As downtown Buffalo rolls out the red carpet to welcome Big Blue to Fountain Plaza, many of the city’s real estate, business and political leaders are touting the spinoff benefits they expect all along Main Street when IBM Corp. comes to the heart of the central business district.
First, there is the stabilizing factor that IBM will bring to the Key Center building, filling space being vacated by Delaware North Companies.
“We’re absolutely elated,” said Buffalo Mayor Byron W. Brown.
Then there are the 500 new jobs with a Fortune 500 company coming to downtown as part of a new technology “hub.”
There also is talk of the benefits of those well-paid workers living and spending money and time downtown, driving more demand for store owners, ancillary services and housing. That gives landlords, developers and businesspeople – who may be contemplating more investment downtown – more confidence to follow through.
“It just adds energy, and downtowns are about positive energy, and we have a lot of positive energy going on in downtown Buffalo these days,” said Michael Schmand, executive director of Buffalo Place, the nonprofit downtown business improvement organization. “Our Main Street is coming back.”
Already, long-neglected city blocks, such as the 500 block of Main Street, have seen the renovation and reuse of one building after another with new residents, office tenants, restaurants and stores. And businesses in the suburbs or other parts of the city are calling downtown landlords and brokers to ask about moving downtown.
Finally, there is a perception that the presence of a blue-chip company like IBM, with its global reputation, will attract other technology companies and young job-seekers to Buffalo, particularly to what the city dubs its “knowledge corridor.”
“The more new people we get down here, the better it becomes and the more people it attracts,” said David Sweet, who owns the Rand, Main-Seneca, Main Court and two other Main Street office buildings. “People want to be where other people are, and companies want to be close to other companies.”
IBM’s willingness and decision to set up shop in downtown Buffalo represents an endorsement that community leaders hope will prompt others to sit up and take notice – especially since IBM’s name will adorn the building.
“IBM coming into the city of Buffalo and locating in the Main Street area is a game-changer,” said Robert G. McDonnell, vice president of sales and leasing for Ciminelli Real Estate Corp., one of the area’s biggest developers, and the leasing agent for the Key Center’s New York City-based owner.
“I don’t know if we’ve ever had a blue-chip company that’s going to adorn the skyline in Buffalo,” he said. “That is just huge. That alone just gives automatic credibility when you drive into a city and see something like that.”
Of course, not everyone is so enthusiastic, optimistic or even positive about the news. Skeptics who have seen decades of malaise and decline in Buffalo remain doubtful of change, saying it’s too soon to proclaim “mission accomplished.”
Critics note that IBM’s new facility is heavily subsidized by the state – through the intervention of a governor running for re-election – rather than being a completely private-sector investment. The state will buy and own the real estate and the technology equipment that IBM and other tenants in the “hub” will pay rent to use.
“I don’t see how substituting one heavily subsidized tenant, Delaware North, with another heavily subsidized tenant, IBM, in Key Center will have much of an impact on the rest of Main Street or downtown,” said Patrick Hotung, whose Main Place Liberty Group owns the Main Place Mall. Hotung vied unsuccessfully to attract the IBM project to his building.
Delaware North had occupied space in the Key Center under tax breaks granted by the Erie County Industrial Development Agency in 2000.
A giant shadow
Also hanging over the arrival is the giant shadow of One Seneca Tower.
The city’s tallest building is 95 percent vacant and in the midst of foreclosure proceedings after its biggest tenants left. Its future remains uncertain, and experts agree it would take years for the city’s real estate market to absorb 850,000 square feet of office space if dumped on the market at once.
“We are not out of the woods yet when it comes to the commercial real estate environment downtown,” said Dottie Gallagher-Cohen, president and CEO of the Buffalo Niagara Partnership, whose study of downtown vacancies led to the joint Buffalo Building Re-Use Project with the city. “This deal is significant, but we’ve got a challenge ahead of us here.”
Still, the city’s boosters say they’re more excited about Buffalo’s prospects than at any time in decades, citing growing momentum and widespread development activity.
“The revival throughout the city has been apparent for a while now and is only accelerating,” said Howard Zemsky, co-chairman of the governor’s Regional Economic Development Council, chairman of the Niagara Frontier Transportation Authority, and managing partner of Larkin Development Group.
“There has never been another time during the past 33 years that I have lived here that Buffalo has been so red hot and so optimistic about the future.”
A different reality
The enthusiasm follows a pair of announcements last week by Gov. Andrew M. Cuomo.
First, the state selected Key Center as the new home of his proposed information technology “hub,” designed as one of several job-creation catalysts to stimulate economic development in Buffalo. The new IBM facility will be the anchor tenant in 100,000 square feet of space – with the potential for much more – in hopes of attracting other related companies downtown.
On the same day, Cuomo unveiled the first dozen participants in the statewide Start-Up NY program, with eight in Western New York – seven in downtown Buffalo. The program, developed last year, created 64 tax-free zones around college campuses statewide – 59 in upstate New York – to lure young technology companies that are just starting up, expanding or willing to relocate from out-of-state. In all, the 12 companies are expected to bring 400 new jobs to the state, with 270 in downtown Buffalo.
“I remember Buffalo four years ago, and the economic depression that Buffalo was in, and it is really amazing the amount of progress that was made in such a short time,” Cuomo told reporters. “Not only is the attitude different, the reality is different. We have businesses coming in that you couldn’t dream of three years ago. And we’re very excited to have them.”
In both cases – IBM and Start-Up NY – the companies are supposed to bring hundreds of net new jobs into the downtown core of Buffalo. And the jobs are likely to be most attractive to younger workers, including those fresh out of college – which supporters hope will help stem the loss or “brain drain” of that generation to other cities.
“It’s exactly what we need. You’re going to have 500 jobs in the software industry that are going to not only draw our kids back, but also other people’s kids from other states, who are going to want to work for IBM,” said architect Steve Carmina, of Carmina Wood Morris PC, who moved both his office and his home to the Main Street corridor.
The latest announcements come as downtown Buffalo is in the midst of a construction, development and renovation boom, with more than $6 billion in projects completed, underway or planned during the past few years, according to research by Buffalo Niagara Enterprise.
“In all my 25 years in real estate, I’ve never seen a surge like this coming from downtown all the way up Main Street,” McDonnell said. “You have most of your major developers involved. You’ve got out-of-town companies. Everybody’s pointing in the right direction.”