“Money is no object!” likely never has been uttered by a Buffalo real estate developer, at least within the last century or so. In fact, due to an array of economic difficulties, finding enough money to consummate a real estate development project in Buffalo, NY very much is the objective.
Buffalo is the kind of place that urban experts call a “legacy city”. Legacy cities, on one hand, endure deep population losses, concentrated poverty, lagging household income growth and rampant property vacancy. On the other hand, though, those cities boast expansive historic building fabric, affordable real estate, economic productivity and opportunity, and community resiliency and sustainability. Your classic good news, bad news dichotomy.
Unfortunately, the “bad news” column of the ledger makes real estate development in legacy cities a tricky endeavor. Shrinking population, surplus aging real estate and lower wages mean that citizens can’t afford top-end rents, that building values appreciate slowly and that developers earn back less ownership “equity” than their national counterparts.
And yet, real estate development in Buffalo is booming, at least in relation to its pace during the last few decades. What accounts for this seeming anomaly? Two words: government subsidies. And, in Buffalo, no government subsidy has been more effective, dollar-for-dollar, than the historic rehabilitation tax credit (HRTC). Consider any recently renovated building in Buffalo that’s over 50 years old and there’s a good chance it was financed using HRTCs. Apartments, hotels, offices, retail outlets, cultural destinations and educational facilities all have been developed using HRTCs.