Worcester's $1 billion bet

WORCESTER -- The empty downtown of this worn-out city has seen noble efforts at revitalization fail before, but $1 billion in new investment may finally put to rest its reputation as a place resistant to change.

A closed mall will be torn down and replaced with shops, condominiums, and restaurants. A new hotel is under construction nearby, and an old one has been renovated. Other derelict properties have been snatched up by developers, and an old auto dealership, roller rink, and former triple-X movie theater are all candidates for redevelopment.

``We'll get downtown right," City Manager Michael O'Brien said. ``This will be the final reincarnation."

By rights downtown Worcester should be hopping. The city is home to several colleges and schools, which bring student spending and street traffic. It is also home to a major teaching hospital and transportation hub at Union Station. Indeed, Worcester has gained new residents while the state as a whole has been losing population, according to census figures.

It's also the closest urban destination for surrounding Worcester County, which has seen a surge in new residents drawn to the suburbs' more affordably priced housing.

Instead, downtown Worcester has been eclipsed by malls and other retail strips in other parts of the city as well as the suburbs. Some in the community contend that crime has scared outsiders away while the poorer residents who live in the inner city aren't able to support an active district. Others blame city officials for a lack of vision, or developers who built huge, closed-off, self-contained projects -- like the mall -- that aren't knit into the fabric of the downtown.

Whatever the reason, downtown Worcester is the ``hole in the doughnut," according to Young K. Park , president of Berkeley Investments, a Boston firm that plans to replace the mall with a $469 million mixed-use development.

``The suburbs around Worcester are thriving," he said. ``Bringing the money, energy, and creative strengths back into the downtown area is really the challenge, but the resources are there."

The Berkeley site is one of 40 projects planned or underway in Worcester . Developers have spent more than $500 million in recent years buying property in the urban core, and government and local institutions have also been part of the development mix.

John McGrail of the Boston-based Mayo Group has made a career out of buying properties in seedy areas to turn them around, converting former industrial spaces in Lynn, for example, into loft apartments and condos.

After learning of Berkeley's investment in Worcester, McGrail spent more than $17 million on property along Foster and Salem streets. One property, the Bancroft hotel, was once a graceful landmark overlooking the city common that was rife with drug dealing and prostitution when McGrail bought it two years ago.

He now rents out apartments to students and young professionals. In a glossy brochure, he touts ``top-of-the-line amenities" including high-speed Internet access, and an on-site fitness center in the ``heart of a revitalized downtown Worcester."

The view from the Bancroft has indeed improved. The City Common has undergone $2 million in renovations and improvements, with $6 million more to come, including the installation of an outdoor skating rink.

More recently, McGrail bought an old auto dealership on Salem Street that includes a 1950s-era roller rink. He plans to open a Super 88 Asian market in the old dealership and a restaurant in the roller rink. He's not sure what will become of the defunct porn theater, which now hosts a church.

``There is a huge amount of risk," McGrail said. ``But for a company like us, there is a huge reward."

Meanwhile, a $25 million Hilton Garden Inn is under construction just a few blocks from City Hall, as is a $180 million courthouse. The Massachusetts College of Pharmacy and Heath Sciences located its Worcester campus in downtown in 2005, bringing about 600 students into the area.

The city agreed to spend more than $64 million for downtown improvements, including the construction of a new 1,025-car underground parking lot. And once the mall is torn down, , a new road will connect downtown to the city's thriving East Side restaurant district and Union Station.

The government was also instrumental in attracting the Berkeley Investments proposal when the City Council, at the urging of Mayor Tim Murray, now the Democratic candidate for lieutenant governor, approved the mall demolition.

But this location has vexed developers before.

The mall and accompanying parking garage were built in the 1970s as part of an effort to lure suburban shoppers to the city. The building is a gray concrete structure 475 feet long -- as big as a ship. It has a plexiglass and copper roof and was loosely designed after a well-known galleria in Milan .

``The megastructure . . . includes two office buildings, Filene's and Jordan Marsh, Kennedy's, more than 100 shops and restaurants, and the largest parking garage in the world, with space for more than 4,300 cars," a Worcester Telegram & Gazette newspaper reporter wrote on the day it opened.

The mall's popularity slowly faded during the next decade and even its abundance of parking could not save it from competition from newer malls in the region. Downtown businesses closed or moved to the suburbs too, leaving a hodgepodge of nail salons, convenience stores, and vacant storefronts.

It was briefly revived in the 1990s as a discount shopping outlet, but that too faded in popularity and closed by the end of the decade.

David Forsberg , Worcester's chief development officer at the time, said city officials struggled to find a winning mix after the Galleria closed. They built a new convention center, and a hospital in Worcester's downtown, near the old mall, calling it a ``golden triangle." But the mall ended up closing shortly after the convention center and hospital opened.

``I thought we made a valiant effort to bring it back with the outlet concept," said Forsberg, now president of the Worcester Business Development Corp., a non profit business recruitment group. ``In the past, so much of what was done was with public money. Now there's a lot more private money at play."

Maybe that will make a difference this time. But there are some in Worcester who approach the current claims of revitalization with a kind of jaded realism.

Don Reid, who for three decades has run a bookstore on Salem Street, called the Berkeley project another ``development juggernaut.

``There is a certain deja vu," Reid said. ``I fear the reconstruction of the mall won't improve downtown. It's a place people avoid anyway."

Indeed, the man behind the mall redevelopment, Young Park, is cognizant of how difficult it's been to redevelop the site. His firm plans to turn 21 acres of the property into offices and apartments, retail shops, and entertainment venues. An existing office tower and some portions of the mall and accompanying garage will remain.

Park said Worcester has simple demographics in its favor; it's home to thousands of students who attend schools in the city such as Clark University, College of the Holy Cross, and Worcester Polytechnic Institute.

``The landscape is littered with pioneers with arrows in their back," said Park. ``It's risky, but I think there is significant opportunity."

Megan Woolhouse can be reached at woolhouse@globe.com.