Challenges Persist for the Business Community as 2025 Begins
Reflecting on the Year That Was
George Timmons calls education “the great equalizer,” and MassEducate a very effective way to achieve that.
In many ways, 2024 didn’t provide much clarity regarding economic questions we posed a year ago in our annual year in review. Inflation and interest rates remain high (if not historically so), while remote work, a housing shortage, and some sector-specific challenges continue to make the news.
But there was some good news, too, and some encouraging progress on fronts ranging from rail development to educational access to some intriguing high-tech developments. As 2025 dawns, BusinessWest presents its year in review, noting some of the stories and issues that shaped our lives, and will, in many cases, continue to do so.
The High Cost of Everything…
The Federal Reserve has been on a mission over the past two years — to tame inflation without putting the country into recession. By and large, the latter part has been accomplished, but inflation remains a thorny challenge.
Consumer prices were up 2.7% for the 12 months that ended in November, but stubborn inflation in housing (up 0.3% for the month in November) and food (up 0.4%) continue to hit people where they notice it most, while the price of cars and energy also rose in November. Economists are also unsure how President-elect Trump’s promised tariffs will impact inflation.
Meanwhile, some economists expect some relief in interest rates, and a chance that the Fed may go as low as 4% in 2025.
Still, Bob Nakosteen, semi-retired professor of Economics at the Isenberg School of Management at UMass Amherst, recently told BusinessWest that “the economic numbers don’t look bad at all. The labor market has weakened a little bit, but it’s not weak; it’s just not as strong as it had been. And most of the other indicators are strong, including GNP. It’s about where it had been, and in some ways, it’s above trendline.
“This is not breaking news,” he added, “but the economy has held up really well in spite of a lot of pressure, especially from a rapidly rising interest-rate environment. The consumer has really rolled with the punches.”
…Except Community College
MassReconnect, a program the state launched in 2023 to fully fund tuition, books, and supplies at community colleges for students over age 25, has, to hear college presidents tell it, been a game changer, significantly boosting enrollment and getting more students into a pipeline that will hopefully bring more new blood to the region’s workforce.
“The economic numbers don’t look bad at all. The labor market has weakened a little bit, but it’s not weak; it’s just not as strong as it had been. And most of the other indicators are strong, including GNP.”
This past summer, state lawmakers went further by implementing MassEducate, a $117.5 million annual investment that covers tuition and fees for all students, plus books and supplies for some. The program aims to support both economic opportunity for students and workforce development across a Massachusetts economy that has struggled, sector by sector, to recruit and retain talent in recent years.
Importantly, the program is a ‘last dollar’ investment, meaning students will still access federal funds, like Pell Grants, as well as state aid and scholarships, and MassEducate will pay the costs that remain, so it’s not funding anywhere near the full cost of a student’s education.
“I’m so passionate about this work of education,” Holyoke Community College President George Timmons said. “It is the great equalizer. Once you have an education and all the rights and privileges of that degree, you can earn a livable, sustainable wage, you can take care of yourself and your family, and you can literally change the trajectory of a family.”
Productivity in Pajamas?
A report last year by McKinsey Global Institute suggested that remote work risks wiping $800 billion from the value of office buildings in major cities worldwide by 2030 as the post-pandemic trend pushes up office vacancy rates and drives down rents.
Large employers are fighting back. In September, Amazon President and CEO Andy Jassy informed tens of thousands of workers that they will be back in the office five days a week come January. That was good news for commercial real-estate owners and developers, who hope other employers follow suit.
But while remote-work critics claim improved collaboration and communication, as well as the learning opportunities that come when everyone is together, outweigh any benefits that might come from remote work and hybrid schedules, the fact is that the hybrid movement, at least, seems entrenched for now — and also puts employers who nix all remote work at a competitive disadvantage when recruiting in an already-tough talent market.
But Evan Plotkin, president of Springfield-based NAI Plotkin, told BusinessWest that he sees a partially offsetting force in east-west rail, which has the potential to drive development in areas near the rail stops, and even prompt some businesses to realize they don’t have to be in Boston anymore. “It could be transformative; in Springfield, for example, it could drive development in the Union Station area and make that area much more attractive.”
Working on the Railroad
So, is east-west rail finally becoming a reality, connecting Springfield and Boston? Well, the money being put behind what’s known as the Compass Rail project is certainly real.
At the end of October, U.S. Rep. Richard Neal announced the latest $36.8 Consolidated Rail Infrastructure and Safety Improvements (CRISI) grant by the Federal Railroad Administration, following a $108 million CRISI grant — the third-largest in the nation — late last year. Since Union Station reopened in 2017, more than $200 million has been allocated toward east-west rail, both from federal grants and MassDOT funding.
The latest funding will support the Springfield track-reconfiguration project, which is designed to increase capacity to accommodate both freight and increased passenger rail service. The project will include building new crossovers and layover tracks, upgrading platforms around Springfield Union Station, and modernizing track and signal systems.
“With the substantial progress that has been made with west-east rail, the Commonwealth is well-positioned to pursue additional funding for years to come.”
Since the station’s reopening, Neal said, “the investments that have been made in passenger rail have been extraordinary,” adding that, “with the substantial progress that has been made with west-east rail, the Commonwealth is well-positioned to pursue additional funding for years to come.”
Meanwhile, MassDOT is conducting a study focused on the restart of passenger rail along the Route 2 corridor, a project whose public advocates include dozens of municipalities, regional planning agencies, and state legislators.
SOC It to Springfield
Speaking of Union Station, in September, it officially became home to the Richard E. Neal Cybersecurity Center of Excellence, one component of a multi-million-dollar series of investments, announced in 2022, to bolster cybersecurity resilience — and the related workforce — across the state.
These awards included a $1,086,476 grant to support the launch of CyberTrust Massachusetts, a nonprofit that works with business and academia statewide to grow the cybersecurity talent pipeline while promoting local security operations.
U.S. Rep. Richard Neal joins a host of local dignitaries in September to cut the ribbon on his namesake cybersecurity center.
The state also awarded $1,462,995 award to Springfield Technical Community College (STCC) and $1,200,000 to Bridgewater State University to establish a security operations center (SOC) and cyber range in each city. The Neal Center at Union Station, managed by STCC, also benefited from $500,000 in ARPA funding from the city of Springfield.
Springfield’s 6,000-square-foot center — a collaboration between STCC, the Springfield Redevelopment Authority, and CyberTrust Massachusetts — aims to be a hub for advancing cybersecurity awareness, education, and innovation while battling global security threats. Its cyber range is a simulated, hands-on training environment, and its SOC is envisioned as a support service for Massachusetts municipalities, as well as regional businesses, to detect cybersecurity events in real time and respond quickly.
Tackling the Housing Crisis
One of the dominant stories of 2024 was a continuing housing shortage that touches virtually every community.
With that in mind, over the summer, Gov. Maura Healey signed into law the Affordable Homes Act, which aims to support the production, preservation, and rehabilitation of more than 65,000 homes statewide over the next five years. It is the largest housing bond bill ever filed in Massachusetts, at more than triple the spending authorizations of the last housing bill passed in 2018.
The legislation authorizes $5.16 billion in spending over the next five years along with 49 policy initiatives to counter rising housing costs caused by high demand and limited supply. Key spending authorizations and policy changes include allowing accessory dwelling units, an unprecedented investment in modernizing the state’s public housing system, boosts to programs that support first-time homebuyers and homeownership, incentives to build more housing for low- to moderate-income residents, support for the conversion of vacant commercial space to housing, and support for sustainable and green housing initiatives.
“The Affordable Homes Act creates homes for every kind of household, at every stage of life, and unlocks the potential in our neighborhoods,” Healey said. “We are taking an unprecedented step forward in building a stronger Massachusetts where everyone can afford to live.”
High Risks for Cannabis Operators
According to a new report in the Boston Business Journal, cannabis businesses are surrendering licenses at an alarming rate in Massachusetts. Since September 2023, four retail licenses have been either surrendered, not renewed, or revoked, and so have 26 non-retail licenses, which include growers and manufacturers. In the five years before that, just five retail and 11 non-retail licenses were surrendered.
The green rush is clearly over; more than 700 cannabis businesses have opened or received licensing approval, and prices have fallen sharply amid stiffer competition — which makes running a business much more challenging.
Springfield Mayor Sarno recently cut the ribbon opening EMBR Springfield, a cannabis dispensary at 461 Boston Road.
So does a still-unresolved disconnect between state and federal law that has thrown a number of wrenches into cannabis businesses, which, among other hurdles, grapple with an onerous tax burden since they can’t write off many of the costs other businesses can. Federal laws also impact elements from transportation to banking. And while federal rescheduling of cannabis has bipartisan appeal, it’s uncertain whether the next Congress will have the appetite for it.
There may be some potential good news for dispensary owners: a newly established regulatory framework for operating ‘social consumption sites’ in Massachusetts, potentially allowing public use of the drug. The Cannabis Control Commission is currently receiving public comment on the draft and will take the issue up in the new year.
Data Center Clears Tax Hurdle
Two years ago, Westmass Area Development Corp. helped Servistar Realties secure approval from the Westfield Planning Board, as well as a major tax break from the City Council, for a large, high-tech data center near Westfield-Barnes Regional Airport that could attract some of the largest tech companies in the world. Servistar even negotiated a power-purchase agreement with Westfield Gas & Electric allowing it to access below-market electric rates.
“The challenges in healthcare over the past five years have shifted, but they have not let up. And they ultimately result in financial challenges that are stressing the ways in which we collectively provide access to care in our communities.”
One hurdle remained to move the $3 billion project — which will feature 10 buildings going up over two decades — off the ground, and that was a state sales-tax exemption commonly offered to data centers in other states. Last month, that exemption became a reality as part of a larger economic-development bill on Beacon Hill, and because of it, the Westfield project could start progressing soon.
Analysis from McKinsey & Co. shows demand for data-center capacity in the U.S. more than tripling by 2030, according to the Boston Globe. Meanwhile, the sales-tax exemption could save the future Westfield park owners up to $30 million per year. Construction could start early in 2026, with the first building completed 18 months later.
Diagnosing the Problem
In a recent interview with BusinessWest, Mercy Medical Center president Dr. Robert Roose used the word ‘relentless’ to describe the current headwinds in medicine, which include everything from spiraling costs and inflation to persistently inadequate reimbursements from payers; from continuing workforce challenges to access and capacity issues — not to mention the overriding issue of caring for a population that is older and sicker than what has been seen historically.
“The challenges in healthcare over the past five years have shifted, but they have not let up,” Roose said. “And they ultimately result in financial challenges that are stressing the ways in which we collectively provide access to care in our communities.”
Baystate Health, in a remarkable show of transparency, recently went public to detail its struggles — including $300 million in operating losses over the past few years — and its response, which includes the sale of its lab, the pending sale of Health New England, and, most recently, the elimination of 130 administrative positions.
Those steps are part of what Baystate’s new president and CEO, Peter Banko, called a “transformation plan, one that calls for making hard decisions, relieving cost pressures, some cuts, but also investments in the years to come and greater financial stability.”
Expect more hard decisions across the healthcare spectrum in the year to come.
Music Lives Again at the Iron Horse
Finally, a positive note — many notes, in fact.
When music venues began to reopen in the wake of the pandemic, the Iron Horse Music Hall in Northampton was not among them, and owner Eric Suher didn’t have immediate plans to unshutter the venerable Center Street storefront.
Chris Freeman says he wanted to “bring back the glory days” of the Iron Horse.
In stepped the Parlor Room Collective, a nonprofit that operates the nearby Parlor Room music space, which purchased the Iron Horse and set about raising $750,000 to renovate it, maintaining its intimate feel but improving facets like its famously inadequate green room and restrooms, while expanding into adjoining space for a dedicated bar and community events. The venue reopened on May 15 and has hosted a robust lineup of concerts ever since.
“We have witnessed the magic of our local music scene and its ability to fuel the engine of our economy, enhance the overall well-being of our community, and contribute to our cultural vitality,” said Chris Freeman, executive director of the Parlor Room Collective.
“I live here, and part of the reason Northampton has become a great food scene and a great downtown culture is the arts,” he also told BusinessWest. “I’ve made it my life’s mission to make sure that never goes away, and we can bring back the glory days of such a legendary venue.”
