At least 11 projects totaling more than $1 billion are in the works or have just been completed, most of it at the two ends of downtown Buffalo – the waterfront and the Medical Campus.
Hard hats already dot the landscape near Canalside, where the former Memorial Auditorium site is being transformed and the neighboring Donovan Building rebuilt.
At the Buffalo Niagara Medical Campus, four projects, including a new University at Buffalo medical school and a new children's hospital, are expected to be built and opened in the next four years. They join the $291 million Gates Vascular Institute, which opened next to Buffalo General Medical Center last year.
Taken together, it is a level of activity that hasn't been seen in Buffalo for at least 20 to 30 years.
“It's been decades,” said Andrew Rudnick, president and CEO of the Buffalo Niagara Partnership. “It's making people believe that there is a real estate development environment here that's far more positive than it's been in a long time, which begets more real estate development.”
The boom promises to further transform the Buffalo Niagara economy, making it less dependent on the manufacturing and transportation industries that have dominated the region since the 1800s. Most of the 11 projects provide new facilities for health care, medical technology, higher education and tourism. Advocates hope the projects will attract attention, visitors and new residents from outside Western New York.
Among the projects planned or under way:
• The former Memorial Auditorium site is being transformed into replica canals, including a winter outdoor ice rink, retail, office and restaurant space.
• Benderson Development Co. is turning the former Donovan State Office Building into a Courtyard by Marriott hotel and offices for the Phillips Lytle law firm.
• The Buffalo Sabres plan to build a hotel, two indoor rinks and indoor parking on the Webster Block in front of First Niagara Center. Groundbreaking on the $123 million project is scheduled for March.
• At the Buffalo Niagara Medical Campus, plans are moving forward on a new $375 million University at Buffalo medical school to be built above the metro station on Main Street at Allen Street.
• The new $200 million John R. Oishei Children's Hospital at Ellicott and High streets is scheduled for completion in 2016.
• Catholic Health System announced it will build a six-story, $46 million headquarters and training facility, extending the Medical Campus downtown. The facility will go up at the foot of the Kensington Expressway, between Elm, Oak and Genesee streets.
• Roswell Park Cancer Institute is building a $50 million, 11-story clinical sciences center planned on the northwest corner of Michigan Avenue and Carlton Street, abutting the cancer center's main hospital building.
• Kaleida Health has consolidated its skilled nursing facilities into the new Highpointe on Michigan facility.
“Right now, if you look at Western New York in general, those are your two hot spots,” said Robert G. McDonnell, vice president for sales and leasing at Ciminelli Real Estate Corp., referring to the Medical Campus and Canalside. Ciminelli is building the 300,000-square-foot Conventus facility at Main and High streets, tied to the medical school and the new children's hospital.
Just outside the city core, growth continues at Larkinville, where Howard Zemsky's bet on an enormous old manufacturing warehouse has paid tremendous dividends. The Larkin at Exchange Building is full, and Zemsky has revived other nearby buildings, creating an active community and public space, and attracting new investment into two other facilities in the neighborhood.
The Hamister Group bought the Tishman Building at Lafayette Square with plans for a hotel and its new headquarters. Mark Croce has renovated three floors of Statler City and wants to put a boutique hotel at Franklin and Huron streets. Other developers, such as Jake Schneider, have undertaken other projects.
“Historically, we never had one hot spot. Now we've got three. And look at the amount of money and investment that's taken place,” said James R. Militello, president of JR Militello Realty. “People want to be here, and there's room for new and improved assets. Every time a new asset is brought online here, it seems to do pretty well.”
Some of the development – especially the $375 million University at Buffalo medical school – is the result of government investment. But the far larger private development has been enabled by economic forces, business executives say, especially renewed lending and low interest rates.
“There is more money flowing in the system, and the cost of utilizing that money is very low. and so things that might have been hanging around for a while are all happening now,” said Rudnick of the Buffalo Niagara Partnership. “Those might be independent of each other, but they're all products of those macro drifts.”
The HSBC vacuum
The owners, Seneca One Realty LLC, have said it will explore mixed uses for the building. But many are concerned about how so much empty space will affect the city's real estate market.
“Until we know if there's going to be a reuse or what's available on the office side of things, the plans are sort of unclear,” said Shana Stegner, director of office sales and leasing for CBRE in Buffalo. “There will be an impact on the market. How much will be figured out in 2013.”
Beyond HSBC, the building boom will create vacancies in older buildings.
“New development and redevelopment will leave older office space vacancies behind,” said David Schiller, associate broker and director of sales for Pyramid Brokerage Co. “As painful as this may appear to many ... renewal of the inventory is a natural, expected process, and it is good to see it occur in Buffalo.”
“Downtown is an area that people want to be in now,” Militello said.
Uniland Development Co. revived the former Dulski Federal Office Building on Delaware Avenue into the Avant, with residences, office space and an Embassy Suites hotel. Rocco Termini's Hotel @ the Lafayette has loft apartments as well as hotel, event and office space.
Ellicott Development Co. has roughly 300 downtown residential units – and they are 90 percent occupied, the company says.
Said William Paladino, chief executive officer of Ellicott Development: “We are starting to see more people from the suburbs looking at the city. People are seeing what's happening, and there seems to be a lot of action and excitement about downtown.”