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

With HSBC Bank USA in the decision-making stage about where to locate its Buffalo headquarters, pressure is on to keep it in the present location. If it decides to move to another site in the central business district, it will do so with minimal public-sector incentives.

On Dec. 15, directors of Buffalo Place Inc. approved sending a letter to a top local official, Executive Vice President Mark Melas, urging him to lobby to keep the bank as anchor tenant in the 38-story HSBC Tower. The bank occupies about 653,000 square feet of the nearly 850,000-square-foot building and has 2,200 employees on 22 floors.

At the same, Buffalo Mayor Byron Brown wrote a letter to Jordan Levy, chairman of Erie Canal Harbor Development Corp., stating that he'd prefer that the bank remain in HSBC Tower rather than move to the Webster Block, which is part of the ECHDC's Canal Side development area.

HSBC and Phillips Lytle law firm will see their respective leases expire in 2013. Both are scouting downtown Buffalo for new locations, as well as considering remaining in HSBC Tower. Decisions are due within weeks.

Should one or both leave the tower, many feel it would have a devastating effect, leaving the building nearly 87 percent vacant at a time when office occupancy rates downtown are increasing and the commercial real estate market is stagnant.

"Given historical absorption rates, it could take as long as a decade or more for the vacant space to be absorbed," noted a letter from Keith Belanger, Buffalo Place Inc. chairman. "The market might never recover from this blow."

Others expressed similar concerns.

"We all know the ripple effect this will have in downtown," said Paul Ciminelli, Ciminelli Real Estate Corp. president and CEO.

HSBC is considering several options, including exercising a 10-year renewal option for HSBC Tower or extending the lease beyond the next decade. It also is considering moving into a proposed 14-story building on the Webster Block across from HSBC Arena or into a 10-story building that Seneca One Realty LLC, has offered to construct. Seneca One Realty owns the tower.

Many feel if HSBC moves, it will expand its Buffalo workforce, perhaps doubling the number of workers it has in the central business district.

Bank officials declined to comment, other than to say options are being considered.

A move to the Webster Block, coupled with a handsome incentive package, has many concerned.

"All you are doing is moving two blocks away to the other side of the (New York State) Thruway," Ciminelli said.

Belanger, in his letter, said if HSBC decides to move, "we hope it is because of a compelling alternative has been put in front of you that is not driven by public incentives."

Brown, who has flown to New York to meet with HSBC executives, said he, too, is concerned about potential ripple effects. The impact could be deeply felt by property owners of older, B space buildings.

Still, he said he would support the bank if it opts to build its headquarters on the Webster Block.

"I recognize that, first and foremost, HSBC has a business decision to make," the mayor said.