Steps to Effectively Manage Your New York State Commercial Real Estate Purchase

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There is an old adage in real estate that says ‘if you can agree on price and possession’ then the rest of the contract will fall into place.  Possession is a synonym for timing, and when purchasing commercial real estate for U.S. business expansion the timeline is often underestimated. Heated market conditions have changed the way the due diligence process occurs from ‘sequential’ to ‘simultaneous’ and this requires firms to front some soft costs such as appraisal, environmental etc. while they pursue the economic incentives.  Plus, access to incentives, low-cost utilities and other types of support can be different from what is available in other countries and may impact the process.

Here is a guide to what international companies can expect:

Step one: Connect with Experts

Companies interested in an US expansion should connect with economic development agencies such as Invest Buffalo Niagara or a professional Site Selector. It is important for companies to develop an upfront, detailed relationship with these professionals when entering the real estate market so that a clear and concise game plan that can be readily executed.

Step two: Define Your Needs

Economic development experts such as Invest Buffalo Niagara will meet with you to understand your business plan and project scope. They will look to understand your facility requirements and other factors that will impact your site location decision.

Step three: View the Landscape

Once you define your site criteria, Invest Buffalo Niagara can conduct a preliminary search to understand availability in the local market as it relates to your real estate needs and connect you with the local real estate community.

Step four: Understand Competitive Tools

There is potential to qualify for incentives, financial assistance, infrastructure development, customized training and technical support programs when locating a new business and creating new jobs in Buffalo Niagara.  Many of those incentives are site specific. A company must purchase or lease a property ‘contingent’ upon securing the incentive package, otherwise; they will jeopardize receiving them.

Step five: Apply for Competitive Tools

The process to obtain the incentive package can take time depending on which program(s) are targeted. Applicants must provide company and financial information – not being prepared with this information can prolong the process. Organizations like Invest Buffalo Niagara will help you navigate the applications and incentive process but companies must be prepared with the necessary information and paperwork.

Step six: Conduct Due Diligence

The due diligence phase of the commercial real estate process now becomes sequential versus simultaneous. Most purchase contracts include a contingency time period for due diligence to be undertaken. It’s possible that activities such as mortgage application, environmental reports, building inspections and legal reviews may not be completed in the original contingency time period. This does not have to be a significant issue, as extensions to the due diligence period are commonly negotiated. However, with the existing industrial vacancy rate shrinking the in metropolitan Buffalo market, prolonged due diligence periods make the timing component in the ‘price and possession’ equation increasingly difficult to accommodate.

Step seven: Take Possession

Start your business! Keep in mind there will be a transition period as you get your new facility up and running. Some facilities will need modification and new equipment; most new facilities will need time and training to implement a new U.S. team.

While the process can seem somewhat daunting, working closely with economic development professionals such as Invest Buffalo Niagara and a good commercial real estate broker can make the process orderly and profitable.

Guest blog: Steve Blake, CCIM, Partner, CBRE|Buffalo 716-362-8707 / steve.blake@cbre-buffalo.com

3 Real Estate Questions International Companies Ask When Considering US Expansion

Real estate is a hot topic for international companies considering a Buffalo Niagara business expansion. Businesses owners aren’t familiar with our region’s availability of commercial properties, averages sales rate or current real estate trends.

Most frequently asked questions:

  1. How does Buffalo Niagara compare to the national U.S. real estate market?
  2. How are real estate prices trending locally?
  3. Is there a shortage of properties which tenants and buyers are competing for?

Our partner CBRE|Buffalo, and its annual MarketView report does a great job of addressing these questions.  This publication summarizes the real estate market in Buffalo Niagara – listed below are excerpts from the Annual End of Year 2015 report that international businesses owners find particularly useful:

Industrial Market

Forecasted in the 2014 CBRE/Buffalo MarketView Report, the 2015 Buffalo Industrial Market experienced a measurable decrease in the overall availability (vacancy) rate, dropping from 4.5% to 3.6%, with a substantial 2,707,651 sq. ft. of positive absorption.  This is the fourth consecutive year that demand has remained strong, and has outpaced supply, resulting in lower availability rates.  This trend is expected to continue in 2016 due to the lack of non-build-to-suit new construction in the pipeline.

Nationwide availability rates continued to decrease year-over-year with the national availability rate falling to 9.6% in Q3 2015.  The national market has now experienced 24 consecutive quarters of availability rate decline and this rate is at its lowest since Q3 2001.  For Buffalo/Erie County, 2015 marks the 11th consecutive year that the industrial market availability rate has remained below the national average.

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Office Market

The Buffalo Office Market vacancy rate decreased this year to 13.5%, a 0.5% decrease from last year’s 14%.  This brings Buffalo back in line with the US office vacancy of 13.4%.  Nationally, downtown markets are seeing significant peaks in performance and this has also been the case in downtown Buffalo.  Despite large blocks of office space in older inventory, construction and tenant active was significant with a large amount of pre-committed new space coming online.

Just under 500,000 sq. ft. of new office inventory was added this year, almost all occurring in the downtown market.  The anticipation of city projects was visible through impressive demand, leaving limited amounts of vacancy as new projects were completed and space was absorbed.  Some projects under construction were slowed by 2014’s harsh winter, but will come to fruition Q1 2016.  New construction will be seen throughout 2016 as 350,000 sq. ft. of office inventory is currently under construction or planned.

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Interested companies can search our Commercial Listing System or view Featured Properties on our website, BuffaloNiagara.org.

For additional information about the Buffalo Niagara real estate market, contact Steve Blake, CCIM, Partner, CBRE|Buffalo 716-362-8707 / steve.blake@cbre-buffalo.com

by Carolyn Powell, Business Development Manager

Canadian Restaurant Industry Seeks Buffalo Niagara Expansion

Invest BN began working with Trophy Foods in January 2014 on their US expansion. Their new facility, named Redland Foods Corp., is now located in Cheektowaga, NY.

Invest BN began working with Trophy Foods in January 2014 on their US expansion. Their new facility, named Redland Foods Corp., is now located in Cheektowaga, NY

Every year, I make the quick trip across the border to Toronto, ON to attend the annual Restaurants Canada show.  Over 1,200 exhibitors participate in this three day event, representing a variety of facets from the restaurant industry including; food processors and distributors, equipment manufacturers and service companies.

Aside from sampling fabulous food at Restaurants Canada, this show provides me the opportunity to meet growing Canadian based companies in the food industry.  Many of these companies have a strong US sales base and are considering US expansion to better serve customers. Often times, these Canadian companies have established a medium to high percentage of sales in the US market while importing a medium to high percentage of raw materials from the US.  Those percentages create a tipping point, leading to the need of a US location.

Besides the sale to import ratio, there are a number of reasons driving Canadians in the restaurant industry in opening a US location. Some key factors:

  • Increased product to market times
  • Limited product shelf life
  • Border delays
  • Currency fluctuation
  • Customer and contract requirements
  • Parent company risk reduction

Invest Buffalo Niagara has worked with a number of companies in the restaurant industry, many of which I have encountered at Restaurants Canada.  Trophy Foods (Redland Foods), Pride Pak, Nutrablend, and Magic White are all food processing, packaging, service companies I worked closely with, resulting in successful Buffalo Niagara expansion projects.

Upon my return of 2016 Restaurants Canada, I am excited to begin working with many of the people I met and look forward to adding them to the long list of Canadian-based companies with a Buffalo Niagara location. To learn more about establishing a business in Buffalo Niagara sign up to receive Access US, an e-newsletter that covers the hottest topics in Canadian business expansion.

Carolyn Powell, Business Development Manager

7 Practical HR Considerations for Canadian Businesses Expanding to the U.S.

 

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Insight into U.S. Human Resource Policies

There are a number of differences in human resource policies between the U.S. and Canada, making it important for Canadian businesses owners considering a U.S. expansion to fully understand regulations. Policies and procedures that focus on employees and comply with Federal and State Labor laws are imperative.

Q:  Can a U.S. employee be dismissed without minimum notice or “pay in lieu of notice” (severance)?

A: Yes. “At will employment” exists in most States in the U.S. This allows an employer to dismiss an employee, usually for good reason, without the obligation of paying severance or minimum notice as is required in the Ontario Employment Standards Act (ESA).

Q: What are the minimum vacation periods and mandatory holidays in the U.S.?

A: There aren’t any. Decisions as to how many vacation days or the paid holidays that an employee earns are at the discretion of the employer and can be designed to meet the needs of the company as well as the employees.

Q: How is medical insurance obtained?

A: Employee benefits play an increasingly important role in the lives of employees and their families and can have a significant financial and administrative impact on a business. Employee benefits in the US are handled differently than Canadian public insurance (eg. OHIP) and health insurance plans and premiums can vary dramatically across the U.S. Typically; the company will negotiate with insurance plan providers to determine the best plans for that worksite. The employer then determines how much of the premium will be company-paid based on financial capabilities and what they need to be competitive in order to recruit the caliber of employees they need.

Q: What are the allowable payroll frequencies in the U.S. (weekly, biweekly, etc)?

A: Similar to Canada, the choices can be weekly, bi-weekly, semi-monthly and monthly. It is important to know which one to use based on the State in which you have operations. For example, in New York State – laborers are mandated to be paid no less than weekly while administrative staff can be paid bi-weekly.

Q: Can I mandate that my workers receive their pay via direct deposit?

A: No. You cannot mandate that employees receive their pay via direct deposit only.  A company is required to provide a live paycheck if preferred by the employee.

Q: What are the mandatory U.S. policies for medical and/or maternity leave?

A: In the U.S., maternity and medical leave are covered by a 12 week “UNPAID” time frame. Employers have the availability to allow employees to use accrued vacation/sick time as well as crafting their own policies as to what benefits will be made available during the employees leave. These policies should ensure equal treatment of employees so as to avoid being seen as discriminatory.  Some cities have instituted mandatory paid leave policies but most companies have a well-crafted PTO policy already accommodate these rulings.

Q: What is the minimum wage rate in the U.S.?

A: Minimum wage varies by state in the U.S.  While the Federal minimum wage is $7.25, some states set a higher minimum wage through state legislation.  In New York State, the minimum wage will be $9.00 effective 12/31/15.

Guest Blog:

John H. Bradley, Regional Vice President, Alcott HR

716-626-9500

johnb@alcotthr.com.

Alcott HR is a Professional Employer Organization specializing in administering U.S. employees for Canadian corporations.

 

Redland Foods Adds Flavour to Buffalo Niagara

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When I talk about manufacturing in the Buffalo Niagara region, most people typically think of metal based products –especially when I tell them I’m working with a nut manufacturer. But Trophy Foods is not your average nut. Instead of hex nuts, flange nuts, and weld nuts, they value-add process almonds, pecans, cashews, peanuts, and more used for snacking and baking.

In January of 2014, I started to work with Trophy Foods Inc. as they considered a U.S. expansion. The company was outgrowing their Canadian facility and was considering locations in both New York and Michigan. BNE had the pleasure of working with Brian Paul, COO to provide the necessary data and guidance to ensure their expansion took place in Buffalo Niagara. The facility, named Redland Foods Corp., is now located in Cheektowaga, NY.

Redland Foods Inc. is one of the leading suppliers of high quality and innovative flavoured edible nuts, dried foods and confectionery products for both their name brand and many private labels. The facility has two roasting lines and a toffee line. They are equipped to handle an endless variety of packaging options in an array of sizes and formats. All products are either nitrogen flushed or thermal sealed for added freshness and food safety.

I recently visited Brian at the new U.S. facility to see firsthand the success they are experiencing nearly two years later. Redland Foods made major investments in the transformation of the facility and purchased critical processing and packaging equipment to meet their demand, as well as FDA regulations.

Close proximity to their Canadian headquarters, a strong workforce and the low cost of doing business in the Buffalo Niagara region has provided Redlands a successful start.

If you would like to enjoy Redland Foods product, stop by Aldi’s and try their sliced almonds!

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By Carolyn Powell, Business Development Manager

NEXUS – The Only Way To Travel

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I travel to Canada a few times each month as I work to help Canadian companies expand their business into the U.S. This November, I’m heading to Montreal to meet with companies through AmCham Quebec  for a program focusing on business opportunities in the State of New York for Quebec companies; the following week I’ll be engaging companies at Select USA in Toronto; and finally on November 23rd I’ll participate in the Ontario Export Awards in Mississauga. With all this travel, waiting bumper to bumper to cross the border is not the best use of time- and that’s why I have the NEXUS pass. NEXUS program is designed to expedite the border clearance process for low-risk, pre-approved travelers into Canada and the United States.

For $50, I now zip through the NEXUS Lane. The only catch? All those traveling in the car with me also need to be NEXUS pass holders. Any citizen or permanent resident of Canada or the United States can apply for a NEXUS pass. The process takes about six weeks and, if you’re approved (after risk assessment and interviews by border protection officials of both countries), the pass is valid for five years.

Following are details about the NEXUS pass that can help get you zipping across the border, just like me:

What is NEXUS?

The NEXUS program allows pre-screened travelers expedited processing when entering the U.S. and Canada.  Program members use dedicated processing lanes at designated northern border ports of entry, NEXUS kiosks when entering Canada by air, and Global Entry kiosks when entering the U.S. via Canadian preclearance airports.  NEXUS members also receive expedited processing at marine reporting locations.

In addition to designated process lanes, the NEXUS card is a Western Hemisphere Travel Initiative (WHTI) complaint travel document and can be used in any primary lane.  The more travelers participating in the NEXUS program, the greater the benefit to overall border wait times.  By having advanced traveler information, U.S. Customs and Border Protection (CBP) is able to reduce inspection times in the NEXUS lanes.  Greater participation in this program further reduces overall border wait times at the local crossings by allowing more cars to be processed per hour without increasing the infrastructure.

How Does the NEXUS Program Work?

At Buffalo land border crossings, program participants proceed to dedicated NEXUS only lanes and present their NEXUS photo-identification cards.  All occupants of the vehicle must be enrolled in NEXUS to utilize the dedicated lanes.  In addition to dedicated NEXUS lanes at the Lewiston and Peace Bridges, the Whirlpool Bridge in Niagara Falls is designated as a NEXUS-only crossing, available exclusively to NEXUS cardholders.

Additional Benefits of Global Entry included with NEXUS:

Individuals approved to participate in NEXUS receive photo identification cards that allow them to receive expedited passage at NEXUS-dedicated lanes at the land borders (both into the U.S. and Canada), NEXUS kiosks at airports when entering Canada, at Global Entry kiosks when entering the U.S. (both in the U.S. and at preclearance locations) and by calling a marine telephone reporting center in the marine environment to report their arrival into the U.S. or Canada.  NEXUS members who are U.S. citizens, U.S. Lawful Permanent Residents, or Canadian citizens will also receive the benefits of TSA Pre-Check.

Apply for a NEXUS card at GOES or visit the Trusted Traveler Programs section of the CBP website to find out what program best fits your cross-border travel needs.

Carolyn Powell, Business Development Manager

AMDOR Opens Doors to Buffalo Niagara

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After a company expands to Buffalo Niagara we like to visit and see how their operations are progressing . Recently we stopped by AMDOR, a division of Whiting Group, which is a Canadian headquartered manufacturer. Whiting Group selected Buffalo Niagara for their AMDOR location.  After renovating its facility, AMDOR is now fully operational and has been running seamlessly in its first six weeks.

Here is a behind the scenes look at AMDOR’s expansion and the work that went into setting up shop in Buffalo Niagara:

Headquartered in Burlington, Ontario, Whiting Group is an advanced manufacturer with multiple divisions and facilities including a location in Lancaster, NY. The company needed to expand its AMDOR division, which manufacturers roll up doors for fire apparatus, ambulances and other specialty vehicle applications. AMDOR considered expanding at its existing facility in Burlington, or establishing their first U.S. site in Buffalo Niagara, Wisconsin or Florida.

AMDOR weighed several critical priorities in their relocation decision, including:

  • Cost effective location, including infrastructure, workforce and facility
  • Existing building or build-to-suite options that could meet budget and timeline expectations
  • Available and talented workforce
  • Close proximity to Canadian headquarters

Buffalo Niagara Enterprise (BNE) helped AMDOR complete a real estate search for their new facility and provided employee wage data, worker availability and potential benefits costs based on the specific job positions and descriptions. Through the assistance of BNE and other regional agencies, the company gained a better understanding of Buffalo Niagara’s incentive process and completed various incentive applications, meeting required deadlines. AMDOR applied for and received benefits from Lancaster Industrial Development Agency (Lancaster IDA), Empire State Development (ESD), New York Power Authority (NYPA), and New York State Energy Research and Development Authority (NYSERDA). To ensure the company had the needed utilities and supply, BNE connected AMDOR with New York State Electric and Gas Corporation and National Fuel.

AMDOR purchased a 21,000 sq. ft. existing facility on eight acres in Lancaster, NY and completed a 10,000 sq. ft. addition. AMDOR is on its way to hiring 17 people this year, with plans to have at least 28 full time employees by year five.

by Carolyn Powell, Business Development Manager

Buffalo Niagara Real Estate Primer for Canadians

Below are additional frequently asked questions from Canadian businesses considering the US real estate marketing when expanding into the US:

Q1: Can we reduce our ‘real estate costs’ by expanding into a less costly market, without jeopardizing our profits or business model?

A1: For many companies it is a resounding yes.

Average net asking sale price ($/sf) industrial real estate:

  • Toronto GTA (Greater Toronto Area) : $113.57 psf. *
  • Buffalo/ Erie County: $36.60 psf. ** = savings of approx.   68% per square foot.

Average land cost for fully serviced industrial land:

  • Toronto GTA: approximately $597,000/acre*
  • Buffalo/Erie County: approximately $45,000/acre = savings of approx. 92% per acre.

Q2: 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?

A2:  Yes! In the United States and specifically in the Buffalo Niagara region companies of all different sizes can apply and potentially 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.

by Carolyn Powell, Business Development Manager

Benefits of a Foreign Trade Zone

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Do you import raw materials and goods from overseas?  Do you buy these goods in bulk and then resell them?  Do you add value to the imported components or raw material before they are sold again?  If you answered yes to any of the above, then a Foreign Trade Zone (FTZ) might save your company money and give it a competitive advantage.

The purpose of an FTZ is to stimulate international trade and create jobs and investment in the United States rather than abroad.  In the U.S., an FTZ is a defined geographic space that is next to or within a short commuting distance from an official U.S. port of entry.  U.S. Customs and Border Protection supervise the Zones, but do not run them.  The space is secured and operated as a public good under a license agreement with the U.S. federal government.  In foreign countries, FTZs are typically referred to as Free Trade Zones.  Both U.S. and foreign goods can be moved into a Zone for storage, exhibition, assembly, manufacturing and/or processing.

There are multiple benefits to using an FTZ, but each company must research which specific benefits would apply on a case-by-case basis.  In doing so, they must consider: 1) what is being imported; 2) the volume and frequency of the imports; 3) will the imported goods be changed into something else; 4) whether the final good will be exported or enter U.S. customs territory; 5) what is the normal duty rate, if any, of the imported good, etc.  Generally speaking, an FTZ will provide the most savings to a company that imports a high volume of goods, the goods are not typically duty-free, and many of the goods will ultimately be exported out of the U.S. to the end user. Continue reading

Growing by Takeoffs and Landings

As both an economic development professional and lifelong Buffalonian, watching the companies that I help establish a business in our region grow and succeed is incredibly exciting and rewarding. Each company that we assist is unique; some begin with a large scale operation while other companies start small and grow their business over time.

Headquartered in Kansas, Executive AirShare is fractional ownership aircraft company that began with regional hubs in the central U.S.  In 2009, they decided to establish a northeast location to expand their business and reach new markets.  A successful location needed to meet four major criteria:

  • Appropriate space for both corporate aviation services and back office operations
  • A potential customer base
  • Available workforce, including pilots
  • Available incentives to assist with first year expenses and startup costs

BNE assisted Executive AirShare with the coordination of potential incentives and helped facilitate discussions for runway services and leasing hanger space.  In 2010, the company leased 26,000 square feet of hanger and office space at 485 Cayuga Rd, Cheektowaga, NY.  BNE was then able to assist them with their marketing efforts for a grand opening event and the launch of their first northeast location.

Since October of 2010 Executive AirShare has refurbished an 8,300 square-foot private aviation terminal and 53,000 square-feet of hangar space, doubling the size of its operations at Buffalo in less than three years.  Much of the added hangar space is being used to support demand for jet aircraft management services for a growing list of Western New York-based companies. The Buffalo based aircraft now totals seven in the fractional and managed fleet, with one or two additional aircraft that rotate into Buffalo from central U.S. bases.  This facility operates with 17 full-time employees based in Buffalo and supported by additional flight crew from other locations as needed.

by Carolyn Powell, Business Development Manager