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DEMAND PUSHES RENTS HIGHER FOR DOWNTOWN APARTMENTS

AT $1,300 A MONTH- utilities extra -- it's the most expensive apartment in the newly opened Ellicott Lofts between Genesee and East Tupper streets.

Developer Rocco Termini was sure the sprawling space with two baths would be the last of the 38 apartments he rented. Instead, a Buffalo businessman and his wife snatched up the 1,900-square-foot two-bedroom unit.

"The higher-end apartments are renting before the lower-end units," Termini said. "People want the more spectacular units."

Buffalo is a price-conscious town, but people are increasingly willing to write a monthly rent check that's larger than the mortgages on many homes to live in a stylish, modern apartment in the heart of the city. A $150,000 home, including taxes and insurance, would have a monthly mortgage payment of about $1,300.

"The last few years there's been an ever-growing back-to-the-city movement," said Carole Holcberg, a real estate agent marketing the Lofts at Elk Terminal, where rents range from $950 to $2,395. "It's supply and demand, and if supply is limited, the price is higher."

Michael Joseph, president and owner of Clover Management, thinks the demand may be just a few hundred people in a region with a population of 1 million. The company oversees 2,300 apartments in Western New York and is converting the Sidway Building into apartments that will rent for up to $1,920.

"My guess is that the city of Buffalo can absorb somewhere around 100 of these a year," Joseph said. "But I don't know if it can do it for more than a couple of years."

The increased demand for downtown living has trickled into other sections of the city such as Allentown and Elmwood. Landlords say more people are responding to ads, but the demand is not so strong that it has increased prices much. Rents may have risen by about 5 percent in the last year, triggered partly by higher utility bills for those landlords who include heat in the rent.

But more lofts and SoHo-style apartments are on their way. Clover Management is creating 67 apartments in the Sidway Building at Main and Goodell streets that will rent for up to $1,920.

Carl P. Paladino of Ellicott Development Corp. is transforming the former L.L. Berger building on Main Street into 30 apartments that will rent for between $1,200 and $2,500.

First Amherst Development Group was the most recent to convert an industrial property into trendy apartments. In the Lofts at Elk Terminal, a few blocks east of HSBC Arena, the most expensive apartment was one of the first rented. A couple sold their Buffalo home and moved into the 2,500-square-foot unit that costs $2,395 a month -- plus utilities.

Since First Amherst Development began turning these abandoned food warehouses into modern lofts in 2001, the company has converted 48 lofts. Another 12 are now under construction, of which nine are already rented.

The units originally rented for $850, but demand has pushed the starting price to $950.

Who's interested?

Two main group flock to these downtown apartments -- those who are young and childless, and empty-nesters. Both groups enjoy the city's night life, cultural attractions, dining out and living in a maintenance-free place. Families with children often decide to forgo these downtown attractions for better schools in the suburbs.

The schools were a big reason Carolyn Regan raised her children in Cheektowaga. Last year, she sold her suburban home and moved into the Lofts at Elk Terminal.

"I always wanted to live in the city. It's vibrant, exciting," said Regan, a retired teacher. "And my kids all lived in the city as young adults. Now they live in Williamsville and Snyder and don't understand how I could live in the city."

She doesn't understand what they find so attractive about shoveling driveways and sidewalks in the winter -- a chore that Elk Terminal staff handles.

Charlie Murdough also used to own a home in West Seneca. He lived in the Ambassador Apartments on North Street for seven years, but decided to move into the Ellicott Lofts.

"I wanted to be in the city as close as I could to my office," said Murdough, a financial adviser at Merrill Lynch in Key Center. "I work a lot, and I don't have time to handle the maintenance."

His two-bedroom, two-bath apartment rents for $1,050 and includes a quartz counter top in the kitchen, brushed steel appliances, slate flooring and windows that let in plenty of light.

"It's probably some of the best I've seen in apartments out there," he said.

Age, location and rent

But most apartments in the city can't command these rents because of their age, condition and location. For example, the cost of an apartment in the Allentown or Elmwood areas of the city has risen by about 3 percent to 5 percent in the past year, according to several landlords.

The average price of a one-bedroom apartment in Erie County with one bathroom is $592, according to Sunrise Management & Consulting, a property management and consulting company based in the Albany area.

A two-bedroom with one bath was $659, and a two-bedroom with two baths was $880, according to the survey, which included nearly 17,000 apartments ranging in size from 14 units to 928. This was the first year the company surveyed Buffalo, Rochester and Syracuse.

Syracuse has the lowest prices. Erie County was in the middle. Rochester and Albany had the highest rents, but also on average had larger apartments.

"The Buffalo market is a little different," said Richard Dolins, director of research. "We saw a significant number of creative reuses and renovated buildings. If you go up and down Delaware and Elmwood avenues, a lot of product has been turned into more modern apartments."

But as with homes, location makes all the difference when it comes to what an apartment will fetch. The Kissling Interests owns more than 700 apartments in the city, many of which the company has remodeled.

At the Hertel Homes, Sanders Court and Delsan Court in North Buffalo, market-rate, remodeled apartments with three bedrooms rent for $650, plus utilities. Drive four miles closer to downtown, and a three-bedroom apartment in the Ambassador apartment complex on North Street runs $1,200, including utilities.

"Even though the economy is still in a standstill, I see Buffalo turning around," said Scott LaCasse, vice president of the Kissling Interests, which began buying Buffalo real estate in 1999.

Last year, nearly one in three tenants moved. This year, the turnover rate is about 10 percent, he said.

"There's no question. There's a demand in the core downtown," LaCasse said. "All our downtown properties are rented."

e-mail: lhaarlander@buffnews.com

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