NORTHEAST SNAPSHOT, MARCH 2008

Buffalo, New York Industrial Market

Despite some broad based New York State/Northeast trends indicating the steady decline of manufacturing, there still is a solid base of manufacturing companies in the Buffalo region that are thriving and expanding. Currently, there are approximately 100 million square feet of occupied industrial facilities in the market, and interestingly enough, a significant portion of this industrial base is moving from suburban locations into the city of Buffalo. Many of these companies are investing in newly remediated, incentive rich brownfield sites.

Regionally, the majority of industrial development had been taking place in the first ring suburbs of Ckeektowaga, Tonawanda and Amherst. This was due primarily to the availability of shovel ready sites to build on and the population movement from the city to outlying communities. Now as a result of the availability of remediated sites, shovel ready sites in Buffalo with attractive incentives, the city has captured 38 percent of the industrial activity in Erie County in the last 3 years.

The following companies have recently relocated and expanded operations to city of Buffalo brownfield sites: CertainTeed Corporation, a division of Rubbermaid Corporation and a manufacturer of plastic fencing products, recently moved into a new 276,500-square-foot plant. Hydro-Air Components, a manufacturer of heat transfer equipment, also has a new 152,700-square-foot manufacturing plant. Also in the city, Cobey Inc., an equipment manufacturer for the petrochemical industry, has a new 90,000-square-foot manufacturing plant.

In addition to these manufacturing operations, Sonwil Distribution Center just announced the development of two 300,000-square-foot distribution buildings on 54 acres of reclaimed land in the city. This project will also include an intermodel component in support of its distribution operation.

Along with the obvious physical investment in the city of Buffalo, the investments by these companies have made a significant statement about the city of Buffalo and the potential of the brownfields program. It is a reaffirmation of public policy to heavily invest in the clean up of older industrial sites over the last 15 years. Plus, these new operations will employ more than 400 new workers.

The vacancy rate across all industrial types of space is 14.7 percent. New high bay distribution space leases are ranging from $5.50 to $6.00 per square foot triple net. Older facilities can be leased for $3.50 to $4.00 per square foot triple net.

In the future, the city of Buffalo will continue to be an area for more industrial development. The city has assembled more than 270 acres of prime industrial land in the Lakeside Commerce and Steelfields project. This land is remediated, shovel ready land with very attractive incentives. There are aggressive property tax abatement programs, direct low cost financing and in many cases out right capital grants to manufacturing operations creating new employment.

The Steelfields project is located in south Buffalo on the site of the former LTV Steel/Donner Hanna steel and coke plants. Planning is under way to divide the site up into a number of parcels for new development, many of which will have excellent access to roads, water and rail services. The Lakeside Commerce development is the transformation of the Union Ship Canal area into a smart growth urban commerce park that is set along the waterfront to provide multi-modal transportation opportunities.

Buffalo is also benefiting from the growth of the Canadian market and the favorable exchange rates. There are regional initiatives to enhance cross boarder commerce, such as the development of direct rail shipments from the Port of Vancouver through southern Ontario to U.S. markets via Buffalo.

— James R. Militello, SIOR is the president of J.R. Militello Realty, Inc./CORFAC International in Buffalo, New York.

Calamar Expands Woodlands Corporate Center in Buffalo Woodlands Corporate Center Calamar is currently expanding its Woodlands Corporate Center in Wheatfield, N.Y., with the addition of Woodlands Corporate Center East. Upon completion, the 120-acre mixed-use development will feature Class A office, industrial, flex, medical and retail space, as well as senior housing and 34 patio homes. The project is expected to take approximately 10 to 15 years to complete. Presently, Calamar has completed two flex facilities, a 50-unit senior housing apartment complex, a 110-unit senior housing apartment complex and 28 private patio homes. Calamar is also set to begin construction on a restaurant/banquet facility within the development. Amenities include a wooded campus setting, abundant parking, walking trails, park settings throughout, an on-site daycare facility, on-site property management and access to transportation. Situated directly across from Woodlands Corporate Center at Niagara Falls Boulevard and Shawnee Road, Woodlands Corporate Center East is easily accessible to all major arteries such as I-290 and I-990.

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