Q2 2012 Buffalo, New York Commercial Real Estate Economy

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Q2 2012 Buffalo, New York Commercial Real Estate Economy

Buffalo, a city with a more illustrious past than present (it once was a significant center of industry; it hosted a World’s Fair in 1901), belongs to that other Northeast—the old industrial Northeast, a victim of irreversible decline. Indeed, Buffalo’s economic profile and modern history resemble those of the struggling cities of the Great Lakes—and Buffalo itself is found on the eastern shore of Lake Erie. Like Detroit and Cleveland, in which manufacturing, despite some recent improvement, has undergone long-term structural downsizing, Buffalo also has suffered from chronic population loss.

Like some of the nation’s weaker economies, however, Buffalo’s slump, due to the recession, was relatively shallow. And its recovery, while slowing in 2012, has been notable. According to preliminary data provided by the U.S. Bureau of Labor Statistics (BLS), total non-farm employment in the local Metropolitan Statistical Area (MSA) as of August 2012 was down just 8,600 jobs (1.6%) from August 2008. While growth from August 2011 to the latest August was marginally negative at 400 jobs (0.1%) lost net, the preceding August-to-August period saw a gain of 8,600 jobs (1.6%) Among its recent strengths is resurgence in Manufacturing: job growth over the latest August-to-August period in that sector was 1,300 jobs (2.5%). The Education and Health Services sector saw a larger increase—a gain of 2,800 jobs (3.1%). On the other hand, employment in Professional and Business Services, a main contributor to the 2012 slowdown, declined by 3,200 jobs (4.3%) over the same span. And the Trade, Transportation, and Utilities sector returned to the loss column following a period of modest expansion.

Thus, laments Buffalo Business First in an October report, “the tables seem to be turning.” As recovery begins to take hold in metro areas across the country—and as local growth slows—Buffalo’s recent favorable profile is diminished in relation to growth now seen elsewhere. “Markets that were struggling a year or two ago are shifting into recovery mode, and several have zipped past slow-but-steady Buffalo.” Putting numbers to this assessment, the On Numbers Economic Index’s latest economic “vitality’ ranking placed Buffalo 37th among the nation’s largest 102 areas, still relatively favorable but down fully 23 places from only two months earlier—”the sharpest decline of any metropolitan area in America.”

Still, the local housing market continues to progress. “There was good news in most every category when it comes to tracking the Buffalo Niagara residential real estate market in August,” Business First reported in early October. Like its economy, Buffalo’s housing market held up better under pressure due to the recession than did most markets nationwide. According to the report, citing Buffalo Niagara Association of Realtors, prices and sales volume have increased, while inventory on the market has declined. August sales were up 13.1% year-over-year and were up 9.1% from the comparable span of 2011. The August median selling price was $128,750, up 7.3% year-over-year. The number of homes for sale declined 16.2%. Days on market, meanwhile, were down 15.3%, from 72 to 61.