Imagine a Ritz-Carlton Hotel, the biggest condos in Buffalo and a Tiffany’s jewelry store, all in one building, atop a new and much larger Buffalo Niagara Convention Center.
Now put that all in downtown Buffalo, at the foot of Main Street, right next to Canalside. And the building’s already there.
Welcome to Peter F. Hunt’s new high-end vision for Buffalo’s tallest edifice, One Seneca Tower.
At 38 stories, it is the most dominant property in the city, with views that extend throughout Western New York and even as far as Toronto when the skies are clear.
But the former One HSBC Center is also 95 percent vacant and in foreclosure, after its three largest tenants all left, leaving only about 20 small offices on the upper floors and barely any tenant revenue. And that has left many real estate observers such as Hunt, chairman and CEO of Hunt Real Estate – as well as developers and rival property owners – concerned, frustrated and perplexed about what to do.
That’s because there simply isn’t enough office demand to fill up the space. Given the building’s size – 851,000 square feet – and the average pace at which Buffalo’s downtown market takes up empty real estate, it would take 10 to 15 years to absorb it. Also, it would need to be updated to try to meet the needs of today’s tenants.
Experts including the Urban Land Institute already recommended a mixed-use development as the solution, incorporating multiple concepts under one roof. Such a diverse mix is necessary to avoid having 851,000 square feet of space dumped on the local office market at deeply discounted rates, which they say would be a disaster for other buildings.
But the conversion costs would still be large, with most estimates in the tens of millions of dollars, even as high as $100 million. Nevertheless, that’s not stopping local real estate developers and others such as Hunt from kicking around ideas, in hopes of preventing a major building from going dark.
Hunt doesn’t want to just target any clientele. Instead, he wants to use the 38-story structure to fill the gap he sees in the local market for the highest-quality upscale accommodations, living, office space and shopping, all in one building. He even compared it to a 60-story building at 900 Michigan Ave. in Chicago, an older office building retrofitted by one developer into a Four Seasons hotel, condominiums, offices and a smaller high-end mall.
“This is the single best opportunity that exists for stepping up the quality of downtown,” Hunt said.
It’s a concept that appears to be shared by many real estate and development experts locally. “Everyone’s pretty much talking about that same concept,” said William A. Paladino, CEO of Ellicott Development Co. “It’s a big building. We’d need all those uses to really make the project work.”
Indeed, Paladino, whose company is the biggest landlord in the city, said he would almost have to intervene, just to protect his own interests with his other buildings. “When the time comes, we’ll probably take a look at it,” Paladino said. “We probably wouldn’t do the project by ourselves. … There’s only a select few in this market that could do that on their own.”
But it’s also one that not many others are willing or able to pursue. Both Anne E. Duggan, spokeswoman for Ciminelli Real Estate Corp., and Jill A. Pawlik, spokeswoman for Uniland Development Co., said their firms are not involved in any discussions right now.
“Given the size and scope of One Seneca Tower as a redevelopment project, a mixed use seems to make the most sense,” said Paul F. Ciminelli, CEO of Ciminelli Real Estate. “But whoever purchases it or otherwise takes that project on will have to have very patient money, as it will be a massive, long-term undertaking.”
The current owners, New York City-based Seneca One Realty, controlled by Mark H. Karasick and Victor R. Gerstein, are widely expected to just walk away rather than fight the foreclosure and be faced with a $75 million balloon payment next year.
Still, the foreclosure has to move through the courts before the lender or anyone else can take possession through an auction. That could take months.
“At some point in the future, we will take that next step, but nothing’s been done yet,” said the court-appointed receiver, Richard J. Schechter. “We’re in a holding pattern now. We need to get a handle on the situation and let the foreclosure process wind its way through the courts.”
Hunt is more familiar than most people with the intricacies of the tower, and the scope of any effort to revive it. His firm has been working as leasing agents for the building owners since January 2005, and had begun lease renewal negotiations with HSBC Bank USA and law firm Phillips Lytle LLP as far back as 2010 – three years before both leases expired. “When it became clear that it wasn’t going to work out with either of them, … we began to contemplate other usages for that building,” Hunt said. “We knew something was going to happen.”
Hunt no longer has any contractual relationship to the building.
Hunt’s concept entails a “vertical village,” focused on providing several features not already available in the city.
For example, he said, there’s no full-service, five-star hotel. There’s few if any high-end condominiums with large floor plates. And there’s very little new and available top-quality office space that isn’t spoken for. All three could be included. There’s also a dearth of luxury retailers, he said, especially for the hordes of Canadian shoppers. Right now, they flock to the outlets, Walden Galleria, Boulevard Mall and other shopping meccas, but don’t find premium stores such as Tiffany’s, Saks Fifth Avenue or Bloomingdale’s with “immediate brand value,” he said. The same is true for luxury or destination hotels such as Four Seasons or Westin, aside from the boutique Mansion on Delaware. Providing a limited amount of high-end space “would be a huge attraction for this kind of building, with a mixed use, and a real feather in our cap when the pro teams that we’re playing come into town,” Hunt said. “So we think there’s a real place for that.”
Finally, he said, the sprawling lower levels of the building and adjacent plaza area, below the tower, could accommodate a convention center of more than 200,000 square feet, which would have access to the hotel above. That would be significantly larger than the current aging facility. “Now we would be able to compete for sizable conventions, and that would add to life downtown immensely,” Hunt said.
The plaza level also has a full-service commercial kitchen, gallery space and a 350-seat stadium-style auditorium. And there’s attached parking, with 1,200 spaces. “Think about the nightlife you could create there, the activities you could create there,” Hunt said.
The building also already has the capability to host a sophisticated data center, since it did so for HSBC. There is “more redundant power in that building than in any building in the city” and “as good a fiber-optic access as you’re going to find anywhere,” Hunt said.
“All of the ideas would require “substantial changes” to the infrastructure, including reworking the entrance to make a hotel more accessible, and he said he has already priced out the costs. He would not disclose specifics but said it is doable “without exceptional incentives from any government.”
“Does it need updates? Does it need new infrastructure? Absolutely, and we know what they are,” he said. But “you don’t have to build a new building. It’s there.”
Hunt has already pitched his concepts to developers, elected officials and the Buffalo Niagara Partnership, among others. He said there is already “genuine interest,” both local and from out of town, and he predicted that it would take multiple developers and investors to get the job done. Hunt might invest himself “if the right other players were in place,” but “we’re not a developer.”
For now, though, the plan is in limbo along with the building. “This is going to take real money to make this happen. This is not a first-time developer deal,” Hunt said. “This is a significant, serious transaction.”