The Buffalo area has virtually no industrial space to market to companies and should encourage new development with incentives to solve that problem, a commercial real estate group says in a new report.
The Commercial Real Estate Development Association's upstate chapter contends the region's low industrial vacancy rate of 3.4 percent is effectively zero when unappealing, unoccupied properties are subtracted.
"It means that the organizations that we have representing us, like Invest Buffalo Niagara, don't really have anything to sell," said Robert A. Richardson, a representative of the commercial real estate development group, in a meeting with The Buffalo News editorial board on Wednesday. "It means the companies in the industrial market — manufacturers and the like — who are growing and doing well, don't have a place to move when they get bigger.
"So these kinds of issues are really fundamental to how we continue to grow our economy," he said. "And yet there is virtually zero industrial space being developed in Buffalo."
Richardson said industrial development agencies' policies don't favor incentives for development of properties like industrial buildings without job totals attached. Meanwhile, he said, prospective tenants expect to be able to move into a property in 90 to 120 days. The report argues that economic development policies simply promoting "shovel-ready sites" and "build-to-suit" properties "are dead and no longer a tool to attract industry."
"We have this discontinuity where we're not producing the products tenants want, therefore they aren't moving here, therefore we're missing out on this industrial activity that's going on nationally," Richardson said.
The region's IDAs could open the door to more of that development by changing their policies, he said. The group's report recommends allowing incentives for speculative industrial developments without tenants, and completing the infrastructure in industrial parks.
Housing development is another focus of the Commercial Real Estate Development Association's report, as part of a strategy to attract and keep millennials.
Richardson said IDAs tend not to supply incentives for housing developments, "and we think that's a mistake." He pointed to the revival of older buildings through adaptive reuse projects that were fueled by incentives. "That has been, in our view, a major catalyst for the resurgence of Buffalo," he said.
Richardson said housing should be seen as an essential element of economic development. He described a generational shift, where young people choose where they want to live first, and then seek employment, instead of the reverse.
"One of the major factors in deciding where they want to live is the kind of lifestyle and housing that's available to them," he said. "And so creating interesting and unique places for housing, particularly in the urban core, is the key to attracting the kind of workforce that actually brings employers."
Economic development agencies need to take a different view about how to attract employers, with housing as part of the plan, he said.
Richardson said "high-performing" regions around the country have "very dense, urban lifestyle housing options, and many of them have specific housing categories that are targeted and developed for the types of workforce they're attracting, which is millennials," he said.
"We don't have any of that," Richardson said. "Rethinking the way IDAs engage with housing is critical to this strategy going forward."