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Vacancy rate rises for industrial space in area Nearly 600,000 square feet of industrial space was added to the local market in 2005

Developers have shown more confidence in the Buffalo Niagara market, adding industrial space in some cases before they have tenants to fill it.

That contributed to a higher vacancy rate for the region in 2005, according to an annual survey by CB Richard Ellis' Buffalo of fice.

The rate was 9.8 percent in 2005, up from 8.3 percent the year before. The region's rate was almost identical to the national average reported by CBRE, and below Rochester's rate of 11.8.

CBRE Buffalo representatives said they don't see a glut of marketable space locally, and that new space should help draw more tenants in the future.

The survey said nearly 600,000 square feet of industrial space was added to the market in 2005, about 60 percent of it so-called speculative development, or "spec" space, built without tenant commitments.

"This is such a traditional, conservative market that it probably took some people by surprise," said Tony Kurdziel, market analyst for CBRE Buffalo.

Among the spec projects are buildings in Benderson Development's Broadway Industrial Park in Cheektowaga and at 505 Duke Road, and Ciminelli Development's Airport Commerce Park, near the Buffalo Niagara International Airport.

Ciminelli has seen strong demand for its industrial space, which led the company to add a building at 475 Cayuga Road, said Paul Ciminelli, president and chief executive officer of Ciminelli Development.

"There is very heavy interest in that location," Ciminelli said in a statement.

Benderson Development officials could not be reached to comment on their spec projects.

Kurdziel said he sees the new development as an encouraging sign, creating modern space to draw tenants to established business corridors.

Stephen Blake, vice president of CB Richard Ellis Buffalo, said the developers also had good timing, putting up their projects just before a spike in costs for construction materials.

The survey covered more than 1,000 buildings, focusing on those with at least 10,000 square feet and built in 1950 or later. Pre-1950 buildings were included if they had been upgraded to meet modern business standards, such as Outokumpu American Brass.

Other surveys of the market include more buildings, and reflect a higher rate because they count large, older properties. Blake said CBRE Buffalo's survey tries to concentrate on space that competes for industrial tenants.

Older, obsolete space might be ready to be overhauled for a new use, as occurred with the Larkin at Exchange building, he said.

CBRE says the region's "East" submarket accounts for more than one third of the industrial space counted in the survey. The submarket covers Cheektowaga, Depew, East Amherst, Lancaster, West Seneca and Williamsville.

That market has grown with the addition of space for Upstate Farms and Watkins Motor Lines. Visteon Climate Control Systems has announced it is ending production at its 254,000-square-foot plant in West Seneca. CBRE Buffalo counted it as vacant because the space is being marketed for lease.

Some older, existing space in the region is being reused. Delaco Steel, a new arrival, is moving into the former Terminal of Commerce complex in the Town of Tonawanda, filling 137,500 square feet of vacant space.

Kurdziel and Blake said they expect to see developers add less new space this year, as they instead concentrate on filling existing space.

e-mail: mglynn@buffnews.com

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