This Week
  • The interior of the Golisano Children's Hospital is starting to take shape.

  • Challenges mount for area companies that do business in Russia.

  • Karen Pudetti left an accounting career to start Luxe Salon, Spa and Laser Center.

  • Money managers do not feel threatened by competition from banks.

  • Lawyer John Moragne learned from mentors to set his career's direction.

  • The Business Person of the Year finalists are profiled.

Downtown shows signs of uptick

Rochester Business Journal
January 18, 2013

A rebirth might be a stretch, but Rochester's downtown appears to be growing after years of decline.
 
"I think downtown is sitting in the middle of a shift that's beginning to take place," said Heidi Zimmer-Meyer, president of the Rochester Downtown Development Corp.
 
She concedes most suburbanites are unlikely to leave their sprawling yards and two-car garages for crowded space in the city.
 
Rochester lost 4.2 percent of its population from 2000 to 2010, though there was a slight increase during the last four years of the decade, Zimmer-Meyer said. The city has lost 120,000 residents since the 1970s.
 
Downtown, however, grew 11.5 percent from 2000 to 2010, to 4,430 residents, data from the U.S. Census Bureau shows.
 
"Getting the 2010 census information was an eye-opener for us," Zimmer-Meyer said. "We've begun to see some level of turnaround in the office market. I don't want to overplay that, because the other thread that rips through that is the recession. Even though Rochester fared a lot better than many other cities around the country, we're still not a region that's grown substantially."
 
In some cases, she acknowledged, firms are moving from one part of the region to another.
 
Nonetheless, ESL Federal Credit Union's move to Chestnut Street from Irondequoit and preparations for Windstream Corp. to move its local offices from Perinton to Main Street at Clinton Avenue have given downtown new energy, Zimmer-Meyer said.
 
The RDDC is tracking 16 companies that recently have moved or expanded downtown, she said.
 
"Now, some have also moved out," she said. "But 16 moved in or chose to stay and expand or start up here when they had a lot of other significant options. Downtown, as part of the office options we have, has now become a very real one. And for a long time we were just straining to keep anybody."
 
In addition, a trend continues for historic structures in the center city to be converted for residential or mixed use. That began some 14 years ago with the transformation of the Knowlton Building on Cascade Drive and Chevy Place on East Avenue in 1999, then the Temple Building on Franklin Street in 2001.
 
"The housing story started as the main driver, and it shifted things," Zimmer-Meyer said. "It's begun to populate 28 buildings now, and there are 33 or 34 of them that are now in the pipeline or have already been converted.
 
"These are buildings that were either empty or were office space that isn't as marketable ..., and they're now housing. That soaked up a lot of dead buildings."
 
Gar Lowenguth, an associate broker at Re/Max Realty Group Inc., lives at the Sagamore on East, in the heart of the burgeoning East End.
 
"We stay in the 'hood," he said. "You kind of go three blocks one way and two blocks the other way.
 
"We're Geva people, for sure. We walk to it. We're RPO folks, here and there. We go to the Little Theatre all the time. We really are walking out our door all the time. We can do everything pretty much between Alexander Street and the Liberty Pole."

Critical mass
Those projects have enhanced the value of the buildings, boosted the urban tax base and created a more vibrant downtown, Zimmer-Meyer said. They have put downtown at the low end of the 5,000 to 10,000 residents needed to entice retail business.
 
"We're not there yet," she said. "We have a long way to go in terms of creating a street life.
 
"Retail has to come back, and I think that's going to be the last player to come to the party. But we're getting into the range now, with 5,000 residents. We're at the front end, where retailers are starting to indicate an interest."
 
Downtown has some 112 retail operations now, not including restaurants, Zimmer-Meyer said.
 
"But they're scattered, many of them at the lower end of the retail spectrum," she said. "It's changed quite a lot. Some of them are doing OK, but the concentration of retail that we had with the mall (Midtown Plaza) is gone."
 
The demographics for city dwellers are the same throughout the country, Lowenguth said.
 
"It's the post-war baby boomers, the 45-plusers that have been there and done that and are looking for something different," he said. "Or it's the ones that are 20 to 30 that are postponing getting married and maybe having kids later.
 
"The businesses seem to be proportional to that. It's not going to be like Sibley's in 1952. That's over. It's proportional stuff."
 
Local colleges are playing a role in how downtown evolves. Rochester Institute of Technology has announced plans for a Center for Urban Entrepreneurship on Franklin Street, near the Sibley Centre. The University of Rochester has purchased a city-owned parking lot on East Main Street.
 
"Within the next year or so, the University of Rochester is going to begin working on a development plan for that site, which is huge," Zimmer-Meyer said. "All of these things are like a string of pearls that ends up happening all around downtown, one incredible investment and development after another."
 
Zimmer-Meyer, who joined the RDDC in 1984 and became its president in 2002, said she has never seen anything like this.
 
"We had a long dry spell," she said. "We have absolutely and definitely turned the corner.
 
"We're racing to keep up with it at this point, which is a great problem to have."

Midtown efforts
Redevelopment of the 8.5-acre Midtown site has been the focal point. The state provided $55 million for removal of hazardous materials, and the city plans to spend some $38 million to redevelop it.
 
The city advertised for bids Jan. 7 for the third phase of the Midtown project, which includes construction of new streets, sidewalks, open spaces and public utilities designed to support private redevelopment of the site. That work is expected to begin in April and continue through early 2014, at a projected cost of at least $6 million.
 
"It'll be the most exciting year so far for the redevelopment project since it started," said Bret Garwood, the city's director of business and housing development.
 
Work on the underground service tunnel stretching from Midtown to the Rochester Riverside Convention Center is scheduled for completion by the end of February, he said.
 
"That'll resume normal service," he said. "From a public point of view, nobody really notices that. But the users of the truck tunnel certainly will."
 
The city awarded an $11.8 million contract this month to Spencerport-based Crane-Hogan Structural Systems Inc. for the second phase, rehabilitation of the Midtown Parking Garage. Work is scheduled to begin next month and take a year.
 
"The milestones there are exciting because a portion of the garage and a portion of the streets will open in anticipation of the Windstream building becoming occupied and opened in July," Garwood said.
 
Additional streets at the Midtown site will be opened throughout the year, he said.
 
"That means, a year from now, basically, the street project and the garage are nearing completion," he said.
 
The public space at South Clinton Avenue and Broad Street, on the south side of the Windstream building, will be finished by year's end, Garwood said.
 
"The other big plan for the year is the tower project will begin," he said.
 
Rochester developer Laurence Glazer, in partnership with Robert Morgan of Morgan Management LLC in Perinton, has agreed to buy and redevelop Midtown Tower. The cost is projected to be at least $55 million.
 
"We're working with Larry Glazer on finalizing the design and the financing and how the sale will come together," Garwood said.
 
Work will start soon to weatherproof the roof of the 17-story structure and to fix the freight elevator. A portion of the top of the tower will be covered to protect the elevator, Garwood said.
 
"That work will get under way this month, weather permitting, if it's not already under way," he said.
 
The rehabilitation of the tower for commercial, office and residential space could be done by the end of 2014, Garwood said.
 
"Essentially, they will own all the property that's in that whole block of the tower," he said. "The tower footprint and the parcel aren't exactly the same.
 
"Some of the things we need to work out with the developers are who's going to be responsible for completing that space. What that gets to is, is that going to be public space or is that going to be private space?"
 
A similar deal was reached with the Pike Co., which owns the Windstream property and is rehabbing the former Seneca Building for the Arkansas-based telecommunications firm, which acquired Perinton-based Paetec Holding Corp. in 2011.
 
"Some land that stretches from the bump-out to Clinton Avenue, that's private land," Garwood said. "They'll be having a little courtyard there that's their own private space. That's a minor amount of land."
 
The city has benefited from the work of Glazer and others who have restored its buildings, Zimmer-Meyer said.
 
"Our developers and investors are a pretty enlightened group," she said.
 
"They get the urban experience. They know what you do with a building. You don't strip it out and put in false ceilings and plaster walls and make it like a vanilla box. They get how to create the spaces that the market is hungry for."

Rental housing
Rochester's downtown vacancy rate for rental housing has been less than 4 percent for several years, below the national average of 5 percent, Zimmer-Meyer said.
 
"There's an opportunity to leverage density, arts and culture with this kind of way-cool lifestyle of loft apartments and incredible buildings," she said.
 
George Traikos' $6 million renovation of the Academy Building on South Fitzhugh Street is one example, Zimmer-Meyer said.
 
"You go into the Academy Building and your jaw drops," she said. "You just don't build stuff like that anymore. The captur-ing of people's imaginations, the desire in the marketplace, is very clear. It's not a blip, because it's been going on too long."
 
Rochester has gained nearly 1,500 residents downtown since 2000.
 
"We have another 700 or 800 people coming in (over two or three years) just with what's been announced. There's more stuff coming that hasn't been announced," she said.
 
That growth has changed the scope of downtown, which now includes everything within the Inner Loop, along with High Falls, part of Corn Hill and the upper East End and portions of Alexander Street, Zimmer-Meyer said.
 
"It's the market that's begun to push those definitions," she said. "It's amoeba-like, the way it looks. The market has been respectful of self-defined neighborhoods, like the South Wedge. It's filling the vacuum where there is no clearly defined neighborhood area."
 
The redevelopment of the former Genesee Hospital into Alexander Park by Glazer and Buckingham Properties LLC is an example of the physical expansion of downtown, Zimmer-Meyer said.
 
"That site was a disaster," she said. "It's been redefined as a part of downtown. It's a whole area that's been recast because we have this developer who's unbelievable. They're putting over $100 million into this.
 
"I'm amazed by how much commitment that company has been willing to make, including buying 17 properties across the street and stabilizing the whole area. Everything they've touched, they've filled."

Sibley Centre
The Sibley Centre has been another sore spot. But Winn Cos. plans to spend more than $100 million over 10 years to modernize its 1 million square feet.
 
The greatest problem for downtown now is its core, Zimmer-Meyer said.
 
"When you talk about downtown, the general public thinks Main and Clinton," she said. "That's what makes what happens at the Sibley complex and the Midtown block 10 times more important. Our community psyche is tied up in that intersection. It's part of how we define ourselves."
 
"People are sad and angry about it. They want Sibley's back. Why can't we have Midtown (Plaza) back? Why can't we have big department stores downtown? Well, because we don't compete with department stores anymore. They're pretty much at the malls now."
 
The proposed Renaissance Square development-including a transit center, a theater and a downtown campus for Monroe Community College-was intended for the northwest corner of Main and Clinton. But it died in 2009 because of funding problems.
 
The Midtown and Sibley projects have eased some of that pain, and work has begun on a transit center on Mortimer Street, a block north of Main Street.
 
"The transit center is going to open up new opportunities for a whole section of Main Street downtown," Zimmer-Meyer said. "The transfer points on Main Street will have been pulled into a transit center, which allows us to begin, when we have the money, carving up big, empty sidewalks for parking areas all along the street."
 
Each parking space adds the potential for $150,000 to $300,000 a year in retail sales, she said.
 
"There's a section, particularly between the river and the Liberty Pole, that feels abandoned, and it looks abandoned. The whole section where Ren Square would've gone is the last bastion of we-better-do-something-about-it territory," she said.
 
The challenge of the northwest corner of Main and Clinton is daunting because of funding issues similar to those of Midtown Plaza before the state stepped in with $55 million for abatement work.
 
"It's too much remediation cost and demolition and just getting to a development-ready site," Zimmer-Meyer said. "It can't be done by the private market in our regional economy ..., so it's going to have to be a partnership."
 
Zimmer-Meyer calls that corner the last hole that needs to be filled for downtown to thrive.
 
"You're already seeing people walking their dogs down here in the middle of the day," she said. "I've never seen anything like it. It's just shifting. All of that is going to put increasing pressure on that northwest corner.
 
"In the next five years or so, we're going to have to come up with some kind of community plan and solution for that. That's going to start holding things back if we don't."

1/18/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


What You're Saying 

There are no comments yet. Be the first to add yours!

Post Your Own Comment

 
Username:
Password:

Not registered? Sign up now!
 

To Do   Text Size
Post CommentPost A Comment eMail Size1
View CommentsView All Comments PrintPrint Size2
ReprintsReprints Size3
  • E-mailed
  • Commented
  • Viewed
RBJ   Google