NORTHEAST SNAPSHOT, NOVEMBER 2007
Upstate New York – Buffalo Office Market
The Buffalo office market continues to experience a significant amount of new construction and redevelopment in both its CBD and submarkets. Several of the developments downtown are proposed mixed-use buildings with plans to include office space as well as condominiums and hotel components. Several flex office parks in the suburbs are also undergoing expansions.
Redevelopment of the Statler Towers is one of several projects expected to have a significant impact on the Buffalo office market. The iconic 500,000-square-foot structure, in existence since the 1920s, will be restored by new owner Basher Issa, CEO of BSC Group.Another new development predicted to impact the market is the conversion of the former Thaddeus J. Dulski Federal Building into Two Hundred Delaware Avenue. The 400,000-square-foot building covers an entire city block between Elmwood Avenue and Delaware Avenue.Uniland Development and Acquest Development are partners in the project. Both the Statler Towers and Two Hundred Delaware Avenue are proposed mixed use facilities featuring Class A office space, luxury residential units, hotel, and retail components.
In addition to those projects, another downtown development forecast to have a viable impact in the city is CityView Properties proposal to build Mill Race Commons adjacent to their Larkin at Exchange office building. The four-story office project will feature 80,000 square feet at the southwest corner of Exchange and Van Rensselaer Streets in the Larkin District
A national developer new to Buffalo is Duke Realty, which constructed the new downtown 450,000-square-foot corporate headquarters of BlueCross BlueShield of Western New York. Since the move this past September, more than 1,300 BlueCross BlueShield employees now come into the CBD on a daily basis. This is bound to spawn more economic development for the city. Duke Realty’s work in Buffalo could be the beginning of more national developers entering the market.
Several major leases have been closed recently. Tower Group has expanded its presence in Western New York at 600 Essjay Road in Centerpointe Corporate Park, taking 17,000 square feet. M&T Bank also leased approximately 60,000 square feet at 285 Delaware Avenue.
Expansion is also occurring at Canisius College. The school is absorbing the former corporate headquarters of BlueCross BlueShield at 1901 Main Street in Buffalo and incorporating the land into its campus.
Buffalo’s typical rental rates for Class A office space range from $19 to $23 per square foot per year There hasn’t been a significant change in rates, although landlord concessions may be lessening.
As the proposed projects come online, the downtown Buffalo office market will pique the interest of tenants, lenders and developers, which will lead to more activity in the city.
— Shana Stegner is director of Office Sales & Leasing at CB Richard Ellis-Buffalo in Buffalo, New York.
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