NORTHEAST SNAPSHOTS, JULY 2006
Buffalo, New York Office Market
The Buffalo, New York, central business district is seeing a resurgence as a preferred site to locate corporate operations. For example, three regionally based companies — HealthNow, New Era Cap and Hodgson Russ — have chosen to make significant investments in the market by occupying space for their corporate headquarters in downtown Buffalo. Other trends in the Buffalo CBD include a strong interest from national developers in the downtown and waterfront submarkets, such as a joint venture between Opus and locally based Uniland Development, which is pursuing a major mixed-use project on the waterfront. In addition, the former Taylor’s department store on Main Street recently was put under contract by George Fakirias from Nassau County with the intent of converting the 311,000-square-foot property to residential units. Also, regional developers Acquest Holdings, Uniland, Iskalo Development and Ciminelli Development have expressed further interest as well, all undertaking major investments in the downtown market over the last few years.
In addition, the relocation of downtown tenants to the suburban markets is a declining trend, as confidence in the future of Buffalo’s CBD has led to the retention of existing tenants. Further, 240,000 square feet per year of privately owned office space has been absorbed in the last 3 years. M&T Bank continues to occupy a large percentage of downtown office space, and it has made plans to take another 68,000 square feet in a new building on Delaware Avenue under development by Uniland. For a more detailed look at occupancy statistics in the Buffalo office market, please see the adjacent chart.
A majority of development is spread throughout the downtown market, where the decision for investment is affected more by availability of land and buildings than by strategic location. The most significant investment in the entire market is the Buffalo Niagara Medical Campus, which will see the hiring of more than 4,000 new workers. The New York State Center of Excellence in Bioinformatics and Life Sciences, and the Roswell Park Cancer Institute for Genetics and Pharmacology both held grand openings recently. The two connected buildings, which total 290,000 square feet and $225 million worth of investment, are in the process of hiring 200 new researchers plus staff. These projects and other related investments within the development are bringing new employment downtown, thus generating residential and retail construction and causing spin-offs of new companies in the biomedical and life sciences industries.
Other major developments are taking place near Inner Harbor, including the Seneca Nation’s construction of a 125,000-square-foot casino, creating new jobs and an entertainment attraction. Also in the area, Bass Pro Shops has proposed a major new retail investment.
Several significant leases have been negotiated recently. HealthNow is occupying 469,000 square feet within a new building; the New York State Department of Transportation inked a 78,000-square-foot deal at 100 Seneca Street; and various federal government tenants have taken 290,000 square feet at 150 South Elmwood Avenue.
Currently, rental rates on a gross basis for Class A office space in the Buffalo office market range from $18 per square foot to $26 per square foot. In the future, the Inner Harbor near the new casino, the area surrounding the Buffalo Niagara Medical Corridor and Main Street have the most potential for development growth.
— James R. Militello is the president of J.R. Militello Realty, Inc./CORFAC International.
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