of 3%, however, the hope is for something much more affordable than the 7% range we’ve been hovering around in recent months.

As of early October, the average interest rate on a 30-year fixed-rate mortgage was 6.32% APR, according to data compiled by Freddie Mac. A year ago, Freddie Mac reported the average interest rate was 7.57% compared to 2021 when it was 2.99%.

The hope is that lower interest rates will ease what one local, leading real estate broker calls “The Golden Handcuffs.” “Right now, people aren’t moving,” said Rick Healey, president of Foster-Healey Real Estate of Gardner and Leominster, adding “we have very low supply and high demand, which is creating even higher housing prices.”

In turn, Baby Boomers who might be interested in downsizing are staying put to continue benefiting from the low home refinance rates they locked in during the pandemic.  Conversely, those needing more space can’t find those larger homes and often, due to supply and demand constraints, are finding available homes too costly.

The numbers support this. According to the Warren Group, 2023 ended with the lowest volume of single-family home sales in 12 years and persistently high prices, both of which contribute mightily to the affordability and access problem the Commonwealth is now trying to address. Data for 2024 through September show sales this year are running half a percentage point ahead of last year’s pace as historic prices continue to break records.

“We have a lot of inventory, however, much of it is locked up due to conditions in the market,” said Nick Pelletier, president of Pelletier Properties and a developer in Leominster. “We can fix this by building more inventory to help bring prices down.” That said, Pelletier added the cost to build, particularly with the Commonwealth’s strict energy codes, keeps builders from constructing lower-cost starter homes in favor of more profitable, and expensive, larger ones.

Pelletier notes the other challenge is affordability. “When people say, ‘affordable housing,’ often they move toward what the industry definition is—low income, subsidized, or even Section 8. However, for most people, affordable may simply mean, ‘can I afford to live here on my income?’ regardless of income level.”

“If you look at the area of Massachusetts with closest proximity to Boston while having the most affordability, it is North Central Massachusetts,” continued Pelletier. North Central Massachusetts has long been viewed as affordable, with great commuter rail access, and easy driving access to Boston and Worcester. Commuters love the lifestyle of North Central Massachusetts which has more open space, is less densely populated, and is less expensive.

“We love that our North Central communities are chosen for affordability and accessibility to Boston,” said Roy M. Nascimento, president and CEO, North Central Massachusetts Chamber of Commerce. “What the One North Central plan showed us is how to maintain this quality of life for our citizens who both live here and work for the many wonderful businesses in industries anchoring local communities in our region.”

According to livingcost.org, the average dollar amount needed for single person to live in the City of Boston per month is $3,467, which includes housing, utilities, food, and transportation. Comparatively, Leominster is $2,743 and Fitchburg $2,682. “It is critical that we consider the diversity of our communities and provide attainable housing for all income levels,” added Nascimento.

Balancing attainability and accessibility

Earlier this summer, Massachusetts Governor Maura Healey signed legislation to spur the production of about 45,000 new units and the preservation of 27,000 more. However, the Commonwealth is expected to have a 220,000-plus housing unit shortage, state-wide by 2030, according to a recent article in the State House News.

“In North Central Massachusetts, there is a recognition now in the planning boards that increasing density is necessary,” said Rick Healey. “We’re not creating any more land and we need to get creative in how we develop denser communities while maintaining green space.” Healey continued that multifamily condominiums, townhouse, and cluster developments surrounded by green space are critical. “We have to be flexible in how we develop our land,” he said.

Pelletier adds that all types of housing are needed—both rentals and for sale, along with one- two-, and three-bedroom units across the income spectrum. “We currently have about 6,000 homes on the market in the region,” noted Pelletier, adding, “it’s getting better.  A few years ago, we only had 3,000 on the market.”

Marc Dohan is the Executive Director of NewVue Communities, a non-profit community development corporation dedicated to creating strong and healthy neighborhoods where residents choose to live, work, and invest throughout North Central Massachusetts. “We do a first-time homebuyer class. People are really challenged between interest rates and availability, and are finding it much harder to buy that first home. They learn a lot but need to move farther away from the main cities of Leominster and Fitchburg to buy something.”

“Some people have accepted the fact that buying a home might be unattainable. We must fix that,” concluded Pelletier.

Fitchburg setting the tone for the future, making what’s old, new again.

Jacob Zapata of The Tocci Group showcases the construction progress on one of their latest mixed-use developments on Fitchburg’s Main Street, which will feature ground-floor retail spaces with market-rate apartments above

The City of Fitchburg has taken the housing and affordability issue to heart with an aggressive effort to develop Main Street, taking old, abandoned, yet historical buildings and converting them into affordable apartments.

Jacob Zapata is a Partner and Chief Operating Officer for the Tocci Group. Based in Fitchburg, The Tocci Group is charged with working with the City of Fitchburg to redevelop these buildings and turn them into hundreds of apartments. “Main Street is one of the longest downtown main streets in the Commonwealth and the area is becoming an attractive destination,” commented Zapata.  “We thought we’d attract tenants from other parts of North Central Massachusetts; however, we’re finding they are also coming in from New Hampshire, something we did not expect.”

The Tocci Group also focuses on creating retail opportunities to complement the residential units.  “People are craving a fresh, clean, affordable product. It’s a great idea for businesses! It’s inexpensive right on Main Street—open a business for $12-$16 per square foot in rent and they can do pretty well.” He added that by attracting new businesses in a highly desirable business climate coupled with affordably priced, high-quality apartments to feed a large housing shortage, is a win for everyone in the Fitchburg and the North Central Region.

Pelletier Properties is also developing in Fitchburg and Pelletier said rehabilitating old buildings is a great reuse of property, however, the cost can be challenging. “When you look at the cost to retrofit these buildings, the numbers don’t always make sense. We rely on government incentives and grants to make these projects feasible so that we’re not carrying debt too far into the future,” added Pelletier.

Enter One North Central and its Regional Business Investment Fund (RBIF). The RBIF differs from other loan programs in that it is very flexible and geared towards real estate projects. The fund includes very low rates (some as low as 0%) for projects in lower-to-middle income (LMI) communities, flexible repayment terms and can be used to cover soft costs and other expenses not typically covered by traditional lenders.

A recent $250,000 loan through the RBIF to the Gardner Downtown Crossing, LLC (GDX) is helping this developer fit out a three-story mixed-use building that was constructed in Gardner in 1900.  When completed, the building will feature commercial space as well as 14 units of housing.  GDX was able to leverage the RBIF loan with an additional $1.9 million in financing from a traditional lender.  “This is an excellent example of Mayor Michael Nicholson’s leadership in partnering with local community and business leaders to bring this important project to fruition,” comments Nascimento.

Also, unlike our other loan programs, the RBIF can be used for housing projects, and non-profits are eligible. “The RBIF, coupled with other incentives, provides a catalyst and incentive for builders to come into our communities to create dynamic urban settings that are affordable to all citizens,” added Nascimento.

Diversity through the arts

One local developer is fine-tuning his approach to amplifying Fitchburg’s burgeoning arts community through the creation of the Artist Preference Housing Project, which broke ground a year ago after a decade of planning.

The project, spearheaded by NewVue Communities, is a new affordable artist housing development that offers studio, 1-, 2-, and 3-bedroom apartments as part of beautiful renovations of the historic former B.F. Brown Middle School, High School Annex, and City Stables. Artist community cohesion will be reinforced with public art, gallery and studio space, and a landscape plan that knits the entire site together by creating an arts campus that connects to the Fitchburg Art Museum.

“Two huge anchors of culture within Fitchburg– Fitchburg State University and the Fitchburg Art Museum—led us to believe that artist housing would fit perfectly into the city’s diverse culture and desire to revitalize the downtown area,” added Dohan, whose firm, NewVue Communities, is spearheading the project.

In addition to housing, the community also features artist amenities, such as a soundproof room, small classrooms, and an auditorium that can also serve as open studio areas for all types of creatives, including writers, painters, photographers, and musicians. Demand for the 68 units, slated for completion in early 2025, has been overwhelming with over 1,000 applications.

Are North Central communities prepared for growth?

Many communities throughout North Central Massachusetts date back well over 100 years with aging infrastructures that are being addressed as part of future growth initiatives throughout the region.  “It is imperative that we work collectively to address future growth in our communities by ensuring we have adequate schools, water and sewer systems, and roads,” added Nascimento.

The vast and vibrant development in Fitchburg has placed a spotlight on the city as extensive work is being done to fix the roads, sewers, and electrical grids to accommodate the growth happening along Main Street. “I applaud Mayor [Samantha] Squailia and her efforts within the Commonwealth to secure funding to address critical infrastructure needs in Fitchburg,” commented Zapata. “Fitchburg. Don’t sleep on it. It’s the next town to really be redeveloped.”

“Whether it’s Ashburnham, Ashby, Clinton, Leominster, Gardner, Fitchburg, Shirley, or any of the other wonderful towns in between, North Central Massachusetts is poised for tremendous growth in the future,” added Nascimento. We have incredible business leaders who care about our communities, our citizens, and the responsible, affordable growth that is needed to keep our region vibrant for many years to come. I’m excited about the future and look forward to continuing the tremendous progress we have made to date.”

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