DOWNTOWN ALBANY RETURNS WITH A VENGEANCE BACK TO THE CITY.(Main)

Byline: Harvy Lipman and Rosemary O'Hara Staff writers

Peter Kiernan Jr. didn't set out to help revitalize downtown Albany - he just wanted to keep the top two floors of Norstar Bancorp.'s Guilderland headquarters from collapsing on his employees' heads under the weight of an expanding computer system. "It was a coincidence that just as we had to wrestle with that, the news came out that IBM was not going to pursue developing Union Station," Kiernan recalled.

Kiernan, chairman of Norstar Bancorp, decided that creating what would become Norstar Plaza and moving his headquarters there would be good for business: "There's value to being in the area's core community. That's where all the principal businesses are located. It's where you can have the most dramatic impact."

It may have been a coincidence that first led Norstar to think about moving downtown, but it couldn't have fit the city's strategy for revitalizing that area any better if it had been planned by Mayor Thomas M. Whalen III himself.

Less than 20 years ago, nearly the only vibrant business in downtown Albany was the state government. Union Station was an empty echo of better times past, and South Pearl Street resembled a Bronxian wasteland.

It was …