Office market doubles, diversifies over the last decade 
by William Tuthill, Business Review Reporter, published 01/2001.

H.R. "Hal" Schultz remembers when Wolf Road in Colonie had more vegetable stands than office buildings.  His family owned 30 acres and ran the Schultz Farm and Greenhouse near what is now Computer Drive West.

But for a long time, it was clear that Wolf Road was directly in the path of Real Estate Development.  Schultz said.  "It's the central hub of the tri-city area," he said.  Even before the Northway opened 30 years ago, cutting of the back of the Schultzes' property, Wolf Road had become a major traffic route.

The farmland was gradually sold off for commercial use.  In 1978, Hal Schultz himself developed the site now occupies by the Sherwin Williams paint store at 130 Wolf Road. 

By that time, Schultz had started his own construction company, H.R. Schultz Inc., and had moved to Saratoga County.  "I saw a lot more growth potential in Saratoga County for construction and development," he said.

By 1990, Wolf Road was nearly fully developed.  New office projects were going up elsewhere in the Albany suburbs, in places such as Corporate Woods, Airport Park and Washington Avenue Extension.  They were also following Schultz's move up the Northway into Saratoga County.

Wolf Road was an early version of what other suburban areas have become, Schultz said.

From 1990 to 2000 the suburban Albany office market nearly doubled, from 5.9 million square feet to 11.1 million square feet.  Much of the growth occurred in establishing close-in suburbs like Colonie and Guilderland.  As Wolf Road and other developments in those counties reached capacity, office development during the decade also moved north into Saratoga County.

Schultz, 57, has benefited from the commercial development north of the Mohawk River.  He is the developer of Ballston Commercial Park, near Northway exit 12 in the town of Malta.  The park houses office and warehouse tenants, and Schultz recently announced plans to add 75,000 square feet  of new retail, office and professional space.

Route 67, which crosses the Northway at Exit 12, is the center of Saratoga County in much the same way Wolf Road in for Albany County, Schultz said.  It is one of the county's few major east-west routes.

Commercial real estate development in Saratoga County was slowed somewhat by lack of commercial zoning, observers say, and by its mainly rural and suburban residential character.  That changed in the 1990's, as the county began more actively courting commercial and office development.  

Not only is there twice as much suburban office space in the Capital Region as there was a decade ago, real estate experts say, but it is more diversified.  It is less reliant on state government and on large corporate employers.  There are more companies that use less space.

The buildings themselves are more flexible, designed to accommodate tenant's fast-changing staff requirements.  Fewer square feet are given over to each employee as office design has moved from individual walled-off rooms to open areas with cubicles.  And the newer buildings are more technologically advanced to include the latest wiring and other telecommunication infrastructure, real estate experts say.

Eileen Lindburg, vice president of CB Richards Ellis Robert Cohn, a commercial brokerage in Albany, said office tenants in the 1990's started looking farther north.  "The exits on the Northway become attractive as people try to avoid commuting all the way down," Lindburg said.

Near those Northway exists in Saratoga County are a number of large land sites, Linburg said.  And the Saratoga County Economic Development Corp. emerged in the 1990's as a visible and aggressive promoter of office development. 

The 1990's saw a big increase in commuting within Saratoga County, said Todd Fabozzi, a senior planner at the Capital District Regional Planning Commission.  "The suburbs are maturing into their own cities, Fabozzi said.

Commercial and retail development around the Northway exists came first, to serve the surrounding bedroom communities such as Clifton Park, Malta and Halfmoon.  Since 1990, Fabozzi said, it has been supplemented with new office developments that are daytime destinations for Saratoga County Residents. 

Rental rates in Saratoga County remain relatively affordable. Dean Taylor, broker associate with Re/Max Park Place in Clifton Park, said annual office rents are $14 to $16 per square foot around the Northway Exit 8.  At exit 9, the rates drop down to $12 to $14, he said and at Exit 10 they are around $10 per square foot per year.  Closer to Albany, rate are in the $17 to $19.50 range, according to a November survey of office real estate by CB Richards Ellis Robert Cohn.

Taylor said a major change from 1990 to 2000 was in vacancy rates.  Even with the steady addition of new construction in the last decade, available office space is at an all-time low.  "It went from a tenants' market to a landlords' market," he said.  " A lot of people are living in suburbia and deciding to work in suburbia.  And the rents have edged up with demand."

Even with landlords in a stronger position, Taylor said the tenants he works with have become more discriminating.  With the current labor shortage, he said the needs and wants of employees are a bigger factor in choosing space.

"The main concern used to be the bottom line, getting the most space for the dollar," Taylor said.  "Now office tenants are more employee-conscious.  People bring their employees along to look at space, and ask them, 'Is this OK?' "

Like the Northway, Albany International Airport was a catalyst for development in the 1990's.  A decade ago it was a much sleepier place, operating in a 30 year old terminal with outdoor surface parking, and it was surrounded by two-lane roads and some commercial development.  

The airport has a new terminal and parking garage and just finished its busiest 12 month period ever.  Hotels have gone up, and plans are under way for a wider, realigned Albany Shaker Road, the main route to the airport. 

The nearby Airport Park office development illustrates that changes around the airport in the last decade.  In 1990, Airport Park was a mixed use development of offices, warehouse and distribution centers. 

During the '90's the area started attracting more office tenants who had outgrown their space on Wolf Road and other developed areas.  Airport Park's developer, British American Development Corp., started to build Class A office space only.  Another nearby development on Airline Drive, building the same kind of space grew rapidly.  

"We decided office space was a higher and better use for the park," said Charles Poe, executive vice president of British American, "We haven't built a warehouse in more than 10 years.  

In the last five years, Airport Park has expanded rapidly.  It added five new buildings in 2000 most of them fully leased before ground was broken and now contains a total of about 1.2 million square feet.

Office tenants relocating from other parts of suburban Albany have made up a lot of the growth of Airport Park, Poe said.  But in the last two to three years, it has begun attracting more businesses from outside the area.  

"We're not just pulling from within the area, pulling tenants from another developer," Poe said.  "People are opening new operations here, which in general is better."