Buffalo, N.Y.—Rents start at $1,200 a month for the 32 new apartments at Webb Lofts, opening in October. Set in a 130-yearold restored belt factory with 11-foot ceilings, 10- foot-tall windows, and views of Lake Erie and the Niagara River, the Lofts offer stone floors in the kitchens and baths, and exposed brick walls.
Pretty fancy for Buffalo, where $678 a month was the average effective apartment rent in the second quarter, according to Reis, Inc., a New York City-based market research firm.
In the last three years, local developers like Rocco Termini, the owner of Webb Lofts, have built more than a dozen projects bringing a whole new kind of housing to downtown Buffalo, once known for its modest single-family homes and its deserted pedestrian mall on Main Street.
In the last three years, not counting the Lofts, Termini alone opened 138 apartments and 75,000 square feet of retail space in a handful of restored historic buildings, all within a few blocks of each other within the Joseph Ellicott Historic District. Every one of those apartments is occupied. Market-rate rents average about $1 per square foot and range from $650 a month for a handful of state-subsidized affordable apartments to $1,950 a month for a 2,400- square-foot luxury penthouse.
However, Termini hasn’t been able to raise the rents in his apartments because he keeps opening new buildings nearby as he works to create a new neighborhood. “I’m constantly competing with myself,” said Termini.
Another local developer, Ellicott Development Co., has also quickly built up a portfolio of 250 apartments in Buffalo, including 30 that opened in 2004 at the Belesario, in the landmark L.L. Berger department store building on Main Street.
Sales recently began on Ellicott’s latest venture, the Pasquale at Waterfront Place, a 49-unit tower with condos priced from $295,000 to more than $1 million. More than half of the units have been reported presold in just three weeks.
Most of Buffalo’s new rental developments have been small projects, as developers test the demand for apartments in town. “Nobody knows how deep the market is,” said Termini. Downtown developments tend to be restorations of historic buildings, often financed with help from equity from the sale of federal historic rehabilitation tax credits.
Developers are projected to finish 334 new apartments in and around Buffalo in 2007, an increase of 1.6 percent to the local apartment inventory of 20,800 units. Even more units will come on line in 2008, with 452 units opening, according to Reis.
The local market should absorb most of these, Reis said, with the percentage of vacant apartments twitching upward from 5.4 percent in 2006 to 5.8 percent by 2008.
As luxury apartments become more common downtown, average effective rents in Buffalo are expected to grow by between 2 percent and 3 percent a year through 2011, according to Reis.
Almost one-third live in poverty
All this new development might seem strange for a city where 30 percent of the population lived in poverty in 2006, up from 27 percent in 2005. Buffalo is the second-poorest large city in the country, according to estimates by the U.S. Census. Only Detroit is worse off.
Buffalo has been wounded over the years by a series of bad planning decisions that moved jobs and economic activity to the suburbs and allowed poverty to concentrate in town. For example, officials allowed assets like the local branch of the State University of New York to locate beyond city limits. Downtown’s shopping district was also hurt by urban development schemes that turned Main Street into a barely used pedestrian mall and broke up the elegant plan of long radial streets laid out for Buffalo by Joseph Ellicott and modified by Frederick Law Olmsted.
In addition, Buffalo suffered the same blight, industrial job losses, and shrinking population that affected many other Rust Belt cities.
But the city still has several strengths. Canisius College, based in Buffalo, is seriously investing in the city. The National Hockey League’s Buffalo Sabres still play in town, within easy walking distance of the Webb Lofts. The Buffalo Bills’ football team also plays in the area. Niagara Falls continues to draw people to the area, at least to visit.
City officials are looking for ways to make better use of the waterfront. Advised by experts from the Congress for the New Urbanism, they are considering plans to tear down a massive elevated freeway that separates downtown from the waterfront.
Job growth has also returned to Buffalo. Several banks now have offices here in addition to a growing number of start-up companies. The number of jobs is expected to grow from 552,000 in 2007 to 561,000 by 2010.
“Buffalo is doing a lot better than people perceive,” said James Verseput, multifamily specialist for Marcus & Millichap’s upstate New York office, based in Albany, N.Y.
Termini agrees. With that in mind, he has his eye on several more historic buildings to rehabilitate.