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Buffalo Next

Business recruiters can pitch manufacturers on the appeal of the Buffalo Niagara region’s workforce, quality of life and universities.

But it is hard to seal the deal if there is nowhere for a company to get up and running quickly.

That’s an issue recruiters frequently encounter, with vacancy rates so low for industrial space here.

Tom Kucharski, president and CEO of Invest Buffalo Niagara, said he and his team several years ago were frustrated watching projects they felt the region had clinched instead go to places such as Washington state or Texas. 

“We didn’t have a place that we could put them, either in an existing or an adaptive reuse facility, or a site that was either shovel ready or part of a (business) park,” Kucharski told a recent meeting of NAIOP Upstate New York.

That’s because much of the suitable existing industrial space had already been filled. And developers were building very little new space.

Vacancy rate at an all-time low

According to CBRE-Buffalo, warehouse and industrial space in the region last year had a vacancy rate of just 1.5%, an all-time low. It was also the 18th straight year the region’s rate was lower than the national average. Developers are often reluctant to put up a new building on “spec” – meaning a tenant isn’t already committed to it – to ensure they get a return on their investment.

The risk to business recruiters is, if the Buffalo Niagara region doesn’t have a suitable site to market, that project will move on to another part of the country that does.

And it is not just a matter of existing buildings. Even some land promoted as “shovel-ready” might draw a different reaction from consultants, who contend those sites might have been considered shovel ready five or 10 years ago, but need investments to maintain that status today, Kucharski said.

Invest Buffalo Niagara and its partners commissioned a study by Newmark Knight Frank, a brokerage and consulting firm, to take stock of the sites – buildings and undeveloped land alike – that the eight-county region had to offer. The purpose was to analyze how competitive the region was for investments compared to some other regions.







Dona Street warehouse rendering

Uniland plans to build a second warehouse in Lackawanna on “spec,” without a tenant committed to it in advance. 




The report said the region needs to “recommit to improve site readiness and speed of project execution in order to effectively prepare for state-of-the-art industrial property development. Land development planning, policies and procedures should be simplified and streamlined to facilitate investment attraction and project success.”

It is not as though the region has failed to attract new investment in manufacturing lately. Far from it. General Motors is pouring $154 million into its Lockport components plant. Moog Inc. is investing $25 million in its local operations. Sumitomo Rubber USA has kicked off a $129 million investment in its Tonawanda tire plant. And an emerging manufacturer, Viridi Parente, has raised $100 million from investors to advance its green-technology plans in Buffalo.

Those investments capitalize on manufacturers that already have a presence in the region. Business recruiters are also eager to attract big-ticket projects by newcomers, like the $17 billion semiconductor manufacturing plant that Samsung chose to build in Texas. Samsung said the Science Technology Advanced Manufacturing Park, or STAMP, in Genesee County, was a contender for that project. (Another company, Plug Power, is developing a plant at STAMP as the park’s inaugural tenant.)

Meanwhile, Amazon is planning to build a $300 million mega-warehouse in the Town of Niagara – a project that was rebuffed on Grand Island. The warehouse will be built on undeveloped land near the Niagara Falls International Airport.

Some encouraging developments

Kucharski said it was encouraging to to see Uniland building a $17 million warehouse in Lackawanna on “spec.” The developer is planning a companion “spec” warehouse, valued at $20 million, in the same city. 

Kulback’s Construction, Sonwil Distribution and Pinto Construction also have construction projects in the works. It is a reflection of changing market dynamics: developers feel more confident they will find tenants for the new properties once they are built.

Kucharski said it is essential for the region to have more facilities ready for companies to move into, or land served by utilities that companies can readily build on.

Newmark in its report made a similar point, saying “major site plan review” for any development over 5,000 square feet could be amended to apply only to larger projects.

“Companies expect readiness, speed and certainty,” the report said.

Want to know more? Three stories to catch you up:

• CRBE study finds tight industrial vacancy rate, improving office and retail sectors

• Uniland plans second Lackawanna warehouse in new Renaissance Commerce Park 

• Amazon mega-project gets better reception in Niagara despite concerns about traffic

Welcome to Buffalo Next. This newsletter from The Buffalo News will bring you the latest coverage on the changing Buffalo Niagara economy – from real estate to health care to startups. Read more at BuffaloNext.com.

ICYMI

Five reads from Buffalo Next:

1. Building a new Buffalo Bills stadium is expected to create 10,000 local jobs for construction workers, but some contractors are feeling left out due to the stadium pact including plans for a project labor agreement that requires contractors to pay prevailing wages.

2. The remarkable rebirth of Bethlehem Steel’s home: With a smattering of new developments, and more on the way, the shuttered Bethlehem Steel complex is becoming a sign of revival.

3. For WNY workers, experience really pays: Experienced workers in Western New York earn more than twice as much, on average, as entry-level employees.

4. M&T Bank commits to $300,000 to EforAll entrepreneurship program in Buffalo: EforAll, which opened a Buffalo office in May 2021, is a national nonprofit organization that helps people in underrepresented communities start and grow their own businesses. 

5. State budget includes capital funding for new UB engineering building: The budget includes $68 million for the University at Buffalo to construct a new building for its engineering school.

THE LATEST

Catch up on news tied to Buffalo Niagara’s economy:

News industry veteran Mike Connelly, 65, who has been the editor of The Buffalo News for nine and a half years, is retiring next month. Connelly led the newsroom through numerous transitions in a rapidly changing business, including building a digital-first publishing schedule and adapting to the challenges of covering Covid-19.

LCB Capital is hoping to bring a new five-story building with 44 market-rate apartments to Delaware Avenue in Allentown. The Kenmore-headquartered real estate company already owns eight residential and commercial properties in Buffalo and Kenmore.

For the first time in over a decade, mortgage rates have reached 5% – up from 3.1% in December – driving up the cost of buying a home, which could lead to a slowdown in sales and more modest increases in home prices, according to M&T Bank’s chief financial officer.

The new state budget sets aside an extra $20 million for theaters, performing arts centers and museums outside New York City, as well as an additional $4 million reserved for upstate zoos, botanical gardens and aquariums, coming from the State Environmental Protection Fund.

The Buffalo Niagara region’s unemployment rate fell to 4.3% last month – the lowest for any March since at least 1990, the state Labor Department reported Tuesday. The report also showed just how strong the demand is for workers among local employers, as the local labor force grew by 5,200 people during March. 

Kaleida Health’s HighPointe on Michigan nursing home in Buffalo has been hit with a $40,000 fine by the state Health Department – tied for the 11th-largest fine the Health Department has issued to any nursing home over the past two decades – due to lapses in Covid-19 testing frequency and missed temperature screenings of some employees.

Some companies, such as Independent Health and Freed Maxick, are embracing “hoteling,” where remote employees reserve a workstation for the days when they come into the office to do their jobs, rather than having a dedicated desk of their own.

Hiring is heating up, but the region has a lot of catching up to do: Businesses are heading into a potential slowdown short-staffed, rather than fully staffed. That certainly would reduce the pressure to cut staff if things take a turn for the worse.

The Buffalo Next team gives you the big picture on the region’s economic revitalization. Email tips to [email protected] or reach Deputy Business Editor David Robinson at 716-849-4435.

Email tips to [email protected].

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