NORTHEAST SNAPSHOT, DECEMBER 2005

Long Island, New York Retail Market

Phil Perri Director of Corporate Retail Services Sutton and Edwards

Several new retail developers have entered the Long Island market. Overall, preferred developers for Advance Auto Parts and the drug store chains are leading the pack, and additional projects are being constructed by new companies that will have significant impact on the retail landscape. Breslin Realty Development is underway on its new Wal-Mart center in Farmingdale, New York; The Taubman Companies is developing The Mall at Oyster Bay in the long-vacant Cirro Wire Plant location; and the Blumenfeld Development Group and Tanger Outlet Centers are set to break ground on a new Tanger Outlet Center in Deer Park, New York. Additionally, Edens and Avant has purchased the Port Plaza Shopping Center in Port Jefferson, New York, which has been long overdue for a total renovation. A new Stew Leonards also is proposed in Farmingdale, representing another new retail project that will impact the local market.            

New development is spread throughout Long Island as developers are looking for any opportunity to gain market share within a very tight geographic sector. The lack of suitable properties has caused the general focus to shift toward redevelopment of industrial, manufacturing and warehouse properties, as these sectors are quickly becoming obsolete within the overall market. The aforementioned Wal-Mart, Tanger Outlet Center and Stew Leonards specifically represent major transactions that have taken place in the market, due mostly to the fact that they will impact the shift to retail use within the area.

Both Target and Lowe's Home Improvement Warehouse continue to expand throughout the Long Island retail market, and Advance Auto Parts has multiple locations in the municipal approval process. Other retailers that are particularly active in the market include Commerce Bank, which leads the charge of multiple banks that are flooding the market. Major drug chains also are very active throughout Long Island, and the dollar store segment has been heating up over the last couple of years as well.

In addition, a host of national or regional retailers have been preparing strategies for entering the Long Island market over the next few years. Both Qdoba and Chipotle will be opening their first locations in Hicksville, New York, and Super Suppers, a new, trendy concept where meals are prepared to be served later at home, is opening its first Long Island location in Bethpage in a few months.

Looking toward the future, the areas surrounding the new Mall at Oyster Bay that formerly were industrial/manufacturing/warehouse space will continue to be redeveloped into retail projects. Similarly, the area in proximity to the new Tanger Outlet Center in Deer Park, coupled with the redevelopment of Pilgrim State is changing the market from industrial/manufacturing/warehouse to retail /R&D/office/residential/entertainment. The Route 110 Farmingdale corridor south of Conklin Avenue continues to trend away from outlet clothes and furniture, shifting to more traditional retail. Airport Plaza Shopping Center initiated the shift that is continuing with the construction of Wal-Mart and the proposed Stew Leonards. The Jericho Turnpike corridor, which has been under development west of Route 110 for some time, now is showing signs of activity east of Route 110. In addition, the continued redevelopment of the Roosevelt Raceway, the Request for Proposal for the Nassau Coliseum, the Pilgrim State property, proposed expansion of Roosevelt Field and the proposed expansion and addition of a lifestyle component to Smithaven Mall all will affect the retail sector on Long Island.

Overall, Long Island has been one of the more buoyant areas in the Northeast in recent years. Job losses in 2001 and early 2002 were solidly milder than the state and the nation as a whole. Moreover, employment bottomed out in 2002 (a year before the rest of the nation), and it has expanded at roughly a 1 percent rate in both 2003 and 2004, again exceeding the national and statewide rates.

Other factors affecting the retail market include the office market, which, while vacancy rates rose to a 7-year high of 15 percent in 2003, fell back to 12.4 percent in mid-2004 — a much larger drop than in any other part of the metro area. Furthermore, Long Island's housing market has been particularly robust, even more so than New York City; house prices have risen at nearly a 12 percent rate in 2004 and have roughly doubled since 1998.

— Phil Perri is the director of corporate retail services for Sutton and Edwards.


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