Local economic development officials on Monday defended the need for speculative office and manufacturing space in the Buffalo Niagara region, saying it's in unusually tight supply here and is a needed resource in attracting and keeping growing companies.
"Each year, we're shrinking the amount of available space in the market that we're able to sell," said Thomas Kucharski, the president of the Buffalo Niagara Enterprise business development and marketing initiative. "If we don't have something to immediately throw into the search, we don't make it to the next round."
Kucharski made his comments as the Erie County Industrial Development Agency reviewed a survey of local multi-tenant facilities that showed relatively low vacancy rates at those properties within Erie County.
The IDA, in response to criticism last month from Erie County Executive Joel A. Giambra over the agency's policy of allowing tax breaks for buildings that lack tenants, said it had provided incentives for 10 multi-tenant projects over the last five years, covering 730,000 square feet of space, nearly all of it in Cheektowaga.
Charles Webb, the agency's executive director, said the IDA's policy of offering incentives to "spec" buildings has not spawned a building boom that has inflated vacancy rates throughout the county.
On the contrary, Webb said vacancy rates at multi-tenant facilities are relatively low, at 8.5 percent for industrial space and 5.5 percent for office space. Nationally, vacancy rates average nearly 12 percent for industrial space and 15 percent for office space.
"The question becomes, is a 5.5 percent vacancy rate sufficient as we move forward," Webb said. "The 'spec' building policy has been in effect for the last five years and it hasn't exactly made us the 'spec' building capital of the world."
Webb and Kucharski said "spec" space is a valuable economic development tool at a time when growing companies often don't want to take more than a year to plan and build a new facility from scratch. Instead, many prefer "spec" facilities that only require modifications to an existing shell building to meet their needs in a fraction of the time.
" 'Spec' space is the modern equivalent of a shovel-ready site," Webb said.
Kucharski said the BNE currently is working on what it considers to be 43 "active, serious" projects, with about half of those involving manufacturers looking for between 30,000 and 60,000 square feet of space. "And they want it tomorrow," he said.
Giambra said the results of the IDA research were interesting, but he also asked the agency to do a further analysis that looks at the value of the incentives offered to 'spec' projects and the number of new jobs that they have created.
Buffalo Mayor Anthony Masiello, in his final meeting as an IDA board member, also suggested that the agency compare its policy on 'spec' buildings with those followed in other cities, such as Cleveland, Pittsburgh and Baltimore.
"We're competing with other cities. It would be helpful to see what we're competing against," he said. "I've got a sense that they're doing the same thing."