December 27th, 2013
Via Buffalo Business First
by James Fink
Bill Paladino’s phone rings a lot.
As CEO of Ellicott Development Co., he’s constantly fielding calls from commercial real estate agents and fellow developers, many offering him choice properties. The calls often lead to deals.
This year was a good example.
In Erie County alone, the company acquired 17 properties totaling about $13.1 million. Ellicott Development’s activity is viewed in many quarters as a sign of confidence in the region. While total economic development in the past three years tops $8.1 billion, based on Business First research, real estate deals both large and small happened at a near-record pace in 2013.
“What we did is definitely a sign of confidence,” Paladino said. “Every indicator I’ve seen tells me the market has turned.”
The year began in headline-grabbing fashion when the Hamister Group completed a long-awaited deal to buy the Tishman Building in Buffalo and began a $40 million renovation. The work includes moving corporate headquarters to the upper floors and bringing a 124-room Hilton Garden Inn.
Then, just before Thanksgiving, Gov. Andrew Cuomo announced plans by a pair of green energy, high-tech firms in California to spend $1.5 billion to anchor Riverbend Commerce Park in South Buffalo.
And besides a busy year spent buying buildings from Amherst to East Aurora, Ellicott Development was selected by Buffalo Mayor Byron Brown to construct the $75 million, mixed-use Carlo, a project in Waterfront Village. The 14-story Carlo will feature apartments or condos, a brand-name hotel, Class A office space and a series of restaurants and storefronts.
“You can’t do everything,” Paladino said. “You have to pick and choose. Sometimes you decide to walk away from projects; sometimes you just decide to do other things.”
One thing about many Ellicott projects is that they only get advanced if there is a tenant or specific development game plan in mind.
“They know existing buildings,” said James Dentinger, president of McGuire Development Co. “They have a good, internal process of finding the right buildings but not overspending on them.”
McGuire and Ellicott are teaming up to convert the closed Holy Angels Academy in North Buffalo to what likely will be an educational center. Ellicott bid over $3 million for the nearly six-acre Hertel Avenue campus.
“Just look at Ellicott’s track record,” Dentinger said. “So many times you hear people say, ‘I wish I thought of that’ or ‘I didn’t know about that’ when they hear of one of Ellicott’s deals.”
It wasn’t just Ellicott Development making deals this year. Tony Trusso, Paul Iskalo, David Pawlik, James Swiezy and Paul Kolkmeyer were busy acquiring properties in both Buffalo and the suburbs.
Among the buildings that changed owners were the downtown Dun Building, acquired by Kolkmeyer for $1.3 million, and the former Patrick Development offices on Transit Road bought by Iskalo last month for $2.1 million.
According to the Erie County Clerk’s Office, between Jan. 1 and Nov. 30, there were 20,187 real estate deals that closed, both commercial and residential. In that period last year, the number was 17,868 deals. That’s an increase of nearly 13 percent.
In 2012, the clerk’s office recorded a total of 19,785 real estate transactions.
Yet, because of Ellicott Development’s high profile, especially that of founder and Chairman Carl Paladino, its deals are constantly under the regional economic development microscope.
“Carl and Billy have very good instincts,” said Alan Hastings of Hastings Cohn Real Estate. “Very few people know the community as well as they do.”
The company’s history is dotted with economic development home runs. In fact, Ellicott Development was one of the first to buy a large Main Street building and bring it back to life when many considered it a white elephant. It was the former L.L. Berger department store, an eight-story structure that was sitting vacant. It is now the Belasario, a building anchored by 29 apartments.
The same is true with Greystone, a late 1800s former hotel on Johnson Park that Ellicott Development reopened this year as a 43-unit apartment building.
“So many of their deals turn out to be very strategic,” Hastings said.
Strategy carries a lot of weight in Ellicott Development’s due diligence, said Bill Paladino.
“Are there calculated risks involved? Yes,” he said. “But in the end you want to make deals that make sense on their own merits.”
Some examples from this year’s acquisitions.
• A call came with an inquiry about whether Paladino would be interested in buying an early 20th century building at Delaware Road and Delaware Avenue in the Village of Kenmore. The main tenant, Heritage Centers, was moving its special-needs education program to another location. The three-story building was about to go on the market.
Besides finding the building had “good bones,” Paladino said, he and his staff took a look at the neighborhood and its demographics and decided a residential-based conversion could work.
“When you get an opportunity like that, you jump at it,” he said.
He negotiated a $725,000 sale price with the New York State Association for Retarded Children Inc., the building’s owner of record. Plans call for much of the building to be anchored by 24 apartments. The conversion work will start in 2014.
• Nearly two years ago, the Paladinos negotiated a deal with the Stereo Advantage owners to buy their flagship property on Main Street in Amherst. Building off the success of a nearby Hampton Inn they operate, they decided to convert the property into a mixed-use development anchored by Erie County’s first Wyndham Hotel and 36 apartments. The $28 million project debuted earlier this year.
It was something that led to a call to Bill Paladino from representatives of the Cantalician Center for Learning Inc. They wanted to sell the center’s Eggert Road educational hub. The property piqued Paladino’s interest because it is close to Main Street and not far from the University at Buffalo’s South Campus.
“One of the things we learned from the Wyndham is that we wanted to do another Amherst project,” Bill Paladino said.
Ellicott Development, through its 9187 Group LLC affiliate, bought the center for $700,000 and is working on plans to renovate the building into 42 apartment.
• Big-ticket developments in the downtown Cobblestone and Canalside districts also caught his attention. Critical mass is growing in the neighboring areas, thanks to the Buffalo Sabres’ HarborCenter project, the permanent Seneca Buffalo Creek Casino and the continued evolution of the Erie Canal Harbor Development Corp.’s Canalside initiatives.
So when the former Nicholson & Hall property on Columbia Avenue became available, Ellicott Development made an offer to buy the early 1900s manufacturing and warehouse building for $950,000.
That deal was an example of Paladino and Ellicott Development taking advantage of the momentum in downtown Buffalo.
“They are definitely a barometer for how things are going,” said Gunner Tronolone, a broker at M.J. Peterson Corp.’s commercial real estate division. “You want to see how things are going? Then watch what Ellicott Development is up to. They really lay the groundwork for a lot of deals around here.”