Commercial real estate holds steady in Rochester region
When George Traikos saw warning signs in the Florida commercial real estate market in 2006, he began looking around for opportunities.
The entrepreneur and his company, Traikos Real Estate Group, closed on two major Rochester properties in 2007 — the Academy Building on Fitzhugh Street and the former James Cunningham, Son & Co. carriage factory on Litchfield Street. Traikos moved to Monroe County.
“It is a stable environment,” he said this week. “I did some research and I saw that employment was keeping stable. … I liked what I saw.”
The steadiness of the Rochester-area market was borne out Wednesday as the local office of CB Richard Ellis Inc., a major global player in commercial real estate, made public its 2010 regional report.
The report shows vacancy rates no worse than national rates and better than regions hit harder by the recession. The area has a total office vacancy rate of 18 percent, compared with 24 percent in Phoenix, 25 percent in Austin, Texas, and 28.5 percent in Detroit.
The region’s retail vacancy rate of 12 percent is just below the nationwide average of 12.6 percent.
Jonathan O. Murray, director of research for CB Richard Ellis of Rochester, said the region avoided too much speculative construction, which occurs when a developer puts up a building speculating that he will be able to attract tenants.
Despite the comparatively low vacancy rates, they are higher than they had been in 2008, and experts in the field said they may get worse before getting better.
“I think certain sectors are going to suffer from a long recovery,” said Larry Glazer, CEO of Buckingham Properties LLC, which owns 8 million square feet of space in the region.
Glazer said the Rochester market hit bottom several months ago, but tremendous competition remains among landlords for business tenants. That pressure is apparent in downtown Rochester, where many developers, including Traikos, believe there is a glut of office space.
Traikos had to put his renovation projects on hold during the depths of the recession, though he said he’s now ready to finish the building improvements and is looking for private investors interested in buying tax credits he gets for fixing up the two historically designated buildings. Banks, which formerly were eager to invest in such renovations, aren’t as interested these days.
“Most banks don’t have an appetite for tax credits now,” said Traikos. “Somewhere along the line the financial markets froze up.”
He said that finding investors to buy the tax credits is key, since then the construction and permanent loans are likely to follow.
Traikos said the top three floors of the Academy Building will be apartments, with retail on the first floor and a restaurant in the basement.
The Cunningham factory building will be mostly apartments, with retail space on the first floor, he said.
JFSTINSO@DemocratandChronicle.com
Market glance
Some facts about Rochester’s commercial real estate market:
SOURCE: CB Richard Ellis Inc.
