Long Island Retail Market

“Retail remains strong on Long Island,” says Michael Murphy, executive director of commercial services for Prudential Douglas Elliman Real Estate of South Huntington, New York. “Look for retail activity to remain healthy with regards to both leasing and investment. Long Island’s growing population has retailers and chains scrambling for premier sites, despite skyrocketing real estate costs and hard-to-find locations.”

Increasing leasing activity, new development and the redevelopment of vacant retail properties is spurring growth in the retail market on Long Island. Retailers are looking for highly visible sites with heavy traffic flow along with ample, accessible parking. However, throughout Long Island, such sites are limited and very costly. This has led retailers to aggressively seek out existing retail properties in which they can establish their stores.

Recently, according to Murphy, a number of large spaces, previously occupied by Kmart, have been leased up. The pinching of profits, along with too many stores targeting the mid-market retail sector, has caused stores such as Kmart to shut their doors permanently. Big box retailers Wal-Mart and The Home Depot are aggressively pursuing the vacant Kmart sites, which average approximately 100,000 square feet. Similarly unsuccessful and vacant Wiz (averaging 20,000 square feet) and Zainy Brainy (averaging 9,000 square feet) stores are receiving intense competition from retailers looking to move into or expand within the Long Island market as well.

As far as redevelopment, projects are scattered across the island with the majority of activity occurring in high traffic areas such as the Jericho Turnpike, Old Country Road and Route 110. One of the most prominent projects is the proposed Tanger Outlet Center in Deer Park. “This project is valued at more than $150 million and will measure more than 700,000 square feet,” notes Murphy. “The center will blend the outlet center and big box concepts, stretching over the former 81-acre EDO Corporation industrial site on Commack Road.”

Murphy expects retail activity to begin to move eastward on Long Island in the near future. “I look for the trend to start heading east, from Manorville to the Riverhead Corridor, where there is opportunity for development,” he says. “There is so much new residential construction and opportunity to purchase affordable land. With the growing population on the east end, retailers will certainly be able to capitalize on an untapped market.”

As the population grows and the demographics get stronger, more and more retailers are seeking to enter the market. According to Murphy, the competition within the retail sector has intensified as consumers become more price savvy. Several discount retailers such as Wal-Mart, Target, HomeGoods and BJ’s Wholesale Club are faring the best. Each has opened a store on Long Island in the past year. Larger general merchandisers and department stores are struggling. From an investment standpoint, demand remains high among investors looking for supermarket-anchored strip centers and power centers.

Another sector enjoying success in the area is restaurant franchises. New franchisees continue to show strong interest due to the area’s exceptional demographics. Murphy notes, “Within the past year or two more than a dozen food chains have arrived; restaurants such as Quiznos Subs, Panera Bread, Rita’s Ices, Baja Fresh and Cold Stone Creamery are expanding throughout Long Island.”

“Long Island is a tight market,” Murphy adds. “The retailers who can adapt to this ever-changing market, realize who their customer is and meet their demands while staying ahead of the curve will find great success.”

©2004 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.

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