WNY real estate markets strong, CBRE says in annual MarketView reports

Despite the emptying out of the tallest privately owned building in the state north of New York City, Western New Yorks office, industrial and retail markets are strong, according to new statistics released Thursday evening by the Buffalo office of real estate brokerage CBRE.

CBREs annual MarketView reports found the volume of open space in the region fell in two of the three categories, as strong demand for quality office and industrial space driven by an improved economy absorbed a lot of available space.

At the same time, the brokerage reported, a lack of new construction to replenish the inventory of manufacturing space means the industrial base isnt growing. And some vacant buildings were redeveloped for entirely new uses, taking them off the market.

Western New Yorks economic base and overall demographic trends continue to position it as a conservative region for real estate investment, development and lending, CBRE wrote.

Theres more empty office space in the region compared with a year ago, due to the downsizing of HSBC Bank USAs presence in downtown Buffalo and law firm Phillips Lytle LLPs move to One Canalside. Those two shifts resulted in more than 700,000 square feet of space being dumped on the market, as the former One HSBC Center now One Seneca Tower went from 95 percent full to 95 percent empty in a matter of weeks. As a result, the office vacancy rate jumped from 10.37 percent to 13.71 percent. The national vacancy rate was 15.1 percent.

That had been expected for more than a year and hasnt affected other market activity, said Shana B. Stegner, director of office sales and leasing for CBRE. Office leasing in other parts of the region tightened, taking up some of the new slack, while new construction boomed.

The activity is there. The momentum is there, Stegner said. When you look outside and see everything thats happening, its not stopping anybody from following through with their plans.

The vacancy rates for office, industrial and retail space in the region remained below national averages.

Despite this challenge, if the momentum continues through 2014, the Buffalo office market holds promise of recovery and continued future investment, CBRE said in the report.

Meanwhile, sales of existing apartment buildings rose by almost 40 percent compared with the previous three years average, while the total value of those sales rose by 27 percent. And more buildings are coming online, thanks to a mixture of new construction in the suburbs and adaptive reuse projects in the city.

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WNY real estate markets strong, CBRE says in annual MarketView reports