By JAMES FINK
jfink@bizjournals.com | 716-541-1611

Faced with major downtown commercial real estate issues, Buffalo Mayor Byron Brown has asked the Buffalo Niagara Partnership to study the market in the central business district and make recommendations concerning such things as incentives and reuse possibilities.

The study, which the Partnership will start in January, comes as the nearly 800,000-square-foot Statler Towers faces an uncertain future. There also are tenant issues for the 38-story HSBC Tower, downtown's tallest office building.

Also a concern is shuffling of tenants between buildings, with little new, net absorption taking place in the central business district.

"The short-term components are going to be different than the long-term components," said Andrew Rudnick, Buffalo Niagara Partnership president and CEO. "We're trying to put things into perspective."

Brown said the study, expected to be completed by early summer, will serve as a blueprint for his administration's strategy for downtown office development. It will be done by a committee put together by the Partnership and will include professional and academic experts.

"We have made great progress in downtown Buffalo, attracting new residential developments in former commercial buildings and adding new businesses near and within the central business district," he said. "But we have to plan ahead to ensure that the district's available commercial space is maximized to its full potential."

Downtown office vacancy rates continue upward, especially in older "B" and "C" class buildings.

HSBC Tower is at risk of losing its two biggest tenants: HSBC Bank USA and the Phillips Lytle law firm. Both have leases that expire in 2013 and they are considering several options, including moving to new buildings. If they leave, the tower would have a vacancy rate of 86 percent, which would create a financial drain for its owners.

The Statler Tower's fate is equally uncertain with a court-appointed trustee recommending the mothballed building be abandoned. A deal by local businessmen Mark Croce and James Eagan to buy the structure rests on whether they can secure $5.2 million in public-sector support for emergency repairs. A hearing on a possible abandonment is set for Dec. 21 in U.S. Bankruptcy Court.

"Clearly we need a master plan for existing buildings," Rudnick said. "Buffalo needs accurate data and information going forward so it can make the right zoning and planning actions."