Real Estate July 11, 2009 12:00 AM

Law Firm Shopping for Space

Law Firm Shopping for Space

With its lease expiring, a large downtown law firm is exploring its options for a future home.  The search by Phillips Lytle PPC is sure to be of interest to any property owner with space to fill or harboring dreams of landing an anchor tenant for a new tower. 

Business First's Jim Fink has the story:

Phillips Lytle, Buffalo's second-largest law firm, has retained the Studley Group to handle the search. The law firm's lease at HSBC Center expires in 2013. It leases 85,000 square feet, spread over six floors, in the 38-story tower downtown. Phillips Lytle and HSBC Bank are the tower's anchor tenants.

David McNamara, Phillips Lytle managing partner, said the site-selection process is in its earliest stage. No decisions have been made, he added.

"At this point in our analysis, we are open to all options," he said. "We've been very comfortable in this building but, at the same time, we do feel it is necessary to explore all of our options."


Unless a significant vacancy opens in one of downtown's Class A buildings, or the firm opts for less expensive space, it means a renewal at One HSBC Center or the construction of a new building.  A move to the suburbs is unlikely but not out of the realm of possibility.  The owners of One HSBC Center are likely to put together a handsome package to retain the firm. 

Few current downtown buildings offer the space and prestige Phillips Lytle is likely to require.  Avant has three floors and 75,000 sq.ft. of space available but is said to be actively talking to potential tenants.  No one expects the space to be empty in 2013.  

On the development front, Ellicott Development has approvals for a new building at 50 Court Street and has a mid-August deadline to start construction.  Also on the drawing board is office space in the Canal Side project at the foot of Main Street.  CityView has plans for new office buildings in the Larkin District and redevelopment of the Statler and AM&As Department Store, if they happen, are each likely to include an office component.

Chances are developers will offer other new-build locations for the firm to consider.  The competition may be downtown's best chance for a new tower in the near-future.

Phillips Lytle was established in 1834.

DSC_0144.JPG

View image

1 TrackBack

TrackBack URL: http://www.buffalorising.com/cgi-bin/mt/mt-tb.cgi/3859

To no great surprise, a prominent site on Court Street will remain a parking lot for the foreseeable future.  Ellicott Development's Carl Paladino tells The Buffalo News today that his plan for a new office building at 50 Court Street have been po... Read More

Comments

Leave a comment

What about Palladinos 10 story Court Street Tower?

What really comes to mind when I read this story?

The first is why is UB Law School on the Amherst Campus? Isnt it obvious that government and law are centered downtown and that UB Law students are being deprived of education as well as pre and post graduation opportunities. Its very portable...they dont need access to any of the sciences...and liberal arts are shared by everyone...they could easily be offered at multiple locations.

(In fact...Law/Government and Journalism/Media/History all should have strong components...thinking big picture here...Center for Excellence in Life Sciences in Fruit Belt, Law / Journalism / Media / Social Sciences focussed around the Trico Building would be within walking distance to the Library....big picture...ECC downtown campus is also within walking distance to the Library...BIG PICTURE...IMAGINE A NEW PUBLIC LIBRARY 3X-4X THE SIZE OF THE CURRENT FACILITY SERVING THE PUBLIC, UB MEDICAL, UB LAW / JOURNALISM / MEDIA / SOCIAL SCIENCES AND ECC DOWNTOWN. WE COULD HAVE A DOWNTOWN EDUCATIONAL SPINE FROM MASTEN TO THE BASEBALL STADIUM...A LIBRARY OF THAT SIZE WOULD BE THE BIGGEST REGIONAL RESOURCE OUTSIDE NYC...JUST A THOUGHT...BUT WORTHY OF CONSIDERATION. IMAGINE THE SPIN OFF POTENTIAL WITH BUFFALO FILM COMMISSION FOR MEDIA AND DOCUMENTARIES, ANIMATION, VIDEO GAMES, SPECIAL EFFECT...THE POTENTIAL SPIN OFF...OF SUCH A LIBRARY COULD BE SIGNIFICANT...consider Lockwood Library in UB Amherst is like 5 Floors, the Medical Library on South Campus needs to be replaced downtown...ECC needs a library downtown...imagine the potential of a 6-8 story library resource center with study cubicles and student/public lounges and media rooms and community rooms that could be used by downtown businesses for meetings as well as community groups...it could put Buffalo one step closer to once again being a publishing center for statistics and research and documentaries, etc)

The second is that we need to building more Class A office space downtown a priority...conversely...that means converting more of our Class B and Class C properties like Statler, Liberty, LaFayette, Graystone, Hyatt and AM&As into residential or at the very least mixed use.

(My feelings exactly) Converting more of these buildings to residential/mixed use will create the demand for new large footprint downtown office buildings to be constructed.

I think everyone would love to see another HSBC Tower downtown for M&T or First Niagara. Its just to bad we dont have any major technology based companies that could fill a tower.

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

They can swing a lot of action. An 85,000-100,000 sq ft. lease agreement could virtually guarantee financing for a new tower, especially if it's a mixed use building with a pre-leased hotel that gets it over the 50-70% hump. With the right developer and the right kind of hotel property, this could mean a 300-400,000 sq ft tower at minimum; 15-25 stories. Anyone out there want to be the guy two deals away from cranes in the air?

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

My vote is for a developer completing the Issa Statler vision.

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

It would be awesome to see a new skyscraper under construction downtown but with our continued tepid economy and slow absorption of downtown office space, unfortunately such a long overdue vision is not going to happen in the very near future unless the economic numbers can be worked in its favor. I would love to see a building a little taller than the architecturally plain jane circa 1971 HSBC Tower. But in order to pursue such a proposal we have to do the following things in Erie County:
1. Stop permitting the continued development of low-rise campus style office parks in the suburbs and give tax breaks and incentives for companies to locate in the urban cores of Buffalo, Tonawanda, and Lackawanna which all have existing business areas that need new investment.
2. It is time for our real estate development community to stop building single-use buildings and fully embrace the mixed-use concept that has successfully taken root in cities all over the world. Buffalo is still behind the times on this one.
3. We have to fill up the existing building stock first before starting any new major building project regardless whether it is office, hotel, residential, or retail.
4. Despite New York's high taxes and financially troubled state government, we need to make our region more business friendly and cut the governmental waste at the county and local levels.
5. Our business community needs to learn the valuable art of corporate piracy in attracting corporate headquarters to downtown Buffalo from other bigger more expensive cities like New York, Chicago, and Boston. Second tier cities like Columbus OH, Charlotte NC, Omaha NB, and Austin TX have successfully developed their downtown cores into economic hubs by pulling up all the stops and recruiting corporations from all over to locate in their cities. Look at their downtown skylines, they have new construction and existing buildings are fully occupied. There is no legitimate reason why Buffalo cannot try to do the same things. But our business community keeps doing the same damn thing over and over again expecting different results.
6. The NIMBY problem also has to be dealt with because anytime someone has a new development idea or design, all the narrow-minded, backward opponents are out in full force trying to kill the idea and maintain the unacceptable status quo. That is also a primary reason why Buffalo is a tough sell for business development.
7. The local and state politicians just need to get out of the way by cutting taxes and fees and reducing unnecessary bureaucratic red tape.

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

While you make some excellent points, I do take small issue with two things. First, the idea that all existing building stock should be filled before embarking on any new construction. While that would be ideal, it's very unrealistic. Even the most prosperous cities have vacant space in older Class B and C office buildings. It's sort of the ecology of real estate that dictates that many firms and the GSA require Class A digs and prefer new builds over rehabs. If the Liberty and the Rand Buildings were converted to residential there would be enough potential relocation activity to justify new product. Second, the examples you cite of Columbus, Charlotte, Omaha and Austin all have had their own challenges. Austin famously had an unfinished 10 story building rotting in the middle of its downtown after Intel, its builder, abandoned plans for a research center. Most of the new construction for corporate tennants there are in the sprawling, far-flung suburbs. Except for the Frost Bank Tower, most of what's gone up has been condo towers like "360" and hotels. Columbus has a rather stale downtown that benefits mainly from government office construction, usually state offices. It's primary corporate citizens, Nationwide and Huntington Bank are housed buildings that date to the seventies. Charlotte obviously is was a shining star and its skyline is quite impressive. It does continue to draw new businesses but the financial crisis dropped on that town like an atom bomb. Two of its three banking goliaths are gone and only Bank of America, a zombie bank, remains. Time will tell what the damage from all this will be. Omaha was an insurance center that benefitted from state laws friendly to insurance companies that are notorious for "regulator shopping". That has much more to do with the legislative climate in Nebraska than the business friendy climate in Omaha (although both are very business friendy) It's doubtful Albany would ever loosen regulations on insurers and banks, especially now. In all, though, you're right: Buffalo could use a regional planning mechanism that limits corporate office parks to those that bring in new employers and refocuses the regional office economy on Downtown which has all of the infrastructure and capacity needed to suit any developer.

replied to RPreskop
Score: 0 ( 0 votes ) Vote up Vote down Report this comment

The article says Ellicott Development is facing a mid-August construction start date for 50 Court Street. This project has been delayed over and over again, and has already been scaled back. How firm is this new deadline? Will we finally see some progress on this ugly surface parking lot in about a month from now? It certainly would be another big step forward in a key part of the downtown core.

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

Yes, we have high taxes that discourage development but that hasnt stopped high tech in rochester and albany....not that rochester and albany are magnets...just that those cities have big companies that are civic minded enough to attract other big companies and use their supplier/customer networks to attract companies or start them locally. Buffalo does neither very well.

The other problem then are local unions...whose union contracts and demands suck up all the taxpayer money so the city has nothing left to invest to attract such companies.

Buffalo needs 3 things:
1) We need Class A urban office parks constructed on empty city blocks preferably on major streets like Main, Genessee, Sycamore, Broadway, Williams, Seneca, Swan, etc.
2) We need Class A warehouse space (Buffalo is a city built on transportation, warehouse, distribution and import/export.
3) We need Class A downtown office space (which isnt going to get constructed unless our existing Class B and C are converted to other uses like residential.

None of these things can happen if every dollar the city brings in goes to unfunded or partially funded albany mandates and union contracts.

Remember the wonderful things happening in Buffalo arent happening because of local tax dollars....our retail and airport are happening because of Canadian patrons supplementing ourwhelmingly poor population, our Erie Canal Harbor...Globle...Yahoo...are all happening because of Niagara Mohawk Power.

Our Sewar and Water departments have the highest rates, even higher than the desert and even higher than desalination plants on the west coast, yet we are located on a lake. Explain that?!!!

Again...they will grant pay increases and benefit increases and increase staff (like NFTA and their security force), but they will not lay new water lines to fix a 50% leak rate, they will not lay new sewars to fix leakage and spillover, they will not repave/rebrick/recobble streets, replace curbs, replace trees, replace sidewalks, replace street light/signs...nor will they inspect, issue citation, enforce or revise property laws except to harass homeowners that are already good citizens nor will they extend light rail to the airport which would be a huge boon for downtown...as much a boon as when transportation was rail (instead of airplanes) and the Central Terminal was connected to downtown by trolly.

City Hall is a unkept sticky garbage strewn pig stye...that is half to 3/4 empty...the city and county could easily inhabit the same building...and save the taxpayer.

Much of downtown doesnt even look presentable...for an outside investor to want to invest millions in new property...and that is something that the city can do something about.

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

Two suggestions for Phillips Lytle:


Central Terminal


Statler Towers

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

Hearing this, is anyone else sort-of hoping that more tenants will leave the concrete monolith known as HSBC Center, forcing the owner to do a complete reskin (like the Avant building) or at least sell it to some other developer who would. I know it's just a pipe dream, but I think it's much more realistic these days considering how successful Uniland was in doing that for the god-awful Dulski building.

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

Sounds fairly obvious to me they are fishing for a better deal where they are at.

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

They could easily get a better deal at the HSBC Tower. But it appears they want contiguous office space, not just a bulk price on offices scattered through various floors. That is what makes this such an appealing opportunity for a new build.

replied to NorPark
Score: 0 ( 0 votes ) Vote up Vote down Report this comment

don't hold your breath, you will not saee a new skyscraper in Buffalo in our lifetime!

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

I think your wrong onestarmartin, it will be a while but if you remove the majority of our current largest sqft class B and class C office space into residential...then thats going to force new builds. At first those new builds will target the many shovel ready parking lots or peripheral high density area such as Cobblestone District, Larkin District, Central Terminal District, Fruit Belt District and Niagara Street district.

I can easily see the Hyatt and Liberty going residential...triggering new medium height new builds

I can easily see peripheral high density districts gaining ground for new builds

I predict...that those medium height towers are going to trigger a developer interested in a skyscraper.

What makes me so confident? Buffalo banks and insurance have werent in the high risk areas...and have actually grown in market share, UB medical is growing and so are their other research initiatives to the point where could get an announcement of 2nd off campus research center, and lastly one need only look to the skyscrapers in Niagara Falls, Ontario and the recent announced high rise in Fort Erie. Ontario has had a strategic plan surrounding metro Toronto for decades and plan was to siphon off growth in Metro Toronto to feed Hamilton, Niagara Falls and Fort Erie. Increasingly people in Niagara Falls Ontario dont want to live in Niagara Falls but in Fort Erie a short distance away. Increasingly canadians prefer the benefits of Buffalo thru a cheaper Fort Erie to the transient tourism of Niagara Falls (nearly 100% of economy is based on its hotel rooms...which has more hotel rooms than any other city in Canada including Toronto).

There is potential in Buffalo...and while the rest of the nation is sinking...and will be sinking for years to come...Buffalo is still chugging along at 5mph. Now 5 mph may be slow...but its consistent. If you live in Buffalo...then you need to love the slow and steady turtle...and not the fast and fickle rabbit.

replied to onestarmartin
Score: 0 ( 0 votes ) Vote up Vote down Report this comment

Removing Class B and C space will not lead to new builds. The type of tenants who lease Class C space cannot afford to lease in a new Class A building; that's why they're in the Ellicott Square Building instead of the HSBC Center. Buildings like Ellicott Square, Liberty, and even the Statler fill a certain niche for businesses that can't afford or need shiny new office space.

Downtown Buffalo does need more Class A space (the class A vacancy rate is exceptionally low) but removing older space from the available stock won't have any effect on that.

replied to QueenCity
Score: 0 ( 0 votes ) Vote up Vote down Report this comment

Removing existing Class B and C inventory can lead to new builds as has occurred in other cities. The difference is in the type and quality of new builds. Primo Class A trophy properties with lux finishes and ammenities would not go up because the rents couldn't come close to sustaining those developments but there are many builders that can put up new bulk office space that's fresh, flexible, and affordable. There's a lot of that in Chicago where developers often build large bulk offices for tennants who won't pay more if they can avoid it. There is of course, a community of users that rely on older, cheaper space and I think Downtown can easily accomodate them in the smaller, low and mid rise structures that dot the landscape. Towers such as the Liberty and the Rand are ideal for residential conversion while the Tishman Building awaits a nice refresh that could make for an excellent and economical alternative for thrifty office tennants.

replied to JSmith
Score: 0 ( 0 votes ) Vote up Vote down Report this comment

Sounds like more shuffling of the deck. It would be nice to see a new building in the downtown core or vacancies filled in other buildings but not at the price of more "large" vacancy in HSBC. 85k sq ft is quite a bit to fill downtown, although if they can pull in some tenants from the burbs I guess it would be a lesser of two evils.

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

I disagree with the viewpoint on the Liberty Building being converted to residential. It is meant to be a business/office building and it is quite a prestigeous office address. Residential is totally inappropriate for the Liberty Building. Now the Rand Building and the Tishman Building would both make excellent mixed use buildings. A tower that could be converted to residential is the circa 1968 Main Place Tower. Main Place Mall itself could be demolished and Eagle Street could be restored between Main and Pearl Streets. Appropriate in-fill development could go on the remainder of the mall site and if there is sufficient room probably a twin 26 story tower next to MainPlace Tower that would be mixed use. But again we have to follow the basic laws of supply and demand. Like I mentioned earlier, we have to discourage office construction in outer ring suburbs or rebirth of downtown will continue to be a tough, uphill battle.

Score: 0 ( 0 votes ) Vote up Vote down Report this comment

Leave a comment

Buffalo Rising Poll