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Why so many apartments? Buffalo area seeing an explosion of growth

Why so many apartments? Buffalo area seeing an explosion of growth

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Homes for sale may be in short supply these days, but new apartments are popping up across Western New York like dandelions in springtime.

From the Elmwood Village and Allentown to South Buffalo and the West Side, from Tonawanda and Amherst to Orchard Park and Hamburg, developers are putting up new apartment buildings or converting old industrial warehouses and offices. 

The apartments are highly desirable – with new units filling up almost as soon as they come online.

"I’m still amazed at the number that are being built and developed, and that people are talking about building," said Paul Kolkmeyer, owner and CEO of Priam Enterprises, which owns the Glenny, Marin and Roblin buildings on Main Street in downtown Buffalo.

Michigan Place apartments

Framework was going up last month on Cedarland Development's three-story, 35-unit apartment building under construction on Best Street and Michigan Avenue. 

Multiple drivers

Several billion dollars worth of redevelopment has occurred or been announced throughout Erie and Niagara counties in recent years, and much of it has involved residential construction or renovation.

That's a dramatic change from a decade ago, when apartment activity in the city was still slow, especially coming out of the financial crisis and recession.

Frustrated homebuyers, especially in the starter market, are choosing to rent because it's getting too difficult and too expensive to get a house.

The population between ages 25 and 34 has not only stabilized but grown for the first time in decades. Millennials in particular – but even older singles and couples – want to live downtown, to take advantage of the revitalized urban environment.

"We’re fortunate enough to have young people moving back, but they may not be able to qualify for a mortgage," said Paul Ciminelli, CEO of Ciminelli Real Estate Corp. "And younger people want flexibility. They don’t want to be committed to owning a piece of real estate with a mortgage. They want to be flexible with where they are in their career." 

Meanwhile, the aging apartment stock in the city and suburbs needed upgrading or replacement at a time when tax incentive and economic development policies are encouraging adaptive reuse of older buildings in city centers and business districts.

"Most of our buildings downtown have been redeveloped under one or more of those policies and programs," said Bill Paladino, CEO of Ellicott Development Co. "The programs have proven successful."

And apartment projects are more financially viable than ever because the housing boom and Buffalo's resurgence are driving up rents. According to RentCafe, an online apartment-search service, the average rent in Buffalo is now $1,182 per month, for an average of 788 square feet of apartment space. However, rents range from about $850 a month in Allentown to more than $2,000 in some of the city's newer, larger and more high-end units.

"A lot of what we’ve seen over the past decade is adaptive reuse, [but] there is still a segment of the market that is interested in a newer product, newer amenities, updated design, and that is driving some of that demand," said Kellena Kane, Uniland Development Co.'s director of development. "We are seeing new people moving to Buffalo, and they are commanding a different type of rental product than what Buffalo has historically been able to offer."

Mayor Byron Brown's administration has pushed for downtown development and downtown living, and encouraged construction of new units to create a more vibrant urban core with new residents.

"It’s been part of the strategy from the very beginning, which is to work on building the critical mass and the environment, and building the place where people want to live," said Brendan Mehaffy, the city's economic development commissioner and executive director of the Office of Strategic Planning. "We’re not just trying to build apartments and office space. We’re trying to build neighborhoods and great places where people want to live."

116 apartments

Karl Frizlen, president of Frizlen Group, checks in on progress where apartments are being framed in a two-story section at Barcalo Living & Commerce.

Low interest rates have supported new construction projects. And with the commercial office and retail markets sluggish because of Covid, developers are putting their resources into apartments.

Finally, of course, success begets success, and it's hard to argue with occupancy rates at or near 100%. "I know that ours are consistently, if not full, then running at 97% occupancy," said Kolkmeyer. "If ours are running that high, I would assume that other people are getting the same kind of demand."

Developers say they aren't sure which factor is the most powerful.

"I don’t know exactly what’s driving it," said Karl Frizlen, who converted several former schools into loft apartment buildings, and is transforming the former manufacturing facility that makes Barcalounger recliners into 116 apartments and commercial space. "But it has been good, and we're full."

"I ask myself that question all the time," agreed Jake Schneider, whose Schneider Development created the Apartments at the Hub, Shea's Seneca, Musical Suites and Historic Warehouse Lofts, which are now condos. "All I can tell you for sure is it's a robust market."

Building boom

The flood of new apartments, especially downtown, is changing the landscape of the city. Much of the growth has come in market-rate and luxury units, as young professionals and others from out of town can afford to pay higher rents.

There's also been a surge in affordable housing developments as well, given what some developers have described as an insatiable demand.

Inevitably, the question arises from skeptical Buffalonians as to where the renters are coming from, and how long this can continue. And there is indication that many of the tenants are just moving from one building to another, rather than being new to the area.

"It’s a continuous market that just keeps growing," said Paladino, whose new Pardee project with Nick Sinatra at 451 Elmwood has only one unit still available for lease. "I don’t know if we’re necessarily seeing the growth that we saw a few years ago, before Covid, but we’re moving a lot of people around. But there’s definitely demand in every sector of the market."

And yet not only are there are no indications of development stopping anytime soon, but the pace of growth appears to be picking up. Instead of a dozen units here or 50 units there, developers are talking about 100 to 200 units at a time, in each project.

"I don’t know if we’re going to hit the wall with it, and suddenly have too much inventory for the market," Schneider said. "But I’ve been asking myself this question since the early 2000s – how much more can we handle? There still seems to be appetite."

In recent years, several thousand new apartments have been added to the city's inventory, including Seneca One tower, Police Apartments, 500 Seneca, Seneca Street Lofts, AP Lofts at Larkinville, 500 Pearl, the Grid and Forge on Broadway, just to name a few.

Police Apartments

The model one-bedroom unit at The Flats at 74 Franklin, where Douglas Development has converted the former Buffalo Police Headquarters into 114 luxury apartments.

And there's many more in the works:

  • 600 by Douglas Jemal at the Mohawk Ramp and adjacent Simon Electric properties.
  • 500 by TM Montante Development at Gates Circle.
  • 334 by Jemal at the Statler.
  • 300 by Sinatra & Company Real Estate and Ellicott Development Co. in the Elmwood Crossing redevelopment of the former Women & Children's Hospital of Buffalo.
  • 243 at Krog Group's Trico project.
  • 230 by SAA-EVI at Pilgrim Village, where a formal groundbreaking is being held Friday, even though construction started weeks ago.
  • 148 at the Skyway Loop building proposed by Jemal for 61 Terrace.
  • 147 by MVAH Partners at Main Street and Masten Avenue.
  • 116 at Frizlen's and Michael Master's Barcalo Living & Commerce.
  • Hundreds more at projects like Joseph Carubba's The Riv, at South and Hamburg streets; Cedarland Development's Michigan Place Apartments; Savarino Cos.' redevelopment at 1 Howell St.; the Swan Street Railyard, by Frank Lazarus and Frontier Group; and Sinatra's Heritage Point at Canalside.

"It feeds off itself," Mehaffy said. "People see people, they see places to go, they feel more comfortable. They may be walking to work, something they never thought they would experience in downtown Buffalo, and it now brings more people down. The reputation grows, and the demand grows for these types of projects."

The suburbs are also seeing action, with as many as 500 apartments proposed for Amherst's University Commons; up to 340 for Legacy Development's new proposal near the Walden Galleria mall in Cheektowaga; 300 for a pair of Paul Bliss projects on North Forest and Maple roads in Amherst; 162 units by the Green Organization on Millersport Highway; 154 apartments at the proposed Air Buffalo in Amherst; and 320 for Rivertown Center on Grand Island, among others.

"Building after building, developer after developer, there’s a lot of units coming on board," Kolkmeyer said. "I’d say it’s got to be at least 1,000 to 2,000 units over the next few years."

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