43North Semifinalists Are All Winners At Bright Buffalo Meetup

43N14019_43NWeekLogo_D6

by Jenna Kavanaugh, BNE Marketing & Communications Director

I’ve been pleased to be part of the 43North team throughout the process of attracting entrepreneurs to compete for an unprecedented $5 million in funding. It’s crunch time as we head into the finals having scoured thousands of ideas submitted from February through May. Judges have narrowed it down to 113 semi-finalists, and at the end of September eleven finalists will be announced to advance to the final round of the competition.

As part of the excitement and anticipation such a competition presents, Buffalo will host “43North Week” from October 24th through October 30th, with a series of events and educational opportunities.  This includes everything from a startup pitch competition, to a coding workshop, to an evening of networking in the eclectic cafes, clubs, galleries and music venues of Allentown.

One of the week’s most anticipated events is the Bright Buffalo Niagara Semifinalists Meet up, on October 29th.  All 113 semifinalist companies are given the opportunity to meet and mingle with venture capitalists and angel investors and learn more about local resources that promote investment, business partnering and other startup services.  It will be held at the University at Buffalo Clinical Translational Research Center spotlighting life sciences innovation and technology based economic development in the heart of the Buffalo Niagara Medical Campus.

The big finale takes place on Thursday, October 30th, when the eleven finalists will pitch their ideas to a panel of judges in front of a live audience at Shea’s Performing Arts Center.  One business will be awarded $1 million, six will receive $500,000 and four will receive $250,000.  The public is invited to attend the awards celebration that evening to experience first-hand the excitement generated by the competition.  It will be an unforgettable evening, I’m sure. For more information about 43North or registering for the reception, please visit www.43North.org.

Workforce Development Programs Key to Region’s Continued Progress

by Tom Kucharski, President & CEO

On August 5th, I had the pleasure of representing BNE at the 2014 White House Forum on Economic Development, hosted by the International Economic Development Council (IEDC) and SelectUSA. This provided an opportunity to directly engage with White House and high-level administration officials, as well as colleagues and IEDC leaders. Despite some well-documented congressional “gridlock,” SelectUSA is one program that everyone can agree on and is providing much-needed centralized services to potential foreign investors.

I was struck by the progressive and open-minded nature of this group and how receptive they are to helping organizations across the country create solutions to a variety of challenges. Discussions and forums focused on economic strategies and common concerns – specifically, the critical need for better workforce development training programs and initiatives.

In Buffalo Niagara, we’re faced with two considerable hurdles: an aging workforce and a deficit in employees prepared for the high tech and advanced manufacturing industries we strive to attract. One key takeaway from the conference is the critical need for institutions of higher learning to collaborate with the business community to create job-training programs for the 21st Century because this industry cluster is where the jobs are now and will be in the future.

The good news is thanks to an open dialogue with the educational institutions in our region as well as the pool of talent they attract, we have a golden opportunity to create the kind of meaningful job training programs that are in sync with today’s businesses’ workforce needs and tomorrow’s jobs. And that’s good news for BNE’s investors and all of Western New York.

Canadian Businesses Consider Real Estate in Buffalo Niagara

By Steve Blake, Partner at CBRE Buffalo

Real estate availability and cost is an important topic for Canadians considering a business expansion.  The real estate markets in Toronto and Buffalo Niagara differ greatly and as the US economy continues to change, it leaves business owners uncertain.  Companies are unsure of the availability of commercial properties, average lease rates, and the current trends specific to the Buffalo Niagara region.  And how does Buffalo Niagara compare to the US real estate market?  Have the prices plummeted?  Is there a glut of properties just waiting for tenants and buyers?

CBRE|Buffalo publishes a MarketView report every year summarizing the real estate market in Buffalo Niagara.  Here are some excerpts from the Annual 2013 report:

Industrial Market

As forecasted in 2012 by CBRE|Buffalo, the 2013 Buffalo Industrial Market did experience a sizeable decrease in the overall vacancy rate, decreasing from 9.2% to 5.7%.  This equates to 2,482,446 sq. ft. being absorbed in the greater Buffalo MSA.  Nationally, demand for industrial space continued to improve with the national overall vacancy rate decreasing 13.1% to 11.7% in the third quarter 2013. (CBRE, INC U.S. Industrial Market View Q3 2013).  The 2013 results mark the 8th consecutive year the Buffalo Industrial Market vacancy rate has remained below the national average.

Industrial RE Chart
* The arrows are trend indicators over the specified time period and do not represent a positive or negative value.

(e.g., absorption could be negative, but still represent a positive trend over a specified period.)

Office Market

The overall Buffalo office market vacancy increased to 13.71%, up from the previous year’s 10.37%. The expected increase comes after HSBC’s downsizing, which resulted in its departure from One Seneca Tower (formerly One HSBC Center) leaving more than 700,000 Sq. ft. vacant in Buffalo’s Central Business District (CBD). Despite the increase in vacancy, the submarkets displayed positive net absorption of 163,137 sq. ft. of office space, offsetting the spike. As in previous years, the Buffalo market continues to fall below the national office vacancy of 15.1% reflecting a relatively stable market. (CBRE, Inc. U.S. Office MarketView Q3 2013)

Regardless of the cautious sentiment surrounded by the increase in CBD vacancy, construction is thriving with many new office projects downtown and throughout the suburban markets. The Buffalo office market added over 873,000 sq. ft. of office inventory.

Office RE Chart

* The arrows are trend indicators over the specified time period and do not represent a positive or negative value.

(e.g., absorption could be negative, but still represent a positive trend over a specified period.)

 

Additional questions that Canadian companies commonly ask:

Q: Can we reduce our ‘real estate costs’ by expanding into a less costly market, without jeopardizing our profits or business model? 

A: For many companies it is a resounding YES.

Some simple observations:

Average cost to purchase industrial real estate:

  • Toronto GTA (Greater Toronto Area) :   $81.92 psf. *
  • Buffalo/ Erie County:   $26.61 psf. ** = savings of approx.   68% per square foot.

Average additional rent charges for real estate taxes, common area maintenance and insurance, industrial leases:

  • Toronto GTA:                     $3.10 psf *
  • Buffalo/Erie County:       $1.76 psf ** = savings of approx. 43% per square foot.

Cost to purchase fully serviced industrial land:

  • Toronto GTA: approximately $275,000 per acre to $400,000 per acre
  • Buffalo/Erie County: approximately 45,000 per acre to $60,000 per acre = savings of approx. 84% per acre.

NOTE: Similar percentage savings also apply to the office market.

Q: Can we potentially reduce not just our real estate costs but our ‘overall occupancy costs’ including but not limited to utility costs, real estate taxes, sales taxes, employee wages and costs, through available economic incentive programs?

A:  Ontario/Toronto – no.

New York/Buffalo – yes.

In United States and specifically in the Buffalo Niagara Region companies of all different sizes can apply and potential qualify for incentives programs to assist with utility costs, real estate taxes, sales taxes, employee wages and costs.  Most of these programs’ main criteria are based on the number of new jobs being created, the projects’ costs and plans, and the specific industry the company operates in.  Companies need to complete an application process and potentially compete for some of these programs.

There are significant differences between the real estate markets in Buffalo Niagara and the Toronto GTA.  Furthermore, the Buffalo Niagara real estate market has fared relatively well over the past year, even in tumultuous times across the country.  While these statistics and figures provide some great information, they are no substitute for feet-on-the-ground.  So why not head south to see what opportunities the Buffalo Niagara real estate market may hold for your company?

 

CBRE|Buffalo, an affiliate office of CBRE, Inc., staffs 16 professionals and offers a full range of commercial real estate services to Erie, Niagara, Chautauqua, Cattaraugus, Wyoming and Allegany counties, and portions of Orleans and Genesee counties. Our industry-leading platform provides unparalleled service to meet any client requirements including: landlord/owner representation, tenant/buyer representation, property and project management, investment sales, consulting, and marketing and research services

For additional information contact Steve Blake, CCIM, Partner at 716-362-8707 or steve.blake@cbre.com

*     Source: DTZ Barnicke Q1 2012 Industrial Market Report

 **   Source:  CBRE Buffalo

Carolyn’s Recipe for Canadian Business Expansion

by Jenna Kavanaugh, Marketing Director

If you ask Carolyn Powell about her favorite pastime, she’ll tell you its mixing up a new cupcake recipe. But beyond her famous strawberry frosting, this Buffalo native’s has the right recipe to help Canadian businesses succeed in the U.S. Carolyn is a member of BNE’s Business Development team, where she focuses on the Canadian market. Since joining BNE in 2008, Carolyn has helped 32 Canadian companies expand into the Buffalo Niagara region, representing over $706 million in investment and more than 1,600 jobs.

Carolyn also works with businesses involved in food processing and agribusiness, such as yogurt, protein products, and food packaging. Many of these companies are headquartered all over the world.

Carolyn is certified as an EDFP (Economic Development Finance Professional) by the National Development Council.

Based on your experience, describe some of the key pitfalls Canadian business owners must anticipate and avoid with regards to entering the US market?

Across the U.S., well-funded networks have sprung up at the state and municipal levels to ensure Canadian companies tap into the best strategic and cost-saving advice available early in their decision making process. Organizations like ours, Buffalo Niagara Enterprise, can help Canadian business entering the U.S. and save time and money and help you leverage the U.S. system in your favour while avoiding the pitfalls.

Canadian companies looking to expand to the U.S. are best served by following a due diligence process that evaluates an organization’s needs, long-term plans, and addresses practical consideration in a proscribed order. For example, some companies seek to secure real estate options before address critical factors such as immigration first; this can put a company and their employees at risk. Also finalizing a real estate transaction prior to securing incentive commitments can make a company ineligible to receive key incentives.

Critical, first step due diligence items include the following:

  • Legal considerations:  What is the ownership structure going to be for the U.S. operation?  What immigration items need to be addressed for Canadian employees coming to U.S. facility for set up, hiring, or supervision;?  Will they need a work visa?  Does the company have patents in Canada that they need to protect in the U.S.?
  • US Tax and Accounting:  Will the U.S. and Canadian operations be legally connected?  What are the pros and cons?  How will the company transfer money back to the Canadian corporation and owners?  How does the company avoid double taxation?
  • Human Resources:  What is the labor pool like in the community that you are considering?  What is the pay scale for workers in the area?  In the U.S., there is no mandatory severance or mandated holidays; what happens when you fire and employee that has been on the job for 5 years and what does a company offer for holidays?

How do Canadian businesses looking to expand into the U.S. maintain a competitive edge?

Since 2000, we’ve helped more than 60 Canadian companies expand their business into the U.S, Each of these companies was unique had their own reasons why they wanted to enter into the U.S. market and none of these companies did it exactly the same way.

Successful companies are those that had a long term vision for their organization so when they structured their business as they enter the U.S., they evaluate their transportation, distribution and communications infrastructure requirements to determine where these would be best met. Likewise these companies conduct due diligence on the availability of a quality workforce.

Companies that complete their due diligence improperly or too quickly, can have unneeded costs, disruption, and loss of production.  For example, a company that does not evaluate the real estate market may lease or purchase a building that is not suitable for their needs and future expansion; or a company that does not evaluate the competitive workforce model may offer an employee benefits program that is too rich causing high operating costs. Also, the program may be too low causing them to be unable to recruit the needed employees for their operation.

One successful example is NutraBlend Foods, a leading manufacturer in the sports nutrition industry. They are headquartered in Cambridge, Ontario with another location in Brantford, Ontario and first expanded to the Buffalo Niagara region in 2009. What began as a packaging facility with 40 employees evolved into a dry ingredients blending operation in 2011. Today they have 130 employees and are adding a third production line due to increased U.S. sales. The building that they purchased in 2009 has accommodated their growth plans and they selected a community that has been able to provide the needed skilled workforce.

What is your top advice for Canadian entrepreneurs taking their business south.

  • Connect with field experts in the U.S.  I strongly recommend that the first step you take in your expansion plans is to seek the advice of organizations that specialize in helping companies grow their business in the U.S. Organizations like mine, Buffalo Niagara Enterprise, offer a range of services and frontline advice expert advice free of charge. The beauty of this arrangement is that is provides a single point of contact to a roster of experts in every key area: site selection, human resources, accounting, taxation, insurance, legal issues, financial services, utilities distribution services, and incentives.
  • Locate in an area that provides your management team easy access  Whether your business is big or small, the complexity of today’s business activity requires that your company’s leaders are able to be engaged in a hands-on manner. Critical members of your management team must be able to reach your U.S. site easily and economically to enable the face-to-face coaching, oversight and knowledge exchange that are critical to expansion success. As your company continues to grow, you can effectively and rapidly deploy your best minds and practitioners to your expanded operations. Ultimately, this exchange and in-person oversight ability strengthens both your Canadian and U.S. operations.
  • Choose a location your employees will want to call home  Employee satisfaction is enhanced when staff can live well where they work. Reduced commute times in growth areas that offer excellent quality-of-life pared with reasonable cost-of-living are preferred. Look for signs of investment in the communities to which you are considering expanding – reputable schools, property development, restoration and reclamation activity, and services and amenity provisions that caters to the full range of singles, couples and families.
  • Learn from other Canadian companies that have successfully expanded  Gain insight into the challenges and payoffs of U.S. expansion from Canadians who’ve been through the process. One way to access your fellow Canadians is through the U.S. economic development groups that have advised them. We are happy to set up one-on-one meetings between companies that are considering an expansion and companies that have already established operations. In fact we are offering a bus tour of two such facilities this fall.

What are some of the existing advantages for Canadian business expanding south of the border that can be capitalized on?

The U.S. population offers Canadian businesses access to a market that includes nearly ten times the number of people living in Canada. From the Buffalo Niagara region, companies can reach 41% of the U.S. population in a one day drive. There are also the similarities in consumer-culture between our two countries, our sheer proximity, and the unparalleled trade and investor relations that we enjoy. Canadian companies who have already made the move enthuse about all they have gained. It starts with instant boost to capacity and capabilities. Add to the list the enabling of U.S. domestic shipping that U.S. customers frequently request and the appeal of the “Made in the U.S.A” labeling which U.S. customer revere and municipal contracts often requires.

What practical tax advice do you have for Canadian companies expanding into the US?

When expanding into the U.S., Canadian companies need to consider what type of entity (Corporation, LLC, etc.) they should use to minimize their effective cross border tax rate.  Canadian companies also need to review what states they are going to be doing business in and consider the income, franchise and sales tax ramifications to each jurisdiction to ensure compliance with the relevant state and local tax laws.  In building a successful cross border tax strategy, Canadian companies need to have a complete understanding of the Canada – U.S. Income Tax Treaty.  Understanding the Treaty will help them structure their operations to minimize tax exposure on both sides of the border.  While state and local taxes are still assessed, there may be an exemption from Federal tax under the Treaty if the operations are structured properly.

Canadian companies wanting to expand into the U.S. should understand that both countries have a vested interest in the income that is being reported.  A best practice for such companies is to ensure that any transaction between the Canadian and U.S. operations are properly documented and are performed at an “arms length” price to comply with the Transfer Pricing requirements.  While Transfer Pricing is one of the key focuses of both CRA and the IRS, there are other considerations to building a successful cross border tax strategy such as complying with the U.S. employment, payroll, insurance and other similar laws.  These areas are always scrutinized and you can save yourself problems and penalties on the backend by addressing them up front.

6. Finally, can you provide some information about incentives that Canadian business can take advantage of?

Significant government incentives exist to attract Canadian companies to the U.S. In some states you can combine tax breaks to reduce your company’s overall effective tax burden to as low as the statutory minimum. In the U.S., and New York in particular, most companies are candidates for economic incentives based primarily on two major factors: the number of jobs created and the dollar amount of the investment a company will make by virtue of their business expansion.

Moreover, many of these incentives are site-specific and available through either state, county or other municipal sources and must be applied for through the appropriate channels. Organizations like Buffalo Niagara Enterprise can assist companies through this process and make the necessary introductions. Incentives can include low-cost power allocations, training programs, employment tax credits, investment tax credits, and property and sales tax exemptions. Depending on the size of your operation, these types of incentives can help offset some start-up and operating costs.

When Welded Tube of Canada decided to invest in a new steel tube and pipe mill in the U.S. in order to have the “Made in the U.S.A. label”, one of the most attractive benefits of the Buffalo Niagara region, which is unique to our area, was the allocation of low-cost hydro-power they received from the New York Power Authority (NYPA), significantly reducing their cost of power and making them more competitive in the U.S.

It is critical to work with organizations well-versed in incentives in the community you are evaluating, because incentives continually evolve. For example, New York State Governor Cuomo recently announced the groundbreaking START-UP NY program creating tax-free zones across the State for new and expanding businesses that partner with a university or college.  Companies accepted into the program will be free of all New York State (NYS) corporate income tax, business taxes, state and local sales taxes, franchise fees and even personal income tax of owners and employees.

Contact Carolyn at 716-541-1740 or at cpowell@buffaloniagara.org

Buffalo Niagara Commercial Real Estate: Good Challenges, Great Opportunities

by Tom Kucharski, BNE President & CEO

Buffalo Niagara has had one of the country’s most affordable commercial markets since the 1980s, when manufacturing decline, sprawl and economic uncertainty depressed the area’s real estate values. Now, however, as the local economy’s gained a level of momentum not seen in 60 years, what’s the impact on commercial real estate?

From 2012 to 2013 Buffalo Industrial Market experienced a sizable decrease in the overall vacancy rate, decreasing from 9.2% to 5.7%. The 2013 results mark the eighth consecutive year the Buffalo Industrial Market vacancy rate has remained below the national average, currently 11.7%. (CBRE, Inc. U.S. Industrial MarketView Q3 2013).

The region’s growth and expansion has caused a decrease in vacancy rates, driving factors behind new medical and office developments from the south campus of the University at Buffalo through the Buffalo Niagara Medical Campus. And brownfields between Buffalo and Lackawanna, as well as several northward through Niagara Falls, are bursting to life with facilities to support advanced manufacturing and future-looking technologies. Local development is currently estimated at approximately 700,000 sq. ft. of new construction planned for the first and second quarter of 2014.

Offices are filled with employees, of course, and we’re also seeing subsequent demand for residential properties, particularly mid- and high-end rentals. More people means a need for more service-oriented businesses, too, like coffee shops, restaurants and grocers – providing opportunities for small business entrepreneurs and a need for refurbished, ground-level spaces. Residential and commercial vibrancy also creates a more robust destination for tourism and recreation, and cranes are high in the sky with ongoing work at Canalside and the hockey-centric HarborCenter development.

This low vacancy rate may also be an opportunity for developers. Steve Blake, a partner in CBRE Buffalo expects the 3rd quarter/2013 vacancy of 5.7% to tighten even further by the end of 2014. Blake recently commented that, “This will inevitably result in higher lease rates and require longer lease terms as tenants turn to developers for new product to  meet their demands. While the Buffalo industrial market rarely has ‘true’ speculative development occurring, with market conditions there is a good probability that by simply publicly announcing a proposed, high bay, distribution warehouse project, a developer will have a good chance of pre-leasing a major portion of that project”.

Overall, while the market is stronger than it has been in decades, strategic reuse of existing buildings coupled with targeted new development means that commercial properties in Buffalo Niagara will continue to be attractively priced while still reflecting the region’s economic and cultural resurgence. And with potential support through “Buffalo Billion” allocation and the STARTUP NY Tax-Free Zone program, there’s unprecedented financial support for Buffalo Niagara business development.

Comprehensive sector overviews and up-to-date listings of new construction and redeveloped properties, available brownfields, and shovel-ready sites can be found in the Real Estate section of the BNE website. Our team also offers a range of services including assistance with financing and incentives to help new, relocating and expanding businesses take advantage of one of the country’s most affordable and dynamic commercial real estate markets.

 

 

 

 

 

 

 

 

 

Buffalo to Host Leading Design Engineering Conference

asmelogo (3)

by Alan Rosenhoch, Business Development Manager

Late this summer, Buffalo will play host to one of the USA’s flagship conference for Design Engineering, the ASME 2014 International Design & Engineering Technical Conferences & Computers and Information in Engineering Conference (IDETC/CIE 2014). The conference takes place August 17-20, 2014 at the Buffalo-Niagara Convention Center in downtown Buffalo.

The University at Buffalo played a pivotal role in attracting this conference to Buffalo, with Dr. Venkat Krovi, UB Associate Professor, Mechanical and Aerospace Engineering; Pathology and Anatomical Sciences, serving as the Conference’s General Chair.

Even more exciting, ASME has decided that Buffalo is the ideal venue to premier a new program to be co-located with IDETC/CIE 2014: the Advanced Design & Manufacturing Impact Forum. This four-day event will highlight opportunities that help participants realize the full potential of advanced manufacturing solutions. Impact Forum attendees will participate in leading-edge conversations on emerging technologies, applications, and solutions required to compete in the global advanced design and manufacturing marketplace.

ASME has identified Life Sciences & Medical Devices as one of eight highlighted program topics for the Impact Forum, featuring new/novel devices, materials, global manufacturing and biocompatibility. The Impact Forum will include an exhibit hall where companies will have the opportunity to draw the industry’s attention to their latest innovations. The Impact Forum has an impressive program of speakers across the eight topic areas.

The final day of the conference/forum (Wed. August 20) will feature a Career Fair, providing an excellent opportunity for companies and job seekers to connect.

I hope to see you there!

#NewBFLO Developments: Buffalo Iron Works

NewBFLO-04_22_14-IronWorks (3)   New Cobblstone District music venue and bar, Buffalo Iron Works opened its doors at 49 Illinois street in September. With a capacity of 500 people, Ironworks has been capitalizing on the live sounds of Buffalo bands as well as some out-of-town acts. When the live music isn’t in session, the industrial bar/restaurant plays host to Sabres and Bandits fans before and after games, along with First Niagara special event nights. Originally built in the 1900s, 49 Illinois was rehabilitated by developers, Sam Savarino and Roger Trettel, along with additional partners at LagerHaus 95 (maker of our team’s favorite salads). The building’s historic character was preserved, while updated enough to serve as a fully functioning destination. In order to secure historic tax credits, the integrity of the building remains intact, and only the old wood floors are missing, as they were not salvageable. The beams used to support the flooring were reused in the building of the service bar. Other reused architectural elements from this building and others were also incorporated into the design fabric of the venue. Go to Mapping Downtown Buffalo’s Development for more information on developments in Buffalo, NY. Watch for #NewBFLO on our Blog, Facebook, and Twitter.

#NewBFLO Developments: Kamman Building

NewBFLO-04_22_14-Kamman (4)

The Larkin District continues to see an abundance of new life and investment, as it has quickly become a coveted place to work, socialize, and live. Recently, The Kamman Building at 755 Seneca Street, underwent over $1 million in rehabilitation by Chaintreuil | Jensen | Stark Architects (CJS).

The building was designed by noted architect F.W. Caulkins in 1878 and is listed on the State and National Historic Registers, enabling the project to receive historic tax credits. The project also received funding through National Grid, the City of Buffalo, New York State Energy Research and Development Authority (NYSERDA) and Erie County Industrial Development Agency (ECIDA) programs.

CJS maintains their office on the first floor of the Kamman building, complete with a conference room featuring a massive table composed of reclaimed ceiling joists from the building. The second floor is home to two small offices, Ingenious Inc. and White Bicycle, while the third and fourth floors each have two large apartment units that span the length of the building. All tenants have access to the rear porches, which offers great views of Larkin Square

Go to Mapping Downtown Buffalo’s Development for more information on developments in Buffalo, NY.

Watch for #NewBFLO on our Blog, Facebook, and Twitter.