Gateway cities like New York continue to be major job centers, which fuels increased development across asset classes like multifamily, office and retail. But beyond the major urban centers, smaller cities have grown at an equal pace.
Following the Hudson River north from Manhattan — even taking a left turn at the Erie Canal — investors and developers are finding new opportunities in growing upstate urban hubs like Rochester, Albany and now Buffalo.
“We have never seen inventory for purpose-built, market-rate, Class-A housing at these levels,” Buffalo-based Hunt Real Estate Capital Director Zach Casale said. “There has been a huge void in the market, and now those 1970s, suburban, garden-style apartments are being replaced with the downtown redevelopment you typically see in large cities. We are 10 years behind the cycle in places like Brooklyn and Seattle, but we are starting to catch up.”
Creating A World-Class Research And Innovation Hub -As a producer of loan originations across upstate New York, Casale has seen cities like Rochester undergo a renaissance in commercial real estate development, caused by the prominence of its research universities like the University of Rochester and the Rochester Institute of Technology.
Upstate New York saw a brain drain when the decline of Rust Belt cities in the 1980s sent the young and educated to New York City and points south. Declining manufacturing jobs from former heavyweights like Eastman Kodak and Bausch & Lomb have since played a role in shifting the employee demographic from factory jobs to laboratory ones, backed by the presence of a research university.
While the University of Rochester has a student population of over 11,000, it employs 23,000 faculty and staff, making it the largest employer in the Greater Rochester area.
It is this worker population that drives the continued growth of the city, by encouraging developers to build housing, office space and retail to accommodate their needs, Casale said. For students, investment in building a world-class research institution can encourage them to stay for several years, even a decade, to complete advanced degrees and hold jobs in the area.
In September, Kodak Center lit up the night with its new marquee and digital display board to a crowd of more than 1,000 people. The event garnered attention on social media, and was a big step in EBP’s master plan to transform the east end of the park. Developing the open space on the south side of West Ridge Rd. is the next step in that process.
“When people plan a night out, they often focus on places where they can enjoy their whole night without having to drive from place to place,” said Dolores Kruchten, president, corporate real estate and Eastman Park division and vice president at Eastman Kodak Co. “With our new marquee and new acts coming to Kodak Center Theater, we want to provide that ‘night out’ option where people can enjoy dinner or visit a unique shop before taking a short walk to see amazing entertainment right across the street.”
While any business that locates in this space can benefit from events at Kodak Center, it will not have to rely on the theater for business. The location has the benefit of being in a high-traffic area where nearly 40,000 vehicles pass every day and a large workforce at EBP within walking distance.
EBP hopes to select a project by February 2018. Restaurant concepts envisioned include: Fast-casual, quick-service, fast-fine, or full-service sit-down eateries with outdoor seating as well as possible cafe? and bar service. If supported by market demand, EBP is also encouraging upper-story commercial uses and potentially office space.