1.3 Economy

A strategy to promote economic growth and community redevelopment in the City of Buffalo must be based on a clear understanding of current economic trends – in terms of the rise or fall of economic sectors, shifts in employment location and the relation of each to ongoing local and regional policies and programs to promote growth. Along the way, a comparison of regional patterns with trends at the state and national level can help illuminate Buffalo’s situation.  

1.3.1 National trends

A review of national data shows profound and broad-based trends in the sectoral makeup of the economy. Employment in traditional primary industry sectors such as manufacturing, mining and agriculture have declined significantly over time even as the relative dollar value of these activities has been sustained through improvement in productivity. Other economic sectors have grown to provide new jobs to replace the old, most notably in business services (especially information technology), finance, and tourism (entertainment, recreation, food, and accommodation combined). 

Recent ten-year projections (1998 to 2008) by the U.S. Bureau of Labor Statistics suggest that employment in the manufacturing sector as a whole will continue to decline, but at a much slower rate than in the previous decade. Projected trends within the sector, however, will be mixed, with some industries of interest to Buffalo projected to increase while others decline. 

Meanwhile, the Buffalo-Niagara MSA remains significantly more reliant on manufacturing than New York State or the nation as a whole. Likewise, a greater proportion of regional employment is in retail trade, state and local government, health, and social services than the United States overall. 

A recent paper by Empire State Development Corporation (September 2002) confirmed that manufacturing remains a key element in the region’s economy. Based on data from 1999, fully three quarters of “driver” employment – jobs in sectors that produce regional income by exporting products or services – was in manufacturing industries. Finance and services accounted for most of the remainder – 18 percent – of this primary employment.  

1.3.2 Sectoral Shifts in the Region

Regional shifts in economic activity reflect the national trends, although with slower growth in expanding sectors. According to the Cluster Mapping Project of the Harvard Business School, the greatest gains in the Buffalo-Niagara Falls economy from 1990 to 1999 were in business services, transportation and logistics, distribution services, and education and knowledge creation. The traded clusters with the highest overall levels of employment in 1999 were education and knowledge creation, automobile manufacturing, business services, and food processing. 

An ESDC analysis (September 2002) of industry clusters across Buffalo-Niagara, metro Rochester and Ontario revealed that some of the industry clusters with the highest employment in Ontario are closely related to "driver" sectors in both upstate New York metropolitan regions. Such findings provide strong support for an emerging bi-national economic strategy aimed at further integrating the Western New York and Ontario economies. 

Table 3 City of Buffalo, Employed Population (16 years and older)
Industry 1990 2000
Agriculture, forestry, fishing, hunting 720 165
Mining 31 7
Construction 4,855 3,694
Manufacturing 21,201 14,906
Wholesale trade 4,891 4,257
Retail trade 22,415 12,172
Transportation and warehousing 5,823 5,474
Utilities 2,527 749
Information   2,974
Finance, insurance, real estate, rental & leasing 9,282 6,509
Professional and related services 10,199 9,774
Professional, scientific and technical services 3,864 4,840
Educational services 13,286 12,166
Health care and social assistance 17,612 20,218
Arts, entertainment and recreation 1,461 1,371
Accommodation and food services   8,166
Other services 5,933 5,498
Public Administration 6,901 6,012
Total 131,001 114,062
Source: U.S. Census Bureau / OSP Planning Analysis

Jobs in public administration, meanwhile, declined absolutely and as a proportion of regional employment. There were nearly 4,000 fewer jobs in government in the region in 2000 than ten years before, and the proportion of regional employment in public administration declined slightly during that period from 4.44 percent to 4.26 percent. 

For Buffalo residents – whether they worked inside the city or out of it – the trends were similar. Employment in manufacturing fell by a total of 6,000 between 1990 and 2000 (see Table 3 ). Once the leading economic sector, manufacturing jobs as a proportion of total employment shrank from 16 to 13 percent in that same period. Still, manufacturing remains the second largest source of employment for city residents and is expected to continue as a vital part of Buffalo’s new mixed economy, an important generator of wealth even at lower levels of employment. 

The sector producing the most jobs for Buffalo residents, meanwhile, was health care and social services, which added roughly 2,600 jobs and increased its share of resident employment from 13 to 18 percent. Education and retail shared third place ranking behind manufacturing with 11 percent each, or more than 12,000 people employed in each sector, although this number had declined slightly since 1990. Professional and related services was the fifth largest source of employment for Buffalonians with about nine percent of the total or nearly 9,800 jobs and holding steady since 1990.

Industry sector employment figures as currently organized obscure the importance of tourism as a source of jobs for Buffalonians. Indeed, there is no category for tourism (see Table 3). Rather, employment in the visitor-based economy spans a number of sectors, including arts, entertainment and recreation, and accommodation and food services. Although all income in these sectors cannot be attributed to tourism, combined employment in these sectors totaled more than 9,000 jobs in 2000.  

1.3.3 Location of Employment

A review of employment figures by location (see Table 4 ) shows some significant trends including a decline in total jobs, a decline in the proportion of regional jobs located within the City of Buffalo and an increase in the number of workers who commute from city to suburb. Nevertheless, Buffalo retains its status as the predominant employment location within the region. 

Table 4 Public Sector Employment
Jurisdiction 1990 2000
Local government 14,364 13,158
State government 8,359 6,369
Federal government 3,397 2,653
Source: U.S. Census Bureau / OSP Planning Analysis

Total employment in the Buffalo-Niagara Falls MSA declined by more than eleven percent during the period from 1990 to 2000 – a loss of nearly 68,000 jobs, of which more than 50,000 had been located within the Buffalo city limits. As a result, Buffalo’s proportion of total regional employment shrank from 36 to 31 percent. Such precipitous losses notwithstanding, Buffalo remains the most important employment center in the region. 

The changes in job locations resulted in a significant shift in commuting patterns. The number of workers commuting into the city each day declined from nearly 121,000 in 1990 to fewer than 94,000 in 2000 – a drop of more than 22 percent. Meanwhile, the number of “reverse commuters” grew about 15 percent, from nearly 39,000 to almost 45,000. Nevertheless, the proportion of in-city workers who commuted from homes in the suburbs actually grew slightly, from 57 to 58 percent. Likewise, the number of in-bound commuters still exceeded the number of out-bound commuters by nearly 50,000 people a day.  

1.3.4 Emerging Policies, Ongoing Programs

The policy implications for Buffalo from this portrait are clear. First, the City and its allies in the County, State, and in the private sector, should do whatever is possible to maintain the region’s manufacturing base even as they recognize its share of the economy will continue to shrink. Second, all of the relevant players should work together to foster the various elements of an emerging mixed economy. 

In the latter case, this means providing strategic support in a range of economic sectors that already have a strong base, not only in the region, but within the city itself. These include: health care and social assistance, including medical research and bio-informatics, manufacturing, education, professional and related services, finance, insurance and real estate, retail, tourism, transportation and warehousing, information technology and other knowledge-based industry, and public administration. 

A Brookings Institution study published in early 2004 confirmed such a strategy, urging policy changes that would help the region in “leveraging its strengths in higher education, health care and manufacturing into long-term growth and job creation in both established and emerging industries.” 

Indeed, government officials at all levels and private sector leaders are already engaged in a continuing cooperative effort to enact such a strategy. These partners include the Western Region office of Empire State Development Corporation, Buffalo Niagara Enterprise, Erie County Industrial Development Agency (the City’s economic development arm), the Buffalo Economic Renaissance Corporation, and the Buffalo Niagara Partnership. 

The Buffalo Niagara Partnership, Buffalo’s preeminent regional private sector economic development and business advocacy organization, has staked out a leadership position on these matters with its Partnership NOW program. They have identified eleven priority initiatives that map closely with public sector policies. These include advocacy for regional land use planning, city permit reform, downtown housing development, regional tourism development, cross-border facilitation, preparation of “shovel-ready” industrial land, workforce development, commercialization of life science technologies, and reform of regional economic development services. 

Figure 4 Perspective Narrow

Figure 4 Perspective Narrow (Popup full image) 

The Queen City Hub: Regional Action Plan for Downtown Buffalo connects downtown to the water and surrounding ring of neighborhoods. Like the Queen City in the 21st Century, it depends on the relationships among the water, the Ellicott Radial Plan, and the Olmsted Park and Parkway System to create these connections.

Figure 5 City Hub - Arrows Theatre

Figure 5 City Hub - Arrows Theatre (Popup full image) 

Five strategic investment areas make up the core of the downtown’s regional action plan. In the decade of 2000 to 2010 the areas are accounting for over one billion dollars of investment creating a critical mass of mixed use in the downtown. According to the Queen City Hub, key residential neighborhoods will nest between the strategic areas.

The first steps in a reorganization of the delivery of economic development programs have already taken place. A number of functions previously performed by staff of the Buffalo Economic Renaissance Corporation (BERC) have been shifted to the Erie County Industrial Development Agency (ECIDA) and Buffalo Niagara Enterprise (BNE). BERC, meanwhile, has been brought under the umbrella of the Office of Strategic Planning. 

In general, the ECIDA and BNE have taken responsibility for those functions that have a regional scope and impact including major regional development projects, real estate development, regional marketing, and coordination of major incentive programs. OSP and BERC have retained functions with a specific city focus including neighborhood commercial redevelopment, heritage preservation, downtown development and others. 

The collaborative relationships established during this work remain active and all parties are receptive to further efforts to ensure efficient and effective delivery of programs and services and the coordinated pursuit of economic development planning and policy making.   

1.3.5 The Role of Downtown Buffalo

Downtown Buffalo plays a pivotal role in the Buffalo-Niagara economy and its continued development will be the largest and most important single contribution that the city can make to implementing the region’s economic development strategy. It is the economic center of the region, with the largest and most diversified set of economic functions and the largest agglomeration of employment. It has the room and the opportunity to expand and diversify. It can accommodate both an expanded workforce and expanded residential development. Indeed, all of these things are already happening.

Downtown is best understood in a frame larger than the one that encompasses the traditional central business district. A greater downtown area bounded by North Street and Porter Avenue on the north, the Niagara River, Lake Erie and the Buffalo River on the west and south, and Jefferson Avenue on the east is home to 18,000 residents and place of business for 60,000 workers – more than one of every ten workers in the region. The number of these residents and workers – and their collective buying power – is likely to grow as the development of Downtown continues. 

Downtown’s most prominent assets include both long-established and newly-emerging concentrations of economic activity including government, finance, banking, legal services, insurance, business services, real estate, commerce, retail, entertainment, sports, culture, medical research, health care services, and education. 

Figure 6 Buffalo Aerial

Figure 6 Buffalo Aerial (Popup full image) 

The Queen City Hub: Regional Action Plan for Downtown Buffalo connects downtown to the water and surrounding ring of neighborhoods. Like the Queen City in the 21st Century, it depends on the relationships among the water, the Ellicott Radial Plan, and the Olmsted Park and Parkway System to create these connections.

Recent and pending investments in new private office space, government offices, medical research facilities, retail attractions, heritage tourism sites, sports venues, hotels, theaters, restaurants, transportation infrastructure and improvements in the pedestrian level urban environment provide a stout foundation on which to build further. 

One of the most important recent developments in Downtown Buffalo has been the opening of new housing there, offering residents an environment that is unavailable anywhere else in the region. New downtown residents enjoy unique living spaces and immediate access to an urban environment and amenities that are convenient, attractive and exciting. The depth of this new market is not known, but the introduction of hundreds of new units of housing has already changed Downtown dramatically. 

The historic fabric of the city itself is one of Downtown Buffalo’s key assets. The Joseph Ellicott radial and grid street plan and its system of parks and public squares, Downtown’s wealth of great historic and contemporary architecture, its proximity to close in residential neighborhoods and its immediate links to the Buffalo’s expansive waterfront are all strengths on which the city can build. 

Perhaps Downtown Buffalo’s greatest asset, however, is an engaged, well-informed and well-organized constituency for its continuing development. Since 1994, a series of “Summits” have drawn attention to the potential of Downtown and helped set the agenda for action. The Downtown 2002! implementation management program brought key stakeholders together to make sure priority projects moved ahead. The same constituency helped move forward a new strategic plan for Downtown called The Queen City Hub, which will become part of this Comprehensive Plan. 

If the future of the Buffalo-Niagara region is a more modern and mixed economy, it only makes sense to start working to achieve that future in the location that is already the largest and most diverse place of production in the this region.   

1.3.6 Buffalo's Regional Assets

Buffalo possesses a range of other assets that need to be taken into account in any strategy aimed at redeveloping the city. These assets are both natural and human-made and span a range of categories including waterfront, landscapes, arts and culture, heritage, entertainment, infrastructure, technology, research and education. What these assets have in common is that they are unique to the region – in some cases to the world – or at least represent an attraction that is regional in scope. As such, these are major competitive assets for both the city and the region and they require development. 

For example:  

  • The waterfronts of Lake Erie and the Buffalo and Niagara Rivers which are increasingly accessible for boating, fishing, sightseeing and recreation;

  • The historic parks and parkways system designed by the noted landscape architect Frederick Law Olmsted;

  • Major cultural institutions such as Shea’s Buffalo Center for the Performing Arts in Buffalo’s Theatre District; the Albright-Knox Art Gallery and the Buffalo and Erie County Historical Society as the heart of the Elmwood Museum District; Kleinhans Music Hall, home of the Buffalo Philharmonic Orchestra; the Buffalo Zoo in the OlmstedCrescent and others;

  • Important histories and related heritage sites including the Erie Canal Harbor and local Underground Railroad heritage sites;

  • Historically significant architecture including H.H. Richardson’s Buffalo State Hospital complex, Frank Lloyd Wright’s Darwin D. Martin House, Sullivan’s Guaranty Building and others;

  • Major entertainment and sports venues including HSBC Arena, home of the Buffalo Sabres and site of major concerts; Dunn Tire Park, home of the Buffalo Bisons; and the Erie Community College Flickinger Aquatic Center, a magnet for amateur athletics competitions

  • A robust multi-modal transportation system including major interstate highways (I-90, I-190 and I-290), an integrated bus and rail Metro system, the Peace Bridge crossing to Canada, and much more;

  • A powerful technology and telecommunications infrastructure including the University at Buffalo “supercomputer”and a dense network of fiber-optic lines;

  • Major educational institutions including the University at Buffalo, Buffalo State College, Canisius College and others; and

  • World class medical research and clinical facilities in the Buffalo Niagara Medical Campus including the Roswell Park Cancer Institute, Hauptmann-Woodward Medical Research Institute, and UB's Center of Excellence in Bioinformatics.

Figure 7 Buffalo’s Lake Erie waterfront (Photo from the Western New York Regional Information Network).

Figure 7 Buffalo’s Lake Erie waterfront (Photo from the Western New York Regional Information Network). (Popup full image) 

Together, these regional assets help create a quality of life for residents in the city and throughout the region that makes Buffalo a special place to live, work and play. They provide meaning and purpose to the daily lives of residents. They should not be understood only as economic assets. Nevertheless, they provide motivation for visitors to come to Buffalo and for businesses to invest private capital here. They are irreplaceable economic development assets, especially in an economic era when quality of life, character of place, and the cultural opportunities a community can offer are key incentives for both labor and capital to locate. The protection, development and marketing of these assets should be an integral part of the Comprehensive Plan.

Figure 8 The Buffalo and Erie County Historical Society constructed originally as the New York State building of the 1901 Pan American Exhibition in Buffalo.

Figure 8 The Buffalo and Erie County Historical Society constructed originally as the New York State building of the 1901 Pan American Exhibition in Buffalo. (Popup full image) 

Figure 9 The Buffalo Psychiatric Center designed by H.H. Richardson in collaboration with Fredrick Law Olmsted and Sanford White was completed in 1881. (Photo: Buffalo and Erie County Historical Society)

Figure 9 The Buffalo Psychiatric Center designed by H.H. Richardson in collaboration with Fredrick Law Olmsted and Sanford White was completed in 1881. (Photo: Buffalo and Erie County Historical Society) (Popup full image) 

Figure 10 The Buffalo Niagara International Airport.

Figure 10 The Buffalo Niagara International Airport. (Popup full image) 

Figure 11 The HSBC Arena at Buffalo’s Erie Canal Harbor.

Figure 11 The HSBC Arena at Buffalo’s Erie Canal Harbor. (Popup full image) 

1.3.7 Preparing Land for New Development

Economic development efforts can have only limited success unless the city has adequate developable land – sometimes referred to as “shovel ready” – available for business retention, expansion and attraction. Current marketing efforts are generating a strong demand for land and buildings from companies wishing to expand or locate in Buffalo. Sufficient acreage is essential if this demand is to be satisfied. 

Much of the industrial land in Buffalo is “brownfield” – former industrial sites not immediately ready for new development due to environmental concerns, obsolete structures, or other impediments. Ongoing work is focused on the Buffalo Lakeside Commerce Park project and the City Smart Plan for Strategic Real Estate Investments. But the City does not have the resources needed to develop its industrial real estate inventory as quickly as is needed. 

Preparation of industrial land in Buffalo for redevelopment should be seen as a regional priority. Making brownfields ready for market will bolster the economic health of the urban core, promote efficient use of land and existing infrastructure, and reduce the public burden of extending new infrastructure to undeveloped areas of the region. More rapid assembly and clean-up of brownfield sites is urgently needed to support the City's and region's economic development program. 

Figure 12 Perspective sketch of the Buffalo Niagara Medical Campus from the BNMC Master Plan, Chan Krieger Associates.

Figure 12 Perspective sketch of the Buffalo Niagara Medical Campus from the BNMC Master Plan, Chan Krieger Associates. (Popup full image) 

Figure 13 Buffalo’s I-190 trade corridor.

Figure 13 Buffalo’s I-190 trade corridor. (Popup full image) 

A new State Brownfield Clean Up Program went into effect in April 2004. This program provides for a significant expansion of State support for all aspects of brownfield reclamation, from assessment to clean up to reuse, including significant tax incentives for private sector owners. The program replaces the voluntary program and will provide the incentive and the means for the City to boost its brownfield clean up efforts immediately.   

1.3.8 Improving Transportation

The City of Buffalo continues to support collaborative efforts to plan and implement an efficient regional transportation system that also improves the city’s economy. The transportation network created for Buffalo was designed to serve the needs of a significantly larger population than is here today. Nevertheless, former industrial sites lack adequate access to make them viable for reuse. The transportation network needs to be extended to these areas to increase the integration and connectivity of the system across and between modes for people and freight. 

The City should continue to promote the efficiency and the reliability of freight movement (truck and rail) within and through the region and improve multi-modal facilities and system connectivity to capitalize on growing international and trans-border trade opportunities. The City should also support legislative efforts for “smart growth” and “quality communities” initiatives that promote coordinated planning and encourage mixed-use development with multi- modal transportation connections.   

1.3.9 Neighborhood Economic Development

Neighborhood business districts are a key asset across the city. Most of these business districts have suffered due to the decline in population in the city and trends towards large-scale retail. But they still serve an important role in promoting the vitality of the urban core. Others have prospered by finding a new role by combining local service retail with specialized or “niche” retail goods. The revitalization of these districts can play a key role in the stabilization and redevelopment of neighborhoods overall. Such districts are, by extension, important to the entire region. Overall, they represent a regional investment in building stock and infrastructure that needs to be used better.

The Buffalo Economic Renaissance Corporation runs the Commercial Area Revitalization Effort (CARE) Program. While its focus is on redevelopment of local business districts, it also serves to support broad City policy to help restructure those neighborhoods that are severely distressed; revitalize those neighborhoods experiencing some decline but that are still relatively stable and intact; and reinforce those neighborhoods that are strong and healthy. 

Neighborhood commercial revitalization should focus on these goals: 

  • Stabilizing or establishing key retail anchors for neighborhood commercial districts;

  • Supporting street, streetscape and other infrastructure improvements;

  • Stabilizing existing major employers and attracting new businesses;

  • Ensuring that neighborhood residents are prepared to step into existing jobs as they open up, and the new jobs that will be created; and

  • Ensuring that neighborhood and small businesses have access to capital.

Figure 14 Land currently available for more intense economic (industrial and heavy commercial) uses in the City.

Figure 14 Land currently available for more intense economic (industrial and heavy commercial) uses in the City. (Popup full image)