In early 2006, James F. Dentinger took on a new challenge. After 17 years at Ciminelli Development, he became president of Buffalo-based McGuire Development, a division of the McGuire Group, which is known for health care facilities. McGuire Development has since grown into a division with 24 employees and has a portfolio of more than 2 million square feet of space. Dentinger, 50, reflected on the division's progress and the outlook for the region's commercial real estate market:
Q: How has McGuire Development changed during your time as its president?
A: The reason why I got here is, [Chief Executive Officer] Jim McGuire wanted to re-energize the division. . It was kind of a unique experience because you're able to create a new vision, but you're attached to a larger corporate structure. So you had the capital, you had the infrastructure to re-energize the real estate business. I think that really helped us grow very quickly.
Q: Geographically speaking, are there certain parts of the region that are hot for development?
A: Downtown, with an asterisk, has had an incredibly strong development run and continues to look strong. The asterisk obviously is [One HSBC Center], which is a very large potential question mark in the marketplace. But if you look at the hospitality development, the inner harbor and the medical [campus], UB's announcement, there is so much momentum in the downtown core, it's just extremely exciting. And every developer in the area is focused on different types of opportunities in the core.
The suburban development has really gone from more major projects - maybe with the exception of CrossPoint [Business Park in Amherst] - more toward smaller, 15,000- to 20,000-square-foot-type buildings. You're starting to see industrial growth come back.
The last piece, which I think has been very quiet since the 2008 downturn, has been the suburban office market. It's been very stay-where-we-are, and it's been very stable, but the major corporations have kind of been parked. And I think that once the economy begins to turn around, there's going to be a lot of pent-up demand for movement in that segment, either expansions or downsizings or people looking for newer, modern types of spaces, and functional spaces. So that will probably be coming in the next couple of years.
Q: If One HSBC Center does empty out, what would the ripple effect be?
A: If the tower empties out, there's certainly going to be a lot of space going on the marketplace. And there's not enough office absorption to fill it up in a relatively quick period of time, unless something else empties out, which is not always the best thing. Does it become a mixed-use property? Can you tie it into the inner harbor somehow? What does it become? If [HSBC] stays with some presence in the building, I think that helps or maybe lessens the blow. Certainly I think developers are kind of looking at that saying, how's it going to affect us?
Q: Is there much appetite for speculative development in the region?
A: The spec building days are gone. You need to line up 50 percent occupancy and be smart about it. That's kind of across the country. . Certainly the financial restrictions are the check and balance there.
Q: How is leasing activity around here?
A: I would say Class A space is pretty tight everywhere, suburbs and downtown core. I think [Class] B space is probably the space that has the most vacancy, but stable. Industrial space is holding its own. I know apartment leasing is very strong. Retail [space] is one of those things where Walmart's doing great and some plazas are having some vacancies, but some new concepts are coming back in. It just comes down to the point of, it seems like new stores come up. And some of these [vacant] big boxes I think become more difficult to fill up, 15,000- to 20,000-square-foot-type stores.
Q: When you joined McGuire Development in 2006, what types of real estate projects did you want to focus on?
A: Although we're not completely a health care developer, commercial types of expansions back when we started were starting to wane. Companies were kind of pulling back. Health care was not. So if you look at a lot of our initial growth, it was in the health care side. . A big part of our process is that we not only build for ourselves as a developer, we also do a lot of consulting work, and a lot of third-party work for other clients.
The Buffalo Medical Group, we meet with them weekly and assist their leadership team, which is their [administrative] team, with their strategic real estate objectives, from anywhere of expanding their clinical ancillary services, such as an MRI expansion, which we're doing right now at one of their buildings, to sorting out a vision for their Southtowns division. And when they're adding positions, we assist them in, how do we place those positions and how do we make sure the real estate meets the vision of the group's growth?
Q: Why does McGuire get into areas like that, beyond just managing or developing property?
A: If you look at the IBMs and the Apples, they have top-line administration staff right up at the CEO level, the president level, of the people who implement the real estate. Most regional local companies do not have that expertise, so we kind of fill that gap with our financial and facilities model. Another big area for us is we do a lot of nonprofits, where I think fiduciary [responsibility] is extremely important.
Q: McGuire Development promotes a "transparent" business model. What does that mean?
A: We basically discuss with our clients all the cost implications of a project, including our fee, which is rather unique in real estate. Real estate sometimes tends to be a shell game, in which you might not get all the answers you want at a certain point in time. And our whole philosophy is, we want to give as much information as we can to clients up front, so they can make an educated business decision, and then work very hard to deliver the product toward that cost structure. . We hate change orders, We hate budget busts. We really work very hard on maintaining the budget and the time frame for the initial dollars projected.
I think companies really appreciate that model because they buy most things that way. Real estate is one of those last areas of mystery out there, where it's not an exact science, but with good process, you can control it very well. We insist on weekly project meetings [with clients] everything we do. It might seem onerous up front, but it really helps you control the process.