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The Once-grand 1,100 room Statler Towers in Downtown Buffalo
In a Real Estate Limbo amid Rumors the Senecas
Want to Use it for a Casino
By Lisa Haarlander, The Buffalo News, N.Y.
Knight Ridder/Tribune Business News 

Jun. 24--The once-grand Statler Towers in downtown Buffalo is in a kind of real estate limbo amid the continuing battle over bringing casino gambling to the city. 

The 17-story landmark, which once boasted 1,100 hotel rooms, has long been an affordable office building. But for years, many tenants have lived with month-to-month leases. 

For some, cheap rent and the discomfort of moving have been sufficient reasons to stay put. For others, the dreary hallways and lack of long-term leases have caused them to relocate. 

While no mass exodus is under way, the uncertainty over the future of the building and lack of answers from the landlord is unsettling. 

Chelus, Herdzik, Monte & Pajak, a firm with 15 lawyers, recently moved into a new office in the Main Court Building, and the Bar Association of Erie County will leave the Statler at the end of the month, also for Main Court. 

The Statler, the Lawley Building across the street at 120 Delaware Ave., and other downtown locations have been discussed as possible sites for a casino. But the project is far from a reality, delayed by difficulties ranging from ironing out how to share gambling revenue to establishing labor agreements to lawsuits seeking to block the casino altogether. The Seneca Nation of Indians narrowly approved the compact in May for a casino in Buffalo and another in Niagara Falls, but Gov. George E. Pataki and Seneca President Cyrus M. Schindler Jr. have not yet signed the agreement. 

Several companies have made pitches to the Senecas, including Northstar Development Corp., which is owned by Gerald A. Buchheit, who also owns the Statler. 

"I'm sure anybody in downtown Buffalo would like to know if the Senecas would consider their property," said Gregory P. Photiadis, an attorney for Buchheit. "There has been no recent contact with the Senecas." 

Chelus Herdzik, which had been in the Statler since 1970, is among the latest to leave. When Chelus Herdzik's 10-year lease ended in May 2001, Michael Chelus said his firm tried to contact Buchheit, the owner of the building, about renewing the lease and taking some additional space. 

"They never even responded to us in any fashion," Chelus said. 

Between being ignored by the landlord, dealing with broken elevators (now repaired) and the possibility of the building housing a casino, Chelus and his partners decided that it was time to move. 

David L. Edmunds Jr., president of the Bar Association of Erie County, said his organization ran into similar problems. 

"The Statler did not respond to our request for proposal and did not offer to extend our lease in any way," said Edmunds, a partner at Damon & Morey. 

The Statler wants to keep its tenants and is actively promoting the building to prospective tenants, including some federal agencies and a bank, Photiadis said. He said he does not know why no one responded to Chelus and the bar association, and Photiadis could not immediately reach the building manager. The Statler did switch from a full-time building manager to an outside consultant that manages the building, Photiadis said. 

Many observers think that tenants are on month-to-month leases so the building can be quickly emptied if the Senecas want to use if for a casino. While Photiadis said that Buchheit would be happy to turn the building into a casino, month-to-month leases give him the flexibility to move tenants within the building in case he needs that space for another tenant. For example, several tenants had to be relocated when the state attorney general's office rented an entire floor. 

Buchheit and other investors bought the Statler in 1992 at a foreclosure auction for $2.55 million. Today, Buchheit is the sole owner. 

To help renovate the Statler, the Erie County Industrial Development Agency approved $15.15 million in financing in 1992, but the owner never took advantage of those financial incentives and tax breaks. 

As the Statler Hotel and later the Statler Hilton, the building was once the flagship of Ellsworth Statler, the Buffalo bellhop who founded a national hotel chain. The hotel began its metamorphosis into office building in the 1960s, and it welcomed its last hotel guest in 1982. 

Out of 450,000 square feet of usable space, 39 percent was vacant as of January 2001, according to a survey by the Greater Buffalo Building Owners and Managers Association. The survey does not include several floors that were never converted from hotel rooms into offices. The survey also does not include the departure of Samuel's Grande Manor, which until March 2001 leased the Golden Ballroom and two adjacent banquet rooms. 

Many tenants are sitting tight and waiting to see what happens, such as the law firm of Gradl, Polowitz, Schwach & Faust on the fifth floor. Because of the abundance of vacant space in the city, relocating on short notice would not be difficult, said partner Lawrence R. Schwach. 

"Other than the inconvenience of the move, we wouldn't have a problem," he said. 

Real estate brokers who routinely canvass the building say that most tenants in the Statler and at 120 Delaware Ave. have no plans to move. 

"There hasn't been a large number of tenants defecting from the building," said James R. Militello, president of JR Militello Realty, 268 Main St. "Everyone is aware of what's going on, and most of the people are waiting. It's a combination of the nuisance of moving and the expense of moving. Also, the Statler is an affordable building. A lot of folks aren't anxious to go somewhere else and pay more money." 

If the casino does come to the Statler Towers, it would likely benefit nearby landlords such as David Sweet, whose companies own five downtown office buildings. 

The Main Court Building has gone from an 80 percent vacancy rate, when Sweet took title in August 2001 after purchasing it at a foreclosure auction, to about 60 percent vacancy. Chelus Herdzik and the bar association are the two largest tenants, with each taking a floor. 

"They are both prestigious tenants that will give us a lot of exposure to lawyers," said Sweet, whose companies own about 600,000 square feet of space among the Main Court Building, the Main Seneca Building at 237 Main St., 241 Main St., the Stanton Building at 251 Main St., and the 29-story Rand Building at 14 Lafayette Square. 

Other new tenants include the engineering firm of Hatch Mott MacDonald, Weisberg Jewelers and the law firm of Flaherty & Maxwell. 

-----To see more of The Buffalo News, N.Y., or to subscribe to the newspaper, go to http://www.buffalonews.com. 

(c) 2002, The Buffalo News, N.Y. Distributed by Knight Ridder/Tribune Business News. 


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