United States -  Buffalo

Overview:

The Buffalo market derives economic strength from a variety of sectors. The area’s proximity to Toronto and its accessibility via major interstates allow it to thrive as a retail center for Canadians and make it attractive as an easy weekend getaway for the region. However, market participants note that with the increasing strength of the Canadian dollar, leisure travel to the Buffalo region has fallen. Nonetheless, the Buffalo economic base is also supported by the education, medical, and financial fields, among others. The city's medical industry has grown in recent years with the expansions of the Buffalo Niagara Medical Campus; this trend is expected to continue with the construction of UB’s new medical school, a $375-million showcase facility that is being funded in part by NYSUNY 2020 legislation and is scheduled to open in 2017. Additionally, projects planned or underway in Downtown Buffalo, such as the Harbor Center development, should support further growth. The breadth of employers in the Buffalo area and the redevelopment efforts throughout the market are anticipated to be positive factors going forward.

The outlook for the Buffalo market is optimistic, as many area residents and visitors look forward to the continued development of Downtown Buffalo and the numerous projects associated with the Buffalo Billion initiative. The expansion of the healthcare and technology sectors represents a growing focus on transforming the local economy and encouraging innovation and entrepreneurship throughout the market. While the entrance of new hotel supply outpaced demand levels in 2015, we anticipate the new supply to be absorbed by 2017 and, thus, have forecast occupancy to strengthen marginally beginning in 2018. Furthermore, we expect average rate to continue to gain momentum in the near term, particularly as higher-rated supply enters the market. The Buffalo valuation metric illustrates resumed growth through 2017, similar to that of the national forecast. We note that only one hotel has sold in Buffalo since 2014, the Buffalo Tourist Lodge, at a price per room of just under $25,000.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Buffalo United States
Previous Year +1% (43 of 71) +1% (49 of 71)
Growth in 2017 +2% (21 of 71) +2% (36 of 71)
Growth in next 3 years +12% (16 of 71) +10% (36 of 71)

Change In Value For Market:

Buffalo RevPar % Change

For more information, please contact:

Jerod Byrd, MAI
jbyrd@hvs.com
  • +1 901 481-3058 (w)