What started with a full head of steam and optimism has fallen flat as Labatt USA announced Wednesday it was closing the popular Labatt Brew House on Perry Street and moving employees out of the headquarters it has occupied on the upper floors of the building for nearly six years.

While the company’s owner, FIFCO USA, will be looking for a smaller office footprint in the Buffalo area, there is no intention at this time to reopen the Brew House in another space, as first reported by Buffalo Business First.

The reason given for this shift, at least for the office relocation, is one that has become a familiar refrain in the past few years: Working habits have changed since the pandemic, with many companies and employees enjoying the flexibility of working from home, which also hurt the viability of the bar’s economic status as fewer people are working downtown.

“Labatt Blue and Blue Light continue to perform well so we have chosen to focus our efforts there, as well as sustaining our local workforce and prioritizing remote work that our employees prefer,” Mary Beth Popp, FIFCO’s vice president of brand and corporate communications, said in a statement.

Labatt is far from alone at this unhappy hour.

In a report issued earlier this year looking at commercial real estate, and office rentals and vacancy rates in particular, CBRE Upstate NY said the region’s office vacancy rate was around 15.8%, up from 15% in 2022. That’s still better than the national vacancy rate of 18.6% in 2023, a 30-year high. The vacancy rate locally represented a reduction of more than 750,000 square feet in leased office space.

The report went on to say that a once rebuilding office market was “no longer so straightforward” when it came to an expected growth cycle. “The market is experiencing a total restructuring that is challenging to forecast. Occupiers will likely continue to implement strategies that include a more thoughtful approach in what role the office plays that is unique to them. Challenges from shifting tenants, persistent shedding of space, and evolving workplace strategies will likely make for another turbulent year, but at the same time will force owners to look for opportunities and get creative when it comes to stagnant inventory.”

In early 2023, CBRE released a report on retail space in the Buffalo Niagara market, noting that the retail vacancy rate at the end of 2022 was at 13.6%, an increase over the same time the prior year, and that was before the loss of commercial retail spaces like the Boulevard Mall and Eastern Hills Mall, both of which closed in recent months before expected conversions to town centers offering retail space, restaurants, and possible apartments in the same developments.

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Gallery Credit: Brett Alan

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