When a nonprofit housing agency recently built a low-income apartment complex on Jefferson Avenue, the 30 apartments were rented – sight unseen – before the building was completed.
“They were rented up before I could show an apartment, before there was a certificate of occupancy,” said Michael Riegel, president of Belmont Shelter, the city’s premier low-income housing assistance agency.
That was the first time in his 30 years in the nonprofit housing business that he’s experienced such a demand, Riegel said.
“The pressure is coming from both ends,” said Bob Richardson, president of the Upstate New York chapter of the Commercial Real Estate Association. ”There is pressure from people who can no longer afford market rent. There is pressure coming from people who qualify for public housing but don’t want to live there.”
Giving tax breaks to encourage adaptive-reuse development projects that include apartments and hotels has been controversial among government critics and taxpayer advocates, but a new report by the county’s economic development agency claims it’s paying off.
The report by the Erie County Industrial Development Agency, conducted by Redevelopment Resources and issued Thursday, found that the agency’s policy has encouraged more than 53 redevelopment projects in and around Buffalo since it went into effect in 2008.
Those projects, totaling $659 million in value, include Bethune Lofts, Sinclair, Foundry Lofts, 500 Seneca and Phoenix Brewery Apartments.
Specifically, the report found the incentives led to:
4 million square feet of vacant space converted to new use
1,141 new apartments
338 new hotel rooms
A tripling of assessed value of the properties, from $60.8 million to over $200 million, which generates $4.7 million in added property tax revenues, mostly for the City of Buffalo
In the past four years, Buffalo and Niagara Falls have seen a huge increase in hotel development. Commercial Real Estate Developers have taken the lead in updating and expanding the inventory of hotel products in Western New York.
In Buffalo, inventory has grown to 10,500 rooms with new hotel construction, with more rooms on the way.
There are approximately 2,900 hotel rooms in Niagara Falls, New York and 20,000 rooms in Niagara Falls, Ontario. Free Wi-Fi is being installed in downtown Niagara Falls, N.Y., to meet the demand of the large number of tourists who are filling those hotels.
Those were the messages delivered on May 16, at The Buffalo Club, during The Commercial Real Estate Development Association’s (NAIOP) forum, “Trends in Regional Tourism.”
Bob Richardson, president of the NAIOP Upstate New York chapter, reminded the audience that one of the three focus industries in the Buffalo-Niagara regional economic development plan is tourism, “the renewed focus on the industry is just beginning and there are many opportunities ahead of us. Many of you have already made substantial investments in the tourism/hospitality market in Western New York and rely on the continued focus to justify those commitments.”
There were 7.3 million person trips to Niagara Falls in 2016, up 10.1 percent from 2014 according to one of the panelists, John Percy, president & CEO, Destination Niagara USA, generating $667 million in spending, an 18.8 percent over 2014.
Percy said several new hotel projects are either under construction or in the planning stages, taking advantage of renewed interest in Niagara Falls. “The Niagara Falls USA brand is an iconic and timeless destination.”
Patrick Kaler, president, Visit Buffalo Niagara, talked at length about the need for a new convention center in downtown Buffalo. “This is a big opportunity for to continue the momentum,” he said. “Meeting planners are excited about what they are seeing in Buffalo: the waterfront, new hotels; it’s a great time to be in Buffalo. This is the missing piece for us.”
Tourism is a $1.7 billion industry in Buffalo and Erie Count, with eight million visitors in 2016.
“We’re getting travel writers from around the world who are hearing a buzz about Buffalo. Many are coming in the winter, writing about their authentic experiences about Buffalo,” he said.
Noting Buffalo-Niagara has become a year-round destination, Patrick Whalen, director of the Niagara Global Tourism Institute, said he is focused on researching winter visitors to Niagara Falls. “We don’t know enough about them,” said.
Whalen is also a member of the Council of Great Lakes Region, which studies economic and tourism trends in the U.S. and Canada. “We need more regional collaboration, to include Toronto, Montreal, Detroit and Chicago. That’s hard to do. Wouldn’t we be better off if we get more people to Niagara Falls, USA and Niagara Falls, Canada?
“What I’ve been preaching at the council is to collaborate at the highest levels. Globally, tourism numbers are staggering, they are astronomical. Ours in the Great Lakes Region are nowhere near (those numbers); globally, we have a lot of room to grow,” Whalen said.
“There’s no question, that type of collaboration would mean more opportunity our industry,” NAIOP’s Richardson said. “Our members would likely be involved in even more hotel and tourism-related development projects.”
NAIOP, the Commercial Real Estate Development Association, has selected Kelsey Padgham, a graduate student in the Master of Professional Studies in Real Estate program at Cornell University and a member of NAIOP Upstate New York, as a recipient of the 2017 Diversity Commercial Real Estate (CRE) Scholarship.
“NAIOP recognizes the value of supporting the next generation of leadership in commercial real estate and increasing the diversity of backgrounds and viewpoints in our industry,” said Thomas J. Bisacquino, NAIOP president and CEO. “We commend this high-achieving graduate student for her enthusiasm and commitment to improving the built environment and enhancing the communities in which we live, work and play.”
Padgham is expected to receive a dual degree in Master of Professional Studies in Real Estate and Master of Regional Planning from Cornell University in spring 2018. Her experience includes interning for U3 Advisors, a consulting practice that provides real estate and economic development solutions to community institutions. She also serves as the incoming president of Cornell Real Estate Women.
The NAIOP Diversity CRE Scholarship benefits graduate and undergraduate students pursuing careers in commercial real estate. NAIOP has awarded four $5,000 graduate student scholarships as well as two $2,500 undergraduate student scholarships to individuals from demographics that are traditionally under-represented in commercial real estate and whose universities are part of the NAIOP University Membership program. In addition to the scholarship, each award recipient will have the opportunity to make new professional connections and sharpen his or her commercial real estate acumen with complimentary registration for NAIOP’s CRE.Converge 2017, October 10-12, in Chicago.
There’s new energy and optimism for economic growth in Rochester and the Finger Lakes region, with commercial real estate developers playing a key role in the region’s resurgence. That message was delivered during a developer’s roundtable on Apr. 27, in Pittsford, sponsored by The Commercial Real Estate Development Association (NAIOP), Upstate New York Chapter.
Bob Richardson, association chapter president, served as moderator. “There are certainly positive signs in the Rochester. Our members have been instrumental in revitalizing the downtown residential market and creating the housing options that the millennial generation is looking for. You can see the success they are having and it’s being reflected in the latest population data,” said Richardson.
Vincent Esposito, regional director, Empire State Development, Finger Lakes Regional Economic Development Council (FLREDC), said downtown Rochester is coming back. “No doubt, transformation has started. Buildings are filling up with commercial and residential tenants. It’s the type of life you want to see in your center city if you want your regional economy to grow. This is being led by private investment and the state is doing its part to help.”
Finger Lakes Forward, led by FLREDC, is the five-year strategic plan to accelerate and transform the region to an innovation economy. Its three pillars call for job growth, increasing regional wealth and driving private investment, with a primary goal of poverty reduction, particularly in urban areas.
Esposito said there is an unacceptable level of poverty in the Rochester area. To address this critical need, FLREDC has partnered with the Rochester Monroe Anti-Poverty Initiative, helping people to move out of poverty by overcoming myriad barriers, which include child care, transportation and skills training. “We’re encouraging employers to hire people out of poverty.” He said there needs to be a different approach to addressing poverty.
Companies are also partnering to grow jobs. Esposito pointed to Eastman Business Park, which once was home to Kodak, and now consists of 70 different companies employing 6,600.
“It’s a story of resilience, how the loss of Kodak jobs has resulted in companies that emerged from technologies developed by Kodak. It’s an industrial city unlike any other in the world.
“We have momentum and we want to keep the momentum going forward,” Esposito said.
The Commercial Real Estate Development Association (NAIOP), Upstate New York Chapter, will present a developer’s roundtable, Filling the Gap in Your Capital Stack, Thursday, Apr. 27,
7:30 a.m. – 9 a.m., at Locust Hill Country Club, 2000 Jefferson Rd., Pittsford.
The capital stack is comprised of the different layers of financing sources that fund the purchase and improvement of a real estate project.
Panel participants will be Vincent Esposito, regional director, Empire State Development, Finger Lakes Regional office/executive director, Finger Lakes Regional Economic Development Council, and Joseph Rizzo, regional manager, Economic Development, Rochester Gas & Electric. Esposito and Rizzo will also offer insights on Rochester’s current economic situation and future trends.
The event will be moderated by Bob Richardson, association chapter president.
Toby Burke (left), senior director of State and Local Affairs for the Commercial Real Estate Development Association, Michael Riegel(center), president of Belmont Housing Resources for WNY, Inc., and Bob Richardson (right), association chapter president, take part in panel discussion.
There is a strong push in the city of Buffalo to pass an inclusionary zoning proposal to increase the availability of affordable housing. Developers may be required to include 30 percent affordable housing units in new projects with more than 10 apartments.
During a Feb. 28, public hearing many members of the Buffalo Common Council voiced their support for inclusionary zoning.
“There is a strong desire among many members for inclusionary zoning,” said council president Darius Pridgen. “It is hard to make a decision until we have the numbers. I don’t want this to drag out for years. I don’t want Buffalo to look like downtown Chicago where people cannot live in the areas where they should be able to. At the end of the day, it’s the power of people, not contractors, not business people.”
The Commercial Real Estate Development Association, Upstate New York Chapter hosted a panel discussion, Affordable Housing Strategies – Best Practices and Hidden Issues, at the Hyatt Regency Buffalo on Mar. 28.
Featured speakers were Toby Burke, senior director of State and Local Affairs for the Commercial Real Estate Development Association, Michael Riegel, president of Belmont Housing Resources for WNY, Inc., Michael Clarke, executive director of Local Initiatives Support Corporation (LISC) in Buffalo, and Dr. Robert Silverman, professor and PhD program director in the Department of Urban and Regional Planning at the University at Buffalo.
Burke said the industry has dealt with inclusionary zoning in other cities. “We faced this issue in Seattle. We recognized the importance of affordable housing. We sat down with the mayor and established a dialogue. Through our negotiations, we accepted a certain element of inclusionary as a grand bargain that also included upzoning and density bonuses to make it economically viable. Such a grand bargin was possible in Seattle where both market rents and median income are substantially higher than in Buffalo. Local developers question whether any level of IZ is feasible in Buffalo.
“It’s important to recognize as Buffalo moves through this process, (you need to come up with) ways to make these projects economically viable.”
Are developers philosophically opposed to IZ?
“You need to develop a sustainable approach with inclusionary zoning as part of that discussion,” Burke said. “It’s a balancing act. Good quality of life around your commercial real estate project is good for everyone, including housing. We approach it as a comprehensive solution, taking the politics out of it and focusing on the substantive issues.”
Noting that rents are much higher in Seattle, Boston, Detroit and other major U.S. cities, there’s not a single strategy. “There are so many elements that go into this from a federal, state and local level, that it’s hard to find a one size fits all solution.”
Riegel, who’s Belmont Housing assists more than 15,000 households in Western New York every year, said housing affordability continues to be a problem. “More people are rent-burdened than they were five years ago. As rents have increased, affordability has come to the forefront.
Belmont acquires zombie houses in Buffalo, rehabs them and makes them available to first-time home buyers, but Riegel said it is very expensive. To address the cost issue, Belmont contracts with municipalities to use their HOME funds.
“If there were more tax credits available, we would do more of these projects. Absolutely. It’s a question of financing,” he said.”
The under employed
Clarke touched on another issue impacting housing affordability: “There are an awful lot of people who are underemployed. While there may be a reduction in the overall unemployment rate, there remains a challenge on the rent affordability side.”
People aren’t outright opposed to inclusionary zoning according to Clarke. They want to know: Who is going to pay for it? What’s the balancing point of using an inclusionary zoning process?
“Most people are looking at 10 or 15 percent over 15 to 20 years; no one is going out 99 years” Clarke said. “There is an opportunity to talk about how you do it and how you pay for it. That is what the city (of Buffalo) must wrestle with. The council can do what they want, but they don’t have the money to pay for it.”
Clarke said there are interested private sector companies, but they don’t want to hemorrhage red ink to complete housing projects. He said the best chance of succeeding is an opportunity neighborhood, not a neighborhood that has little chance of being revived.
“As the population ages and people retire and are on fixed incomes, they start to face affordable housing issues that they didn’t face before,” Silverman said. Younger people following them have affordability concerns tied to not only being able to afford housing before where it is located.
“In Buffalo, there is emphasis on development in the core of the city and there are several different segments of the population vying for housing in those areas.”
Silverman said In Buffalo, there is an uptick in development on the market rate side, but the income levels might not be able to support all those units. Developing affordable units might create a more sustainable real estate market and including density bonuses in development might help to create a more stable development in the long term, because developers will be able to add market rate and subsidized affordable units.
The other issue to keep in mind is Buffalo’s aging housing stock, Silverman said. “We’re losing affordable units without replacing them at the same rate we’re replacing market-rate units. As that housing stock ages, a lot of the older units fall into disrepair; they are ineligible for subsidies because they can’t pass inspection. There’s a lack of investment in affordable housing across the board.”
“The association will continue to monitor the proposed legislation and actively pursue a cooperative relationship with the city on the issue of housing,” said Bob Richardson, chapter president. “We’d like to find strategy that allows development to flourish while providing the right conditions to grow the affordable housing stock.”
BUFFALO, N.Y. (WKBW) – Create a bigger, better Buffalo but make it inclusive. That’s the goal for commercial real estate developers in Western New York.
The Commercial Real Estate Development Association hosted a panel at the Hyatt in Downtown Buffalo to discuss affordable housing strategies in the growing Queen City.
The Buffalo Common Council is proposing new legislation that would require 30 percent of all new apartments built in the city to have affordable housing units. The plans for inclusionary zoning have developers worried because the plans would come without funding from the city or the state. Local developers worry this will deter companies from creating new projects.
“Not much has happened here in the past 50 years. We need a fresh coat of paint,” says Bob Richardson, President of the Commercial Real Estate Development Association. Richardson says the city, the county and developers need to work together to create inclusionary zoning that would benefit both residents who need affordable housing and development companies.
Michael Riegel, President of Belmont Housing Resources of Western New York says the city needs more affordable housing. Nearly 20,000 families are on a waiting list for tenant based rental assistance. Riegel believes creating housing options for rent-burdened residents, while continuing to grow the region with new projects is essential in creating fair and new opportunities for jobs, learning and transportation in what he says is a severely segregated region.
The legislation by the Common Council is still in the works and panelists hope they can find a way to work together to approach new development together.
The Commercial Real Estate Development Association (NAIOP), has hired Fuerst Consulting Corporation, Buffalo, N.Y., to provide association management services, strategy, membership development, and sponsorship and event management.
The association is the leading organization for real estate developers, owners and related professionals. Members of the association receive exclusive industry networking and education, and advocacy on issues of importance to development and regional economic health. The association advances responsible, sustainable development that creates jobs and benefits the communities in which our members work and live.
“This chapter of the Commercial Real Estate Development industry is one of the most active and fastest growing chapters in the country,” said Robert Richardson, the association’s president. “We are excited to add a team of professionals to help us accelerate our growth and provide even more value to our members.”
“Working with NAIOP is a great fit for our team as we bring many years of experience and expertise in economic development, real estate and association management,” states Therese Hickok Fuerst, president, Fuerst Consulting Corp. “We look forward to illustrating how development benefits the community and brings vibrancy, economic health and opportunity for the residents of this region. We anticipate the membership will continue to grow and we can increase the exposure of the association throughout Upstate.”
About Fuerst Consulting Corporation
Fuerst Consulting Corporation proudly creates partnerships with clients providing a unique mixture of strategy, planning, and problem solving across various industries and disciplines. Founded in 2015 by Therese Hickok Fuerst, Fuerst Consulting Corporation is comprised of business consultants with a communication focus. To learn more about Fuerst Consulting Corporation and our growing list of clients visit www.fuerstcc.com
Bob Richardson, a real estate development investor and new president of the upstate trade group for developers. He spoke about the trends in Buffalo, the growth, and the need to sustain it, at the lobby of 250 Delaware, Buffalo, N.Y. on Thursday, Feb. 2, 2017. (John Hickey/Buffalo News)
Bob Richardson has seen a lot of changes in Buffalo since he first came to Western New York for M&T Bank Corp.’s management development program.
In particular, he’s seen explosive growth in commercial real estate development in recent years, the rise of new sources of investment capital for those projects and the economic resurgence that is driving activity in Buffalo.
But he knows that could still be tenuous, especially if the local population doesn’t grow. So now he wants to make sure those changes will stick and that the development industry he now represents will continue to play an active role in Buffalo’s future.
To do that, the new president of the Upstate New York chapter of NAIOP wants the commercial real estate development association to become much more active in studying the community and the marketplace, understanding what it needs to maintain momentum and advocating to achieve those goals. That will take some dexterity, as he must work within the interests of not only Buffalo developers, but those in Rochester, Syracuse and Albany, as well.
The California native, who went to college in Syracuse, spent 12 years at M&T, before broadening his experience by managing a national retail consulting firm based in Walmart’s hometown of Bentonville, Ark. He returned to upstate New York seven years ago as chief operating officer of a statewide organization that coordinates foreign investment in U.S. real estate projects, through the EB-5 visa program.
More recently, he teamed up a year ago with former Evans Bancorp Chief Financial Officer Gary Kajtoch to form New Buffalo Capital, an independent commercial real estate private equity and investment banking firm that launched last April. The firm has been raising money to invest in local projects and expects to announce its first stakes early this year – even as Richardson also takes on the volunteer role at NAIOP.
Buffalo News: What is your role at NAIOP?
Bob Richardson: Our organization is focused on representing the commercial real estate industry and advocating for the kinds of things that we think help communities grow and develop.
We’re also very involved in gathering and analyzing data and market conditions, market intelligence, really understanding the kinds of things that communities where we operate need to grow, flourish and attract businesses and residents. That data helps us understand how we serve our community.
You’ve been in business for a while. What do you see as some of the challenges and opportunities facing Western New York?
I and really our industry are very excited and optimistic about the things we see happening in Western New York. We feel like the momentum has shifted and turned in a positive direction, and frankly, our industry has been at the forefront of investing in the renaissance of Buffalo and Western New York. Having made those big investments, and really bet on Buffalo, we have a vested interest in seeing it continue and really advance to the point where Buffalo is competitive nationally and globally.
This is really the beginning of that long-term process. We’d like to play a role in having the community conversation about what kind of city we are and how we build the kinds of projects and residences, and the types of offices and attractions, that make us a city where people want to live and move to and compete globally.
How is Buffalo doing compared to other parts of upstate?
Buffalo is really outpacing the rest of upstate from a real estate perspective, and a growth-and-opportunity perspective. I think we have an opportunity here to create a model for other upstate cities in the upstate market in terms of what it takes to create a resurgence on a local level and have it last, have it transition beyond the point where it’s government induced, to the point where it’s led and funded by the private sector.
What role will NAIOP play?
One of the things that our industry has not had to do in the past is really gather detailed information about the market conditions and really study the market at the granular level, so we understand what is happening and does happen when certain development takes place.
We can take those lessons to other cities in upstate and help them organize the same kind of effort and achieve the same kind of results.
Why haven’t you done that in the past?
There wasn’t the growth; there wasn’t the activity on the real estate side. There were isolated projects here and there that were funded locally to meet a local need.
One of the big transitions that we have to make in our mindset is that, where five years ago, we weren’t a nationally competitive real estate market, we are now. We’ve consumed a lot of our local and regional statewide resources to get to this point where we are now.
Our industry has made a tremendous investment in this resurgence. But this pace can’t continue on local capital or the local population
We have to compete nationally to attract capital. We have to compete nationally to attract population, and we’re competing with other cities that have well-thought-out, cohesive plans for how to do that. I don’t think we do yet, so organizing that conversation and engaging all parts of our community to participate in that is really important.
What are the threats to maintaining momentum?
It’s all of those cities nationally who have their own plans. It’s competition for capital, for resources.
And I think one of the things that I’m really encouraged about is when you look at the success and the activity that’s happening now in Buffalo is that we are attracting the next generation. What that tells me is we have a lot to offer. We have the kinds of things that the research tells us they want. We have a place of character, uniqueness and vibrancy. We have a combination of urban, suburban and natural environments that really is appealing to this next generation.
But we have to get organized and really go pursue these things. We can’t be focused on catching up with the others, because they’re continuing to move forward. We have to skip ahead and play in a totally different paradigm
You’ve mentioned concern about growing the local population and the need for real in-migration. What do you mean?
I fear that if we don’t continue to attract people to relocate to Buffalo, a lot of the gains that we’ve had are temporary. A lot of the employment gains right now are coming from construction and things happening in the banking industry that are probably more temporary.
We have to get people to move here, people with skills that can immediately impact the things that are happening on the medical campus, the new and emerging high-tech industries. We can’t grow that talent fast enough here. We have to convince those people with that talent to move here. When they move here, they create jobs for others and needs in our industry, in real estate and needs in financial services.
This is a competition, a war for talent, and we have to play with purpose in trying to bring those people here.
Where do local economic development, tourism and community stand on this?
Honestly, I’m not sure that we’ve had the conversation yet. We haven’t really thought about how all of those parts of our economy contribute to those metrics.
Frankly, we’re doing too much comparison to the way things were five years ago, and then feeling good about the progress we’ve made. But the comparison we need to make from this day forward is to other cities, globally and nationally, where we’re competing.