Interest in downtown Schenectady growing
Interest in downtown Schenectady growing
SCHENECTADY — The market for commercial and retail space in Schenectady’s downtown is expected to pick up as the economy continues to recover, according to several property management companies and developers.
“Since the first of the year, we have seen a pick-up in activity and interest. That is a positive thing, whereas the interest level in 2009 and 2010 was slim,” said Mark Aronowitz of Omni Development. Omni owns One Broadway Center in Schenectady, home to several state agencies, including the Lottery. The building is nearly 100 percent occupied.
Schenectady has weathered the recession better than Albany but not as well as Saratoga, according to a market analysis by CB Richard Ellis of Albany. Albany had a vacancy rate of 20 percent for office space and about 13 percent for retail, the highest in the region in 2010. Schenectady’s rates were 13.9 percent and 11 percent; Saratoga’s were 9 percent and 7 percent, among the lowest. The national U.S. office vacancy rate, by contrast, is 16.4 percent.
Albany has been hurt particularly by the state’s decision to pull out of private-sector leases and return to state-owned space, such as at the Harriman Campus, according to CB Richard Ellis.
Schenectady has benefited through the presence of the Metroplex Development Authority, created in 1999 to help revitalize downtown initially, according to the CB Richard Ellis analysis. The analysis said Metroplex is able to underwrite economic development efforts, using grants and low-interest loans, to allow developers to obtain financing to construct buildings and renovate others in downtown in what Metroplex Chairman Ray Gillen called a “tough lending market affected by the national recession.”
“Schenectady is fortunate to have Metroplex. It can certainly provide a competitive advantage in relationship to other communities,” Aronowitz said.
Since 2004, roughly more than 1.2 million square feet of commercial and retail space has been built or renovated in downtown Schenectady, almost all under the auspices of Metroplex, Gillen said. He said the overall occupancy rate is 90 percent for that space. “We create space and then fill it,” he said.
Examples include:
*SEFCU Square at State and Clinton streets. Built by John Roth of Highbridge Development, it is nearly 100 percent occupied. All that remains is 3,000 square feet in the four-story, 24,500-square-foot building. “I have had a number of offers for restaurants and bars for that space, but I am interested in a retail tenant which fits into the needs of downtown,” Roth said.
*Center City on State Street is 70 percent full. The Galesi Group spent more than $12 million to remodel the existing structure, a dilapidated office building containing an indoor soccer field, and to construct a 50,000-square-foot addition, creating approximately 220,000 square feet of Class A office space. Gillen said he recently showed the new addition to a company that is interested in occupying the entire space.
*The former Carl Company building on State Street. The one-time department store was gutted and rehabilitated, part of the $30 million Proctors’ project. Gillen said the building is full except for the top floor, which was not rehabilitated. “A number of companies have looked at this space. There is an advantage to locating that this site due to savings on utilities that Proctors can offer through its district energy plant,” he said.
*400 State St., a four-story, 60,200-square-foot building at State and Broadway owned by Galesi, is fully occupied. It houses Siemens, a major international company, and Movieland, a six-screen cinema.
Most of this space is Class A. Class A space is in buildings that have excellent location and access, attract high quality tenants and are managed professionally. Building materials are high quality and rents are competitive with other new buildings. There are also Class B and Class C, lesser grades of quality. Class A has the lowest vacancy rate of the various businesses classes.
For years, One Broadway Center was the only Class A office building downtown. Then came the state Department of Transportation regional headquarters building on State and Broadway. Gillen said the creation of Class A office space was high on the list of helping revitalize downtown.
Some spots remain vacant downtown, including the ground floor of the Utech Building on Broadway, the top floor of 409 State St. and several small retail spaces on Jay Street. Philip Morris, chief executive officer for Proctors, said a company is closing on 440 State St., a former arts incubator building. He said the company will occupy the entire building. Morris is working with Metroplex to sell the building.
David Buicko, chief operating officer for the Galesi Group, said the next evolution for downtown is to bring in retail and residential tenants. “Schenectady has the advantage of new space with great layouts. We are making sure we get the right tenants to complement what is there,” he said. “We are going after Class A users who have ability to use a lot of space. You will see law firms and investment banks coming into downtown.”
Rick Killeen, who owns the Killeen Building on Jay Street and State Street, said he hopes the effort involves a coordinated marketing approach. His building has five tenants, most of whom have been stable customers.
“You have to be realistic on what you need to do to market and develop space down here and that involves having a strategy to recruit and retain retail. If there is a strategic plan to recruit and retain businesses, I am not aware of it,” Killeen said.
Jim Salengo, executive director of the Downtown Schenectady Improvement Corp., said there are continuous efforts to bring in new businesses downtown, but more can be done. “Because we now have this nice mix of new and established businesses, it makes sense to take a fresh look at the full inventory of available spaces throughout downtown and identify the types of tenants that can complement what we already have,” he said.
Salengo said the DSIC can play an enhanced role in small to mid-level business recruitment downtown. “We have put this into our annual work plan. These efforts could be particularly helpful with some of the smaller or less prominent spaces available in all corners of the downtown district,” he said.
While Metroplex has done much to improve downtown’s economy with its incentives, it has also put some established landlords at a disadvantage, Killeen said. He said the playing field could be leveled for owners such as himself by creating an infrastructure to support businesses and to help them offset the city’s property tax structure.
Peter Guidarelli, who owns the Wall Street Building on State Street and Erie Boulevard with partners, said, “It is difficult when competing with other landlords who have received an abundance of Metroplex dollars and PILOTS [payments in lieu of taxes].”
Gillen said any downtown landowner can apply for a 485-B, which provides property tax abatements based on investments to the property. In addition to this program, Roth said, downtown landlords can alleviate their added costs and become competitive by investing in their buildings and paying down their mortgages.
Guidarelli said he has a 485-B and is also gutting the second floor of his building in order to convert it to Class A space. “We have to compete with new space [being built downtown]. We have a great building with character and it is an active building,” he said.
Gillen said that the renovation of Erie Boulevard, a $14 million project slated to begin this year, and the new train station for Amtrak, which will be built by the Capital District Transportation Authority, will help market the Wall Street Building. “In addition, we have completely renovated the parking lot that surrounds the building and helped with facade funding,” he said.
As to the future of Schenectady, Roth is bullish. “There are several interesting projects taking shape in Schenectady over the next three to five years that will increase interest and demand and will help Schenectady flourish in coming years,” he said.
Lamendola , Michael. “Interest in downtown Schenectady growing; Analysis: Metroplex efforts helping with city’s revitalization” Daily Gazette [Schenectady] 7 Apr.
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