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by James Fink – Reporter, Buffalo Business First
July 10, 2020
As a commercial real estate broker, David Schiller is very busy these days.
He’s not the only one. There’s not much interest in office space, retail or restaurants, but light industrial manufacturing and warehousing square footage is another story.
“What’s happened in the market is that there is a shortage of usable, functional (distribution, logistics and warehouse) space,” said Schiller, an associate broker with Pyramid Brokerage Co.
Prior to the pandemic, the Buffalo Niagara region already had a slim supply of available warehouse and logistics space. Of the 67.1 million square feet of space in Erie County, just 2.6% was available, according to a CBRE/Buffalo market survey.
“It’s a very tight market,” said Shana Stegner, CBRE/Buffalo managing director.
“Look at any number, any statistic and you will see just how tight the market is,” Schiller said.
Older buildings that once housed manufacturers or distribution centers don’t fit current demand for a single floor with high bays and multi-ton cranes.
New construction likely is ahead:
- Benderson Development Co. is considering new warehouse projects in Cheektowaga.
- Uniland Development Co. is working with Buffalo Urban Development Corp. on an intermodal center in Buffalo Lakeside Commerce Park.
- Sonwil Distribution Co. plans a 200,000-square-foot center in Batavia’s Genesee Valley Agri-Business Park and may add a 300,000-square-foot building in Buffalo Lakeside Commerce Park as a companion to its warehouse there.
Driving demand is the area’s proximity to Canada, Schiller said, as well as the rise of e-commerce.
Amazon has a distribution center in Lancaster, another in the Town of Tonawanda and may open a third on Grand Island.
“In my opinion, as e-commerce rises, it will only add to the demand for logistics and distribution space,” Schiller said.
Real estate analysts including CBRE’s Spencer Levy predict that more manufacturers may bring operations back to the U.S. from foreign countries and that would increase demand.
Financial institutions are cautious about spec and construction lending, industry officials said, especially in a conservative market like Buffalo Niagara.
“We need space but banks want tenants attached to any new building,” Schiller said.
