NORTHEAST SNAPSHOT, SEPTEMBER 2006
Hudson Valley, New York Retail Market
Following the announcement of the new $5 billion dollar AMD chip fabrication facility just north of Albany, the Upstate New York retail market continues to heat up. The Hudson Valley continues to show steady growth and increased demand with many new and redeveloped sites coming onto the market. This points to a definitive trend of increasing rents on small shop space, while the larger boxes continue to fill, or be built, at rents not seen in these markets previously.
The Route 9 corridor throughout Dutchess County remains a preferred location in order to serve the growing markets of the Hudson Valley, while the growth in Orange County continues. The Route 22 area in the northeast portion of Putnam County is showing strong signs of growth while becoming the retail focus for the town of Brewster and its surroundings.
As the residential development continues to expand throughout this market, the need for all levels of retail follows. The level of big box development is running at a pace not seen before, with the typical players being courted into the newest and best sites. Grocery retailers Hannaford, Stop & Shop and Shop Rite continue to expand in anticipation of the opening of Wal-Mart Supercenters that are currently looking in the region. Markets in Newburgh, Warwick, Plattekill and Hopewell Junction have all recently obtained new grocery facilities, and other new deals include the drugstore chains seeking to locate freestanding facilities in all these markets.
The majority of the development is focused around the population growth in these areas, as people leaving the higher housing costs of the New York metro market seek refuge into more suburban markets. Due to the mass transit, a realistic commute time, a savvy intellectual environment fostered by the numerous higher education facilities, food services similar in presentation to those offered in New York City, many of the new suburbanites have realized the benefits of the Hudson Valley life.
The new developments seek to capture some of this ambiance into their tenant mixes and designs that will point to more lifestyle type designs and layouts. Ulster Crossing in Kingston — developed by Benderson Development — with Bed Bath & Beyond, Barnes & Noble, Sports Authority, Panera Bread, Ann Taylor Loft, Chico’s, Talbots, and Coldwater Creek, is just one example of the lifestyle type development coming to this market. Redevelopment of the former Caldor in Middletown will most likely fall into this category, as will the Dutchess Mall in southern Dutchess County. All of these projects attest to the strength of the market, as these sites are recycled into new exciting centers featuring the most sought-after retailers.
Most of these projects are being brought to market by local and regional development firms with some involvement from some of the larger regional development companies. With vacancy rates this low, and well-positioned sites at a premium, the pressures to obtain the premier tenants have brought interest from the likes of all the home improvement companies, Costco, and the small store cadre of regional and national retailers. Their willingness to develop strategies that conform to the rent structures of this market speak well for the future in terms of stability and expansion into the future.
Andrew Peckage, assistant director of Real Estate for The Howard Group, currently represents numerous tenants in their expansion plans in the Hudson Valley and into northern New Jersey. Peckage says “the best locations are a little more scarce, but landlords are genuinely reasonable in terms of their desire to make deals with the right tenants for their centers.” This can only foster better tenant mixes, that in turn will be better for everyone involved in the market. Peckage cites deals done in the market occurring with realistic speed under terms that are “liveable for all involved. And, that will mean successful retailers and successful centers.”
— Howard Carr, president, The Howard Group, TCN Worldwide
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