While Larry Quinn told the Erie Canal Harbor Development Corporation (ECHDC) Board last week that Benderson Development's involvement with Canal Side was at a "crossroads," ECHDC Chairman Jordan Levy characterized the chances of Benderson not being the master developer as "slim" in a Business First interview. Downtown insiders say Benderson remains interested in the project, but the firm's role will likely be greatly diminished.
If Benderson pulls back as expected and if Bass Pro never signs, then what? Without a large retail anchor as a year-round shopping draw, there will be no need for thousands of square feet of ancillary retail space. The back-up plan is to seek developers for individual development parcels while moving forward with the publicly funded canal, green space, market hall and parking ramps.
After almost a decade of touting Bass Pro as the necessary draw for the proposed $300 million development, expect something a lot less grand, and a lot less expensive if a replacement anchor isn't found and parcels are farmed out to individual developers. One block is in particular demand already. Sources say there is a deal in the works for redeveloping the vacant Donovan Building. An insider deal according to some.
Law firm Phillips Lytle, who happens to be handling real estate negotiations and environmental review issues for ECHDC, is in talks to move to the publicly-owned Donovan Building one block away. Phillips Lytle's current lease for 85,000 sq.ft. of space spread over six floors at One HSBC Center expires in 2013. The firm has been actively seeking a lease extension or new home and has entertained proposals from several property owners and developers.
"There's a 90 percent chance of Phillips Lytle leaving HSBC," says a downtown source. "The firm is fighting with the building landlord over service charges, their relationship is strained."
Ciminelli Development appears to have the inside track to snag the law firm. Ciminelli's plan is to redevelop the Donovan State Office Building with Phillips Lytle as the anchor tenant.
The vacant 148,000 sq.ft. building at 125 Main Street was to be developed by Benderson Development for a mix of retail, office, housing and other uses as part of the larger Canal Side project.
While Ciminelli is said to be the front-runner to obtain developement rights for the building, Uniland Development sees an opportunity as well. The company is also interested in the site with Phillips Lytle as a tenant. Neither firm owns the property. ECHDC was given title to the circa-1962 building from the New York State Office of General Services in November 2007.
"This insider deal will pull Phillips Lytle out of HSBC Center and into a heavily subsidized building," says one downtown developer. "It is not a private development deal; they are proposing to use a publicly-owned building to poach a prestigious tenant, thus undermining HSBC Center. The Donovan developer will be undercutting the market at taxpayer expense."
"Phillips Lytle won't even need to hire a mover, they can use dollies," says the developer. "They [ECHDC] are doing damage control and will spin this as a win. They have too much time and taxpayer money invested in this. There is trouble in paradise."
What is the problem with the largest law firm in the land moving to a vacant building? Hopefully they will do something with the facade. Won't the state or who ever owns the property make money on this deal?
"This insider deal will pull Phillips Lytle out of HSBC Center and into a heavily subsidized building," says one downtown developer. "It is not a private development deal; they are proposing to use a publicly-owned building to poach a prestigious tenant, thus undermining HSBC Center. The Donovan developer will be undercutting the market at taxpayer expense."
That's the problem with it. How will the state make money when they handed over the title to the ECHDC? And ECHDC won't make money on it becuase they'll basically be giving the building away. As the insider points out Quinn, Levy, and all the other hobos are doing damage control.
I imagine the cost to completely gut and rehab the Donovan Building would be quite significant wouldn't it? Also, another building on the tax roll is more money in the city's coffers right? The deal would obviously be slanted in favor of the developer, but what else is new... anything to breathe new life into this eyesore through adaptive reuse is a win in my book.