CityGate sold to Fairport real estate development firm

CityGate, the financially troubled retail and commercial real estate center at the border of Rochester and Brighton, has a new owner — and a new lease on growth.

Streamline Real Estate Partners, LLC, a development firm based in Fairport, completed an arduous year-long purchase process from Anthony J. Costello & Son (Spencer) Development LLC with the filing of the deeds on Sept. 2.

“We’re fired up, we’re excited,” said Matt Lester, manager of Streamline, which paid $17,250,000 for eight properties in the complex. “I grew up in Rochester and I’ve loved that property, and now we want to finish the legacy of what Anthony J. Costello started.”

CityGate is a work-shop-dine commercial community along Westfall and East Henrietta roads, anchored by Costco Wholesale, the popular membership warehouse store that opened in 2015. The plaza includes a variety of buildings, as well as undeveloped land along the Erie Canal, and was crowning jewel of Anthony J. Costello’s development empire.

But CityGate was beset by financial peril following Costello’s death in March of 2016. The county and city canceled a PILOT (payment in lieu of taxes) agreement in 2018 after a failure to adhere to contract terms, a battery of mechanic’s liens were filed for nonpayment of bills and the city of Rochester filed tax foreclosure papers in the spring of 2021.

Those actions, as well as the dealings of the Costello estate in Monroe County Surrogate’s Court, meant this was no ordinary real estate transaction for Lester and his partners, Anthony Gizzie and Tim Meleca.

“It was a very complicated transaction and it took a lot of different participants to get us to the finish line, but the end result is very good,” Lester said. “The Costello family was great; they wanted to see something good come of this.

“Now we’re looking forward to meeting with the city to understand what the community needs.”

City officials are always striving to attract new retail, and CityGate is already unique because it is home to the region’s only Costco and REI Co-op.

“CityGate is a very critical property and one of the few places located in the city that has the space and opportunity it has,” said Dana Miller, commissioner of neighborhood and business development for the city.

Streamline owns a variety of single- and multi-tenant properties in the Rochester area, including The Cannery in Fairport, the Big Lots plaza on Dewey Avenue in Greece and several quick-serve restaurants. This venture is by far the firm’s largest endeavor.

Lester also is managing partner of Caliber Commercial Brokerage, which has long-term relations with a host of major national firms.

“They have a good set of contacts with major retailers like Chick-fil-A, Aspen Dental and Topgolf, and we’re always looking for an opportunity to bring them to the Rochester region, and the city in particular,” Miller said. “Costco and REI are single-location opportunities within the region, and having other businesses support them will be good.”

Costco owns its building, as does Five Star Bank. Streamline bought the remainder of the plaza and inherited a tenant roster that include DiBella’s Old Fashioned Submarines, Rochester Family Orthodontics, CSL Plasma and REI Co-Op. There are several vacancies, so plans on how to best use the space are being formulated.

Among the vacancies: the 10,000 square feet occupied by the former liquor store, the 3,000 square feet that housed Qdoba and a 6,500-square-foot freestanding building.

“Costco does a bang-up job and we want to build on that momentum,” Lester said. “We don’t have a specific direction yet, but we have a lot of national relationships so we’re thinking good retail, possibly a hotel. We’re going to look at what the property needs and what complements the existing tenants.

“And we have all that undeveloped land on the canal.”

The CityGate sale was executed by parcel: $5.3 million for 450 E. Henrietta Rd. (home of REI), $3.1 million for the vacant canal land); $2.5 million for 275 Westfall Rd. (CSL Plasma), $2.5 million for 390 E. Henrietta Rd. (DiBella’s building), $1 million for 422 E. Henrietta Rd. (the vacant building with the smokestack), $1.5 million for 255 Westfall Rd. (Rochester Family Orthodontics), $1.05 million for 350 E. Henrietta Rd. (former Cheeburger Cheeburger home) and $300,000 for vacant land along E. Henrietta Rd.

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