What Development Projects Work in Buffalo Right Now?

Real estate development in Buffalo has always been a powerful driver, delivering construction jobs, enhancing quality of life, and encouraging growth of the urban core and surrounding suburbs. However, current market conditions have slowed the pipeline of development projects locally and nationally.  The biggest factor has been persistently high interest rates, increasingly cautious lenders, higher cost of materials, and labor shortages. As a result, development teams are adapting by diversifying their development pipeline and revisiting all aspects of their current projects to ensure success in a challenging market.

Current Conditions

The situation is not unique to Buffalo. Cities like  Detroit, Baltimore and many more are experiencing it too, due to increased borrowing costs and what Buffalo Business First describes as cautious lenders. Major metropolitan areas are also experiencing plague projects. Developers are scrapping projects before they begin or leaving them unfinished. Some developers are halting substantial development efforts altogether until interest rates lower and investors are more tuned in to financing ground-up projects again.

However, despite unfavorable conditions, Buffalo development is holding steady. Why? Buffalo’s typically conservative mindset has a lot to do with it. Our steps are smaller and so our risk is less, and our pipelines and timelines longer. This creates a very different ebb and flow of development that isn’t marked so much by dramatic peaks and troughs. This reality helps Buffalo avoid some of the economic barriers developers in other cities are dealing with; or at least on that scale.

The basics of sound development practices remain, even in tough economic times. For a development project to succeed, it has to hit the real estate market at an ideal time, make sense in terms of location, and must meet a clear need in the community. Recent development projects that have proved successful in Buffalo are identified in the areas of healthcare, education, multifamily housing, mixed-use, and cultural and sports centers.

Healthcare Facilities: Ambulatory medical facilities are in demand due to change in the way healthcare is delivered to the population. These build-to-suit projects typically attract reliable tenants along with additional development around the area, therefore making them attractive projects to developers. For instance, Ciminelli Real Estate Corporation recently completed work on both 716 Health and Roswell Park Scott Bieler Amherst Center, two state-of-the-art medical centers that significantly impact the level of care available to residents of Western New York.

Multifamily Properties: According to Buffalo Business First, Buffalo’s housing supply is limited, therefore creating a demand for residential development. Many cities, including Buffalo, are experiencing double-digit gains in home prices, so renting continues to be an excellent option. Currently, Ciminelli is leasing several hundred residential units within the City of Buffalo, developing for sale housing at The West End project, and offering condominium sales at their Bethune Lofts. The development team is also taking the initiative to explore the possible conversion of unused commercial offices into apartments which will give purpose to empty spaces.

Mixed-Use Buildings: Mixed-Use buildings address Buffalo’s housing concerns and also make space for both commercial and retail use. Due to their ability to connect neighborhoods, increase public transportation use, and foster local economic growth, mixed-use properties prove to be successful developments even when market conditions are tough.

Cultural and Sports Centers: Buffalo’s cold climate helps feed a need for indoor cultural and sports facilities including arenas, music venues, and cultural destinations where people can host a variety of events. By attracting tourism and talent to the region, these projects boost the local economy, produce long-term revenue, and support a connection with the community.

Commercial Properties: With a persistence in hybrid job opportunities, there is a reduced need for office space. However, many Buffalonians still report to the office at least 4 days during the week, reducing the impact of the hybrid schedule. Also, many of our successful commercial buildings include retail, multifamily rental, and hospitality spaces that diversify the tenant base and help ensure returns for developers.

Education: Developing educational spaces typically encourages growth and strengthens communities. Schools can also inspire community engagement through volunteer opportunities, sports, and clubs vastly improving quality of life.

 Buffalo’s Immunity

Unlike major metropolitan cities, Buffalo’s status as a third-tier city helps developers withstand and often thrive in a variety of economic climates. Buffalo does not experience major business loss or unemployment in economic slowdown, allowing developers to enjoy some flexibility to adapt their development projects, ultimately creating projects that really work for the community and are successful. Developers like Ciminelli Real Estate Corporation continue to diversify the industries they are developing in while utilizing a longer, more detail-oriented development planning process. Currently, Ciminelli’s team is developing in four different industry sectors including healthcare, residential, mixed-use, and commercial, which helps the company remain strong in a fluctuating real estate market and economy. A conservative approach to development, finance, and commerce coupled with financing and labor relationships that can only be found in smaller cities help bring a community together and contribute to successful projects even in challenging times.

Overall, it will always make sense to spend considerable time constructing a well-thought-out development plan, diversifying the development portfolio of projects, and considering thoughtfully what the Buffalo community needs when deciding what development project makes sense in Buffalo.

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