By Michael Canfield, originally published in Buffalo Law Journal/Buffalo Business First on Aug 7, 2017, 9:28am EDT.
Commercial real estate in Buffalo is a hot commodity and it shows no signs of slowing down.
That’s good news for Phillips Lytle LLP, which has 39 attorneys who focus on real estate matters. The Buffalo law firm is in the top spot on The List in this issue, which ranks area law firms by the number of attorneys specializing in commercial real estate.
Second on the list is Lippes Mathias Wexler Friedman LLP with 12 real estate attorneys. Several other firms that are ranked dedicate a large part of their practice to real estate including Wolfgang & Weinmann LLP, which has four attorneys working on real estate.
According to Adam Walters, a partner at Phillips Lytle, commercial real estate in Buffalo continues to take off.
“We see a lot of activity,” he said. “There have been talks that the development growth in Buffalo can’t sustain itself and it’s going to peter out soon, but we’re just seeing no signs that that’s the case.”
Out-of-town developers continue to show interest in Western new York. “They see tremendous opportunity,” Walters said, pointing to Douglas Jemal and Harry Stinson as examples. The usual areas, such as the medical campus, the downtown core, Canalside and the Cobblestone District continue to see growth. However, it’s extending to other parts of the city, he said.
“Hertel is really surprisingly solid,” he said. “If you walk up Hertel you see very few vacancies and a lot of new projects coming online. Unlike Elmwood, Hertel tends to welcome new development and it’s starting to make a difference.”
If development continues on Hertel Avenue, Walters said housing prices in the area will start to look like housing prices in the Elmwood Village. But while development and housing prices may seem high, it’s really just a case of Buffalo catching up with the rest of the country. Industry experts say the cost of real estate here is lower than elsewhere around the country.
“Values are starting to come up, and you’re seeing with new development … the sales and rental numbers are all starting to come up,” he said. “Look at the new restaurants around. They’re all starting to charge a little bit more than what we would consider the Buffalo normal. The market’s at a point where it’s kind of resetting, and it’s going to be interesting to see where it comes out. I think we’re definitely going to see continued progression.”
Another area seeing growth is the Niagara Street corridor, which runs from the Scajaquada Expressway to the Peace Bridge. “It’s been crazy for the last two years,” Walters said. “The number of projects coming online is just unbelievable. … It’s going to pay dividends for that neighborhood.”
Larkinville continues to see growth, he said, adding that development there really hasn’t spilled far beyond its borders. But that’s starting to happen now.
“We’re starting to see more interest in the neighborhood at large,” he said.
In the past, there would be development in one or two areas of Buffalo, according to Walters. Now there’s a range of areas and neighborhoods in growth mode.
“It’s much more like what Pittsburgh has going on,” he said. “Pittsburgh has 10 or 15 great neighborhoods. We’re starting to see that develop here.”
When he hears people say there is nothing left to develop in Buffalo, it’s “pure nonsense,” he said. “There are plenty of emerging neighborhoods out there, with plenty of bargains to be had.”
The East Side is seeing redevelopment, as well. And Walters said the Cold Springs neighborhood is the next hot spot.
“You’re starting to see signs of development, even on Jefferson Avenue, where it’s been forever since there’s been commercial development on Jefferson Avenue,” he said.
And with all of the speculation about the Central Terminal, development is spilling out onto Fillmore Avenue, Walters said, especially in the Broadway-Fillmore area.
The restoration of Shea’s Seneca Theater could lead to more development of the Seneca Street-South Buffalo corridor.
“That area has been rough for a while; it’s kind of been a back-end neighborhood,” he said. “This project could be just the catalyst it needs to see other projects come along.”
He pointed to the Northland Corridor Project on the East Side as an emerging area that includes the New York State Workforce Training Center.
“That’s going to be a huge boost for the East Side,” he said.
Emerging neighborhoods provide opportunities for smaller developers to come in. Walters said the building stock doesn’t need as much work as One Seneca Tower and other large projects.
He sees development as a key to revitalization.
“It’s the catalyst for bringing back a neighborhood and economically integrating a neighborhood and bringing services to a neighborhood that has been blighted and ignored for 50 years,” he said.