Turning City Gate into a Rochester shop-dine-stay-play destination

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Not long after the death of developer Anthony J. Costello, Caliber Brokerage was tasked with finding a buyer for City Gate.

The work-shop-dine commercial community, which straddles the border of the city of Rochester and the town of Brighton, had been the crown commercial jewel within the Costello development portfolio.

And when Costco Wholesale opened in June of 2015, the plaza was expected to fill up quickly.

But Costello’s passing nine months later triggered close to six years of turmoil for City Gate. Instead of flourishing, City Gate was beset by financial chaos. The County of Monroe Industrial Development Agency terminated a PILOT agreement, mechanics liens were filed and a tax foreclosure proceeding was initiated by the city of Rochester.

By the time the property went on the market, there wasn’t anyone willing to bring the project to fruition.

“We didn’t have a lot of interest,” said Matt Lester, managing partner of Caliber Brokerage. “No one could get their arms around it and understand the value we believe it has.”

So Lester and his partners in Streamline Real Estate Partners, Anthony Gizzie and Tim Meleca, bought it for $17,250,000 in September of 2022 and have been busy ramping up the plaza’s offerings.

They have added What the Wellness, Toast Factory and NexTier Bank to the rent roll, and Clear Choice Dental Implant Center is on the way. In the next three months, site work will begin on two popular restaurants, as well as a dual hotel and the region’s first Topgolf, a sprawling entertainment complex occupying nearly 19 acres.

There also are plans for new construction that will create more retail space as well as office, plus the transformation of the decommissioned county steam plant with its smokestack into useable space.

Having a Costco with the fifth-most members in the U.S. (approximately 90,000) guarantees traffic at City Gate.

The most noticeable work will begin next month with the demolition of the old Department of Public Works building, followed by construction of a Chipotle restaurant along East Henrietta Road, directly across from the entrance to Monroe Community Hospital.

Topgolf will join Costco as the prime City Gate attractions. Golf is obviously the focal point but there’s also a bar, restaurant, games and music.

Also in April, the 18-month construction process is scheduled to begin on the latest DelMonte Hotel Group project: the development of a combined AC Marriott and Element by Westin next door to REI on the plaza’s south border overlooking the Erie Canal.

“They are two very exclusive brands that — similar to Topgolf — are coveted by any real estate developer,” Alex Delmonte said back when COMIDA approved $7.6 million in tax incentives for the project.

Builders will start work in May on the area’s fourth Chick-fil-A, which will be located just to the north of REI and the hotels. Chick-fil-A and Chipotle both are expected to be open by November.

The NexTier Bank branch opened in November, the first brick-and-mortar office in Rochester for the Butler, Pennsylvania-based bank. While NexTier had been providing commercial loan services for about three years, there just wasn’t a local branch. That they’re in City Gate makes sense, considering they have a business relationship with Streamline.

“They’ve been able to navigate deals that other lenders could not,” Lester said.

The steam plant and smokestack that sit along East Henrietta Road present development barriers. First, there’s the historic nature of the building. Then, there’s a utility easement with Monroe County on the building’s basement.

But it also makes little sense to pretend the hulking building doesn’t exist, so renovation will create 5,270 square feet of retail space along with 10,790 square feet of office space.

“We’re making lemonade,” Lester said. “It’s a building that has a challenge, but we have an opportunity to restore a really unique building.”

The last piece of the current development plan calls for the creation of a 20,000- to 40,000-square foot new-build along the canal, to the east of the hotels.

“We’re working with a few tenants, maybe a brewery or café, something that allows people to stay and enjoy the connectivity of the canal,” Lester said. “In a perfect world, it would be retail on the first floor and office on the second.”

While hybrid work arrangements continue for many companies, office space is a component Lester believes is important for any a development such as City Gate.

“The image of office is changing,” Lester said. “But I think office drives collaboration. That’s why I see office coming back. When you have that unique space, there’s an environment, you’re not just going to a room with a computer.

“And it gives people a reason to stay, dine and shop.”

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