New York State’s commercial real estate market is cautiously moving forward. Developers are still wrestling with high borrowing costs and inflated construction prices, which have slowed the pace of new ground-up projects. Many are waiting for a break on interest rates or materials before diving in again. Yet, momentum is returning. Retail demand is stabilizing, and state officials are stepping in to keep projects moving. A new $215 million fund aims to fast-track mixed-income housing construction in an attempt to turn pent-up demand into real progress. Meanwhile, change is sweeping upstate. Across the region, old coal plants and empty factories are being transformed into data centers for AI and cloud companies. Even with headwinds, developers are finding opportunity at the intersections where infrastructure, housing, and tech meet.
Reinventing Retail: Rochester’s Creative Comeback
Rochester’s retail sector is proving that reinvention can be as powerful as new construction. Instead of chasing costly ground-up projects, developers are breathing life into existing spaces through adaptive reuse and community-driven design. Take Buckingham Properties’ transformation of Midtown Plaza into The Grove. The project added sleek mixed-use towers, residential space, and retail wrapped around a public courtyard turning a vacant downtown landmark into a local destination. At the same time, retailers are adjusting to new habits. There’s fresh demand for outparcel and pad-site projects, especially in food and beverage. Physical stores now serve double duty as pickup and return hubs for online shoppers. High costs may have slowed speculative growth, but they’ve also created a healthier, more sustainable retail environment.
Power Shift: How AI Is Reviving Upstate’s Industrial Past
A new gold rush is underway in upstate New York this time for data centers. The rise of artificial intelligence is driving companies to seek cheap energy and large footprints, often at the very sites where heavy industry once ruled. Developers are turning shuttered power plants and factories into sprawling data campuses. Governor Kathy Hochul has called on the state to “embrace AI” to stay competitive, and officials say multiple large scale projects are already queuing up to connect to the grid. But this boom brings growing pains. Energy planners warn that the influx could strain power supplies and complicate climate targets. For now, the balance between innovation and sustainability is shaping up to be one of upstate’s biggest CRE stories of 2025.
Concrete Confidence: NYC Keeps Building Through the Squeeze
Even under pressure, New York City’s construction engine keeps humming. The New York Building Congress projects $74 billion in construction spending for 2025 a nominal uptick, though inflation means it actually represents a small dip in real terms. Higher interest rates and steep tariffs on steel and aluminum have made financing tougher, and many developers are holding off on new starts. Still, certain sectors residential, healthcare, office, and transportation are pushing ahead thanks to steady demand. Recent milestones show that big players remain bullish. The City Council’s approval of a $4.5 billion tower at 350 Park Avenue, and the completion of JPMorgan Chase’s new 270 Park Avenue headquarters, underscore a key message: even in a high-cost environment, New York still builds.
