Downtown Development in Buffalo, NY

by Tom Kucharski, President & CEOdowntown map

Last fall talked about shovel ready sites and the impact that this designation of real estate development had on BNE’s economic development attraction efforts, primarily outside our urban core.  This month I would like to share some thoughts on the past, present and proposed development in downtown Buffalo.

Longtime residents or newcomers to our community might very well be surprised to learn that over the last decade 83 different development projects have successfully been completed in downtown Buffalo.  Covering a wide array of uses ranging from office and mixed use to commercial, residential, tourism and research & development space, these new structures are distributed across the geography of our central business district, the Buffalo Niagara Medical Campus, the Canalside/Waterfront district, the Larkin District and the fruit Belt Infill & Redevelopment area.  Just as remarkable is the more than $1.3 billion of investment associated with these projects in what can accurately be depicted as an impressive resurgence of development in New York State’s second largest city.

In both real estate and economic development, new potential investment often follows prior investment.  This dynamic is supported by the additional 20 development projects currently under construction in the city limits that represent an approximate investment of $339.7 million.  But it doesn’t end there.  Another 29 proposed projects are in the early stages of the development process representing an additional minimal investment of $577.5 million across the City of Buffalo.  So what can we discern from all of this development completed, underway and in the pipeline?

First, smart business people with money to invest (a rare thing in a lingering recession) are betting that our region is a good place to invest their hard earned dollars.  Developers and companies considering expansion are extremely risk averse.  The fact that so many projects with such large price tags are in, underway or contemplated for downtown Buffalo is a tremendous message to the economic development industry outside our community.  It speaks to the legitimacy of our potential in targeted industries like life sciences, advanced manufacturing, advanced business services and tourism/hospitality.  It is a compelling story that BNE tells as part of our marketing and business development outreach efforts and it is well received by our audience.

With this type of success come new challenges, some of which were revealed in the 2012-2013 Annual Market View presented by CBRE Buffalo.  This comprehensive review of four key commercial segments showed declining vacancy rates in office and industrial space.  These two markets share a cyclical cause and effect relationship with BNE.  If we succeed in our mission, available real estate comes off the market.  In order to succeed in our mission, we need available office and industrial space on the market.

Growth in the expanding health care industry is contributing to the increased absorption in office space, an encouraging sign for the region’s life sciences industry and our attraction efforts there.  Even with the exodus of major tenants from the 38-story One HSBC Center, office space is not expected to be as plentiful as it has been in recent years.  The 9.3 percent vacancy rate in our central business district is well below the national office rate of 15.5 percent.  Our ability to successfully place prospects into desired office space will be directly impacted by how quickly current and proposed projects come on line, and to what degree the trend of renovating older and historic buildings in the city continues.

Even more challenging to our attraction efforts is the steep drop in the industrial vacancy rate which is compounded by the fact that no new industrial space is anticipated to come on the market for at least the next twelve months.  That means companies who don’t have the time or the resources to build new may find it difficult to accommodate their needs in the pool of space remaining.  Despite all the new development I referenced earlier, new industrial construction would be a great addition to our tool-kit.

The degree of downtown development in a community is a widely considered variable in the economic development and site selection industries.  So much so that the development maps we maintain on our BNE website have become vital pieces of the marketing collaterals we provide to our client prospects.  To get a better sense of the downtown/economic development in our community, check out our two new updated maps, one that identifies these projects based on the various stages of their completion, and the other that identifies these investments by their industry type.

Will new long-haul trucking regulations impact economic development?

by Tony Kurdziel, Business Development Manager

The staffing shortage for long-haul truckers has been well documented since the mid-2000s. Combine this with a sputtering national economy, unpredictable fuel costs and a constantly evolving regulatory environment, and it has added up to trying times for the trucking industry. An important new regulatory deadline from the Federal Motor Carrier Safety Administration is fast approaching and will most certainly force additional change in this industry.

Effective July 1, 2013, the maximum amount of time that a commercial motor vehicle driver can work in one week will go from 82 hours to 70 hours. It will also prohibit truck drivers from driving more than eight hours without taking a  break of at least thirty minutes. These two major changes, along with other provisions of this law, are intended to reduce driver fatigue and make the roads safer.

What economic development ramifications (if any), will develop from these changes? When added to the current strains on the trucking industry, will companies be forced to shift their supply chains? For example, will manufacturers look to concentrate vendors and suppliers even closer to production points? Will distribution centers move closer to their end markets? And finally, will this cause more consolidation in the trucking industry, placing more traffic on capacity-constrained rail lines? If so, how will the rail industry be able to absorb the different shippers that approach them?

The next few years should be quite interesting for the commercial transportation business, especially if the global economy recovers in a meaningful way.

Workforce Development in WNY, One Step Ahead

BBillionBy Matthew Hubacher, Research Specialist

In his recent State of the Union address, President Barack Obama presented several strategies aimed at strengthening the nation’s economy and creating new jobs for the millions of Americans who continue to struggle to find work.  One specific initiative cited by the President was the creation of manufacturing innovation institutes that will provide workforce training and development.

Among the most cited concerns from manufacturers who seek to hire new workers is the persistent skills gap – the difference between the skills possessed by a prospective worker and the skills needed to fulfill the duties and responsibilities of an existing job opening – that exists across the economy, and is particularly acute in the manufacturing sector.  This mismatch of training and education makes it extremely difficult for low-skilled workers to find and retain employment in a 21st Century economy, particularly in manufacturing where technical skills are at a premium.

Western New York is leading the way in developing an innovative manufacturing hub where local workers can hone and learn new skills, which will ensure that the local workforce has the training for jobs in growing subsectors within manufacturing.  As part of Governor Andrew Cuomo’s Buffalo Billion promise, the Western New York Regional Council, with assistance from researchers from McKinsey & Company, Brookings Institution, UB Regional Institute and Buffalo Niagara Enterprise, conducted an exhaustive review of value-added interventions that will assist the region’s workforce for the jobs of tomorrow.

Among the several innovative strategies outlined in the Regional Council’s Buffalo Billion Investment Development Plan is the creation of a state-of-the-art facility to support the region’s manufacturing sector.   The proposed facility, the Buffalo Niagara Institute for Advanced Manufacturing Competitiveness, would provide services to local manufacturers in four specific areas: applied research and development, process excellence, export assistance and workforce training.  Specifically around workforce development, the Institute would work with manufacturers to “upskill” their workforce to perform operations that are more complex by utilizing shared equipment to provide hands-on instruction to help early and mid-career workers learn the tasks demanded by advanced manufacturing processes.  This targeted manufacturing workforce development initiative is in addition to general proposals by the Regional Council to align training, skills and education in the labor force at large.

Buffalo Niagara is one step ahead when it comes to preparing our workers for the jobs of the 21st Century.  With the leadership of the WNY Regional Development Council and the support of Governor Cuomo, Buffalo Niagara will remain a region that “Works.”

Private Sector Investment on the Buffalo Niagara Medical Campus

By Alan Rosenhoch, Business Development Manager

Conventus redering by Kideney Architects

Conventus redering by Kideney Architects

Conventus (Latin for “coming together”) is a brand new seven-story medical building being developed by Ciminelli Real Estate Corporation at the northern gateway of the Buffalo Niagara Medical Campus (BNMC). Designed to be a center for collaborative medicine, it will be anchored by Kaleida Health and UBMD. Ciminelli expects to open the building in the spring of 2015.

I had the opportunity to ask the President and CEO of Ciminelli Real Estate Corporation, Paul F. Ciminelli, a few questions:

Q: You recently began site preparation work on the Conventus project; what does this project represent for the BNMC and the region’s life sciences industry?

A: There are two aspects of this project that represent major milestones in the development of the Medical Campus. First of all, Conventus is the first significant private investment on the campus, which is indicative of our strong commitment to the BNMC and our belief in its vision. Private dollars send a strong message to our community and to other markets that the Campus is a viable initiative and worth the investment.

Secondly, Conventus’ adjacency and physical connections to the new Children’s Hospital and the new UB School of Medicine, is groundbreaking in its collaborative approach to the needs of the patients, physicians, researchers and students. Coupled with its location at the northern gateway to the Campus, Conventus facilitates a seamless connection among all of the major medical-related facilities at the northern end.

Q: How much space will be taken by the two anchor tenants, Kaleida and UBMD, and how much space will remain for future tenants?

A: Kaleida will occupy approximately 85,000 sq. ft. on the 2nd and 3rd floors, which are the floors where connections will be made to Children’s and the Medical School, as well space on the ground floor for their Blood Draw and Pharmacy. UBMD will occupy 60,000 sq. ft. on the 4th floor and a portion of the 5th floor. A major regional bank will occupy a portion of the ground floor as well. Based on the inquiries we have had to date, we expect to have tremendous interest in the remaining square footage, and that full occupancy will be achieved quickly.

Q: What types of tenants are you seeking for the balance of space? For what type of company would you consider Conventus to be ideal space?

A: As with all of our projects, we will identify potential tenants that are synchronous with the existing tenant base and with the overall vision of the Campus. We refer to Conventus as a “center for collaborative medicine” because of the multiple disciplines that will be housed in and facilitated by our physical connections to the Hospital and UB’s School of Medicine. We look forward to accommodating clinical, educational, practical and research components at Conventus, as well as other healthcare-related tenants.

Q: You are targeting LEED Gold Certification for this project; why is sustainable design, building elements and operation so important to Ciminelli?

A: In 2008, Ciminelli made a commitment to pursue LEED certification with all of our projects going forward because of our commitment to minimizing our environmental footprint and to developing high-performing buildings. From an ownership standpoint, it has a definite positive impact on the long-term operating efficiencies of the building. From a tenant’s perspective, LEED certification translates to a healthier, more efficiently run environment in which to work. It’s a win-win.

Q: Conventus is not planned to be a one-shot project for Ciminelli on the BNMC; what else do you have on the drawing board for the near and long-term future?

A: The core of our business is being able to see the big picture; the ability to put pieces of a puzzle together and create synergies within every development project we undertake. This is what our company does best, and why we are committed to supporting the BNMC’s vision. We have purchased additional property at 33 High Street directly across from Conventus and Children’s Hospital and adjacent to UB’s site for the Medical School in anticipation of continued growth. As things continue to evolve on the Campus and we see possibilities for future needs there, we will pursue strategic developments to support those needs.

Q: Plans call for Conventus to connect to the Allen Street NFTA Metro Rail station; how does this fit into your overall plan to connect different parts of the region?

A: Ciminelli is a strong proponent of transit-oriented development, as evidenced by our two current projects under construction: Bethune Lofts (Main Street and Hertel Avenue), and Conventus. Developing along our transit lines facilitates connectivity among vibrant areas of Buffalo Niagara such as the UB South Campus University District, the Hertel Avenue district, the Medical Campus and Canalside. As it stands today, the NFTA Metro Rail station will be connected to the new UB School of Medicine at Allen Street. It should be noted that, while there is a connection from that building to Conventus, its use will be somewhat restricted.

Q: Conventus represents the first significant for-profit private sector-led development on the BNMC; what makes your company so bullish on the future of the campus?

A: Ciminelli has owned property on the Campus for 20 years, so we’ve been a part of it since its early stages. We saw things begin to evolve as the plan was rolled out. We’ve seen similar models succeed in cities of comparable size and demographics to Buffalo, so we knew it could work here, especially with it being so close to our Central Business District and being on a main transit line. All of the components were there; all it needed to take it to the next level was significant private sector investment. We were the first, but we know we won’t be the only ones. Additional private sector support will happen on and around the Campus.

“My life works in Buffalo Niagara because of the tremendous quality of life we have in a relatively low-cost environment, the great educational institutions that supply a talented workforce, and because of the friendliness of its people. I love it here!”

- Paul F. Ciminelli

Roswell Park Opens New $23.6M Center for Personalized Medicine

Center for Personalized Medicine

Center for Personalized Medicine

By Alan Rosenhoch, Business Development Manager

Roswell Park Cancer Institute (RPCI) recently made headlines by announcing the opening of its brand new Center for Personalized Medicine (CPM).  The CPM is a new facility that uses state-of-the-art “next-generation” genetic sequencing tools to decipher people’s individual genetic codes.  The facility and its research will support the development of targeted medical therapies that are custom-tailored to a person’s unique genetic characteristics.

The Center is the result of an impressive public-private-partnership.  Kick-started by a $5.1 million grant from New York State, awarded through Governor Andrew Cuomo’s WNY Regional Economic Development Council (REDC), Roswell Park has invested an additional $16 million in equipment and infrastructure.  Further adding to the collaborative nature of this Center, Buffalo-based Computer Task Group (CTG) has pledged $2.5 million to provide electronic medical records expertise and bioinformatics/clinical analytics support services.  CTG, a board-level investor in Buffalo Niagara Enterprise, is a leading developer of bioinformatics computing and software.

This announcement is especially exciting for me personally (pun only slightly intended), as I had the pleasure of leading the WNY REDC’s Health/Life Sciences Work Group that identified the CPM as a “priority project” for the REDC to recommend for funding.  Working closely with RPCI President & CEO Dr. Donald Trump and Deputy Director Dr. Candace Johnson was a rewarding experience, but having the opportunity to witness this vision come to fruition barely 12 months later is far more gratifying.

The Center is utilizing 5,000 square feet of space in RPCI’s Center for Genetics and Pharmacology at 645 Virginia Street on the Buffalo Niagara Medical Campus.  It will have 21 staff members to start, growing to 42, along with 35 faculty members.  Click here to read RPCI’s CPM fact sheet (pdf).  The Center’s mission encompasses both research and clinical applications.

The CPM has the capacity to sequence more than 300 complete genomes per year.  This is a staggering number considering the original Human Genome Project took 13 years and $2.7 billion to complete the first human genome sequence.  Less than 10 years later, the technology has advanced to the point where the CPM can sequence over 300 genomes at a tiny fraction of the time and cost.

BNIA: A Bi-National Asset

Buffalo Niagara International Airport (BNIA)

Buffalo Niagara International Airport (BNIA)

by Matthew Hubacher, research specialist, Buffalo Niagara Enterprise

Convenience, reliability and cost of air transportation are all critical factors for both leisure and business travelers.  With over 5.1 million annual passengers, the Buffalo Niagara International Airport (BNIA) plays an essential role in the quality of life, business climate, and tourism industry of the region.  In fact, nearly one-third of BNIA passengers hail from Southern Ontario making it a true bi-national asset.

By providing 110 daily flights with non-stop service to 18 cities and 22 airports, BNIA is a convenient place from which to originate air travel.  Major passenger carriers Southwest, JetBlue, Delta, US Airways, AirTran, American and United escort passengers to top destinations across the country including New York City, Atlanta, Orlando, Chicago and Baltimore.

On time performance at BNIA is extraordinary and reliable.  Departing flights registered an 82% on-time mark and arriving flights touched down on-time 78% in 2011.  Only 1.75% of flights were cancelled in 2011, and planes have been grounded at BNIA for an average of only 4.25 hours per year since 2004.

According to data from the U.S. Department of Transportation’s Consumer Airfare Report, Buffalo Niagara air passengers enjoy an average one-way airfare of $170, among the least expensive in all domestic markets; it would cost more to fly out of nearly every other major U.S. market.

The Buffalo Niagara International Airport is a tremendous asset for the community of Western New York and Southern Ontario.  For more information, please visit BNIA’s website: http://www.buffaloairport.com/.