That's a drop from 12.5% a year earlier, and just below the national rate of 12.1%.

The decline is largely due to M&T's lease of 330,000 square feet on two giant base floors of Seneca One complex and 11 floors of the tower. The M&T lease accounts for about half of the "net absorption" of 704,809 square feet of space last year – the largest amount of space taken up in the Buffalo market since 2008, prior to the financial crisis and recession.

But that means the rest of the market didn't keep pace with the amount of new or redeveloped office space that came online last year, which totaled 454,110 square feet – nearly 100,000 more than was newly occupied. Many of those projects were medical or health services in nature, which "continues to be a key driver of development and lease activity," the report noted.

Another trend is the growth in "boutique-style agile space offerings that are rightsized for Buffalo's demand," CBRE said. So while WeWork is flailing nationally, Uniland Development Co. is entering the local co-working arena with Hansa, its renovation of a former warehouse on Ellicott Street into flexible space.