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

The good news: Western New York's commercial real estate market isn't like that of Phoenix or Las Vegas.

The bad news: It's a far cry from places such as Washington or New York.

So where does that put it?

Somewhere safely in the middle, according to a recent panel discussion by commercial real estate and financing experts, along with a top executive from the Washington-based Urban Land Institute. The 90-minute event focused on Upstate real estate trends and reinforced what many already know: The conservative development pace locally is a safer way to advance and helps prevent massive amounts of distressed real estate from hitting the market.

The panelists were Mark Czarnecki, M&T Bank president; Carl Montante, Uniland Development Co. president and managing director; Tom Kucharski, Buffalo Niagara Enterprise president and CEO; and Dean Schwanke, executive director of the Urban Land Institute's Center for Capital Markets and Real Estate.

Jeff LiPuma, managing partner of CB Richard Ellis Buffalo, moderated the discussion. The event was presented by the Buffalo Niagara Enterprise and Buffalo Urban Development Corp.

"We see some progress," Czarnecki said. "Consumers are spending a little more. And because of that, we are seeing some very modest growth."

Montante agreed. He said many Uniland tenants are looking for "more efficient use" of their office space as leases come up for renewal. His company has scored some coveted real estate leases: It brought the federal government to Airborne Business Park in Cheektowaga and Jaeckle Fleischmann & Mugel LLP law firm to the Avant building downtown.

"There is far less risk-taking in this community than you see in other parts of the country," Montante said. "In Buffalo, you've got maybe two or three properties facing big problems."

He attributed that to the conservative approach by developers, as well as banks and financial institutions when it comes to loans on speculative office projects.

"Do I envy the robustness of other cities? Yes, I do," Montante said. "But some of that robustness lends itself to other challenges."

Schwanke of the Urban Land Institute noted that some 40 percent of all commercial real estate deals in Phoenix last year involved "distressed" properties which were in some form of financial failure. It was a similar situation in places such as Las Vegas, Miami, New Orleans and Atlanta.

"Atlanta is chronically overbuilt," Schwanke said.

There are economic indicators that Western New York may be better positioned for a slow but steady growth period than other middle-market cities, he said.

Based on institute statistics, he found that while the U.S. job growth rate for this year is pegged at 1.4 percent, locally it's projected at 1.6 percent. Certain other sectors may see increases, as well, including the local leisure and hospitality markets, where the ULI is projecting a 3.8 percent increase in job growth. The construction industry, meanwhile, could see a 2.7 percent rate.

"We've got to get the economy growing and the number of new jobs growing," Schwanke said. "Without that, the real estate market won't come back."