By ALLISSA KLINE
akline@bizjournals.com | 716-541-1612

Buffalo's next big wave in luxury residential real estate could take place in established city neighborhoods.

A top prospect is the Gates Circle area in the Delaware District - specifically, the former Park Lane Restaurant site at 33 Gates Circle. Uniland Development Co. owns the parcel and plans to build a condominium tower sometime in the future.

"That's a fabulous project," said Realtor Barbara Baker of Hunt Real Estate Corp. "I would bet that would sell very quickly because it's going to draw from all the areas around it where people are still sitting in big, single-family homes that are bigger than what they want."

The concept of luxury living continues to be in vogue in Buffalo. The city boasts supersized architectural gems in North Buffalo, a myriad of condos and townhouses along the waterfront and, most recently, the most expensive group of condos in the city's history in the Avant building in the downtown business district. Just this month, the highest-priced sale of a residential property in Buffalo hit the record books when the Miller Mansion on Nottingham Terrace sold for $1.7 million.

Yet what comes next in luxury living may well be determined by the success of the Avant units in downtown Buffalo and the latest waterfront project, Pasquale at Waterfront Place by Ellicott Development Corp. Twelve of the 28 units at the Avant and several units at the Pasquale continue to be for sale.

Too many high-end properties for sale at one time, however, may flood the market and discourage developers from starting new projects, said Gary Kenline, senior vice president of Hunt Real Estate.

"I think Buffalo has to be cognizant of absorption," Kenline said. "How many half a million-dollar buyers do we have?"

Some Realtors point to the waterfront as an example of potential future opportunity for luxury living. A few mentioned available space next to the city's Portside condos and near Templeton Landing restaurant. Others say development along Canal Side will spur housing projects, including high-end properties.

"I don't think the waterfront is built out yet," said Dennis Penman, executive vice president of M.J. Peterson Real Estate Corp. "There remains opportunity for quality residential construction, even if it's a mixed-use building."

The immediate focus comes back to Gates Circle, originally proposed in mid-2006 following Uniland's purchase of the property. Plans showing a 23-story building drew criticism from neighbors, some of whom filed a lawsuit in 2008 to prevent construction of the building.

Uniland spokesperson Therese Hickok said the company, which operates the Avant, still intends to build on the Delaware District site.

"It's definitely still on our radar, but timing isn't quite right yet," Hickok said. "Our primary focus is selling the remaining units at the Avant. When the economy looks more favorable, I'm sure you'll see progress again."

A second opportunity across the street could also lead to high-end housing. Kaleida Health's Millard Fillmore Gates Circle Hospital is slated to shut down in late 2011. The nine-acre parcel includes 882,087 square feet of facility space.

"That is just a wonderful opportunity," said Realtor Susie Lenahan of M.J. Peterson Real Estate Corp.. "That will be a nice piece of property because I think probably some of it will be torn down."