Worcester Regional Research Bureau finds only 21% of city's properties taxed as commercial property

WORCESTER — A report published by the Worcester Regional Research Bureau this month found that while commercial real estate made up 36.5% of all tax revenues in 2023, only 21% of the city’s parcels are taxed as commercial, industrial and personal properties.

Of that percentage, there are 312 parcels in Worcester that are used primarily for office space, of which 221 are general office use, according to the report.

In fiscal 2023, the report found, downtown Worcester had 27 mixed-use, primarily residential parcels, 12 small retail parcels less than 10,000 square feet, 11 mixed-use, primarily commercial parcels, and nine as exclusively eating and drinking parcels.

For the same period, the Canal District found 33 mixed-use, primarily residential parcels, 27 small retail parcels less than 10,000 square feet, 15 exclusively eating and drinking parcels, 13 auto repair facilities and 12 mixed-use, primarily commercial parcels.

Worcester, like 121 other communities in Massachusetts, has a split tax rate, comprising residential and commercial tax rates.

The city's commercial tax rate for fiscal 2024 is set at $30.04 per $1,000 of assessed value, which City Council voted for in December. The rate was a decrease of $1.22 when compared with the previous year.

The report by the Research Bureau added that among other factors, employment rate and remote work have influenced property values, with Worcester showing an employment increase of 22.85% on a 10-year basis.

This upward pattern was while the city’s employment growth rate surpassed the general population increase in that 10-year period, which the report found to have been at 12.48% between 2013 and 2022.

The Research Bureau’s data show that Worcester’s employed population surpassed 100,000 between 2019 and 2022.

Of that employed population, 35.24% are employed in education, health care and social assistance industries, the bulk of whom live in the western part of the city, which the report found to have the lowest density of commercial real estate in the last three fiscal years.

While less than half of the population living in that area works outside of the city, about 52.9% of Worcester workers live and work in the city, most of them living centrally in the city as of 2022.

In 2022, 11% of working Worcester residents reported working from home, compared to 6.9% in 2019, which the Research Bureau also indicated as influencing commercial, industrial and property tax rates.

The bureau also pointed to the number of building permits as affecting commercial real estate tax rates, finding that since 2014, building permits for commercial space have made up between 10% and 20% of all issued permits, and total project costs have accounted for between 25% and 84% of total project costs for all issued building permits.

In 2023, the city had many more building permits issued compared with 2022, and 2022 had fewer issued than 2021, the report found.