$925K Nabs 1860s-Era Factory Destined for Adaptive Reuse

Developers are wise not to mess with a community’s favorite diner. They’re also better off treading carefully around a stately Gilded Age structure that helped fuel the Northeast’s industrial revolution. But what if both of those precious assets sit on the same site in Worcester, Massachusetts — amid a rapidly gentrifying, stadium-anchored pocket of an opportunity zone that promises tax credits to help meet demand for luxury lofts?

Well, there’s not much choice when it comes to balancing the principle of highest-and-best use with preservation of the past.

When Fernando Dalfior’s Boston-based Dalfior Development landed its sights on 300 Southbridge St., home of an 1860s-era factory and the beloved Miss Worcester Diner several years ago, it was listed as a redevelopment opportunity for just north of $1 million. Dalfior knew he would have to preserve much of the historic property if he wanted to seize a great opportunity.

It may have been difficult not to run wild with ideas. Situated in an opportunity zone, with redevelopment incentivized by both federal and state tax credits, the location also promised growth. Construction of Polar Park — a 10,000-seat ballpark for the WooSox, a Boston Red Sox Triple-A affiliate — was underway mere blocks down the street at the time.

Between the stadium-anchored development and his experience owning and operating several other multifamily units in Worcester, Dalfior could attest to the Boston-area tertiary market’s low vacancy rates and strong net absorption.

Currently, multifamily vacancy rates in Worcester are 3.2%, compared to a national average of 5.2%, according to data from LoopNet’s parent company, CoStar. With Worcester reporting a 7.3% annual increase in rents and an average income per unit of $18,400 in the past year, Dalfior clearly saw that more rental units in the market would make for a solid investment.

But the 31,000-square-foot industrial lot, assessed at a total value of around $500,000, included not only the historic Queensbury Mills (originally the Sargent Card Clothing factory when it was built in 1866) but also the priceless Miss Worcester Diner.

The former wasn’t in great condition, and would need to be gutted. Some developers might have considered razing the heap to the ground and starting anew with as many units as possible.

Miss Worcester Diner was another story. It looks from the outside kind of like a rickety, old airstream. It may be surprising to see it on the National Register of Historic Places, and you wouldn’t guess it was ranked the best diner in Massachusetts this year by Food & Wine magazine.

The diner’s story dates to the 1940s when it was a show model for the adjacent Worcester Lunch Car Co. production facility, which helped spawn the archetypal diners we know and love today.

History is just part of Miss Worcester Diner’s legacy. Its decadent menu and true grit environment are what make it one of the city’s most iconic staples, and they're what landed it on shows such as the Food Network’s “Diners, Drive-Ins and Dives.”

Both of the site’s buildings are sacred representations of different stages of Americana. And both are monitored closely by a review board ensuring they remain at least mostly intact despite Worcester’s rapid redevelopment.

“I think a lot of potential buyers and potential developers were concerned or hesitant about purchasing the building because of its condition,” Dalfior told LoopNet. “But I kept looking at that building and I decided to take it on because I love it. Of course I want to do something new, but instead of a typical, straight box that a lot of people are doing at the same cost, I want to preserve the look and the character of the building.”

The plan? A 21-unit, high-ceiling, loft-style apartment complex that will expose original brick and wood on the mostly-gutted interior and maintain as much of the integrity of the façade as possible on the outside. At least a couple of the units will qualify as affordable housing.

Dalfior’s plan, which got the green light through environmental, historic and community reviews, will also incorporate new landscaping and hardscaping features, including off-street parking. Dalfior also had to shepherd the site through a rezoning process to get it approved as an adaptive reuse overlay district (AROD), he explained.

Dalfior will also restore and rebuild the dormers to their original condition, he said, and replace or at least repair some capital expenditure items such as the roof. The firm’s separate management arm will operate the building once it’s finished.

The diner of course stays. It’s an independently operated institution of Worcester that's been championed by blue-collar workers and celebrated by tourists for decades.

Dalfior scored points for keeping the diner. But his path to closing on the property last week at a final sale price of $925,000 wasn’t without competition. Not only were some other developers eyeing the redevelopment prospect, but the community was vying to keep the building for its own uses.

Until this deal got serious, the site had been operating for several years as “The Bridge,” a vocational skills academy and community center led by building manager Dan Ford.

Ford had been friends with Benjamin Mantyla, who managed trustees of the Thelma Talbert estate, which owned the building and sold it in this deal. According to reporting from Worcester Magazine, Ford fought hard to raise money to buy the building so he could continue offering community classes and art exhibits. He and other community activists had reportedly been inching toward the asking price through online and community fundraising, but the effort ultimately wasn’t enough to seal the deal in time for Mantyla's and Dalfior’s agreement.

In one July 2021 report, Ford is quoted as saying he understands why the deal went the way it did. In others, he expresses frustration with the difficulty of finding another community space like The Bridge for his and other community programs.