It seems like a simple enough observation: “We don’t build 25-story buildings in this market anymore.”
Those were the words of Heidi Zimmer-Meyer, president of Rochester Downtown Redevelopment Corp., explaining part of the success for converting Rochester’s tallest office buildings into multiuse buildings, including residential spaces.
The architecture of the 1960s and 1970s may not seem that appealing for residences, given the Victorian-era real estate on the market in most rust-belt cities like Rochester. Why trade gingerbread trim, cupolas, gumwood interior woodwork and butler’s pantries for living in a Brutalist monolith?
But it’s not what the buildings look like, so much as what they look at that make them attractive. Just visit offices and apartments in the upper floors of what’s now called The Metropolitan, built as a 26-story bank office building in the 1960s. You may find it impossible to concentrate on a business meeting at Datto.
Because. Just. Look. At. That. View.
Now Rochester’s tallest tower, the 32-floor former headquarters of Xerox Corp., is undergoing a similar transformation. Though Buckingham Properties is still renovating the building, Zimmer-Meyer believes with Buckingham’s successful track record and the amazing views, the project will not have a vacancy issue.
In a recent conversation with Zimmer-Meyer, she identified some hopeful and some concerning trends in commercial real estate in the downtown area. And she couldn’t help coming back again and again to the topic of the COVID-19 pandemic that most people believe will cause economic fallout around the globe, including inside the rapidly disappearing Inner Loop that used to define downtown Rochester.
The impact of the pending economic crisis probably won’t change what is happening downtown but when, she said.
“It certainly will delay some of this as companies get back on their feet,” Zimmer-Meyer said. “Nobody really knows where it’s going.”
As of the fourth week in March, RDDC’s Commissary, an incubator kitchen in the former Sibley Building, was still on target to open in June. Zimmer-Meyer said as long as key inspections continue to happen on time, the plan is to open the kitchen for food startups on schedule.
The Commissary is one of five incubators in the downtown area nurturing creation of new companies, many of whom are filling up office space downtown. Zimmer-Meyer said approximately 100 tech companies now reside in the downtown area, along with 90 creative class companies.
Add to that six co-working spaces, with another one expected to open this year, and there seems to be plenty of evidence that downtown is attracting more and more workers and residents.
“Between housing and the downtown innovation zone, it’s created an energy that is very appealing. Not just to young folks: We’ve got boomers and retired well-off folks, income restricted and more affordable. Downtown continues to be the most diverse super-neighborhoods within the city,” Zimmer-Meyer said. This super-neighborhood, she noted, includes 14 separate neighborhoods within downtown.
For at least a decade, developers have been creating new residences out of former office and retail spaces in the downtown area, adding up to thousands of new residences. But an intriguing trend is emerging now, Zimmer-Meyer points out. The number of new conversions in the pipeline (312 units) is being outstripped by the number of newly constructed homes in the pipeline (870.) Nearly a quarter of those are in an apartment building Buckingham plans to build at Alex Park, the former Genesee Hospital site. Others are being built on a filled-in section of the Inner Loop and scattered around the area.
Other positive signs for growth include plans for new hotels in Rochester, including the Hampton Inn as part of the Neighborhood of Play.
What concerns her, though, is that despite all this growth in housing and employers in the tech and creative classes, this new growth is not keeping up with the shrinkage of the traditional manufacturing-based economy.
Along with Xerox tower, two Eastman Kodak buildings that are part of the Kodak Tower complex are now on the market, moving them from the non-competitive, owner-occupied category of office space into the competitive market. Between the three buildings, that means downtown suddenly has an overabundance of office space, especially Class A space, Zimmer-Meyer said.
“It’s not a fundamental weakness in the market, but major transformations of two large multinational companies,” she said.
Still, the downtown area that used to have a 3 percent vacancy in Class A office space in the 1980s, and a 12 percent vacancy rate in 2010, now has 39 percent with the recent addition of these buildings, outpacing vacancies in other classes of office space.
“That is a remarkable reversal,” Zimmer-Meyer said. “We’re watching that very closely. Nobody needed to see that happen.”
Still, Zimmer-Meyer remains optimistic, based on Rochester’s resources and past history.
Rochester absorbed the massive layoffs and selling off of divisions of Eastman Kodak Co., Zimmer-Meyer notes, as the company went from 64,000 employees in the 1980s to fewer than 1,500 today.
“And we have not been knocked on our hindquarters,” she said, noting that much of the brain power formerly employed by Kodak remained the area to helm new businesses.
“Rochester…it’s kind of a brainiac place, with a lot of built-in talent,” Zimmer-Meyer said. “We’ve got a lot of internal pluck and resilience in this economy.”
firstname.lastname@example.org/ (585) 363-7275