04.18.2014 LIBN | Retailers flocking to LI downtowns
By Kristen D’Andrea
Revitalization efforts in many Long Island downtowns – coupled with moderate rents and urban, trendy tenants – are increasingly attracting retailers, including national chains.
In fact, in the not-so-distant future, retailers will more frequently pass over malls to be in desirable downtown areas, predicts Gregg Carlin, senior vice president of CBRE Retail Services in Melville.
A “dated concept,” the mall model is changing in other parts of the country, according to Carlin, who anticipates smaller malls will likely close – leaving larger, stronger malls to reinvent themselves by adding residential and office components.
Regional malls currently account for 16.9 percent of all national retail space, down from 22.9 percent in 1982, but only 1,430 malls remain, down from approximately 2,100 nationwide in 1990, Carlin said.
The Roosevelt Field Mall in Garden City recently spent $367 million on renovations, including the addition of a new wing to house a Neiman Marcus. Walt Whitman Mall in Huntington Station upgraded its façade and added new tenants to stay current, Carlin noted.
But the lure of the downtowns is palpable. As the economy improves, overall retail vacancies in most Long Island downtowns have dropped, according to data released this month by the Long Island Index.
“People want to be in downtowns where there are more restaurants, arts, music, culture and events, not just in the summer but all year,” said Eric Alexander, executive director of Vision Long Island.
The Northport-based smart-growth organization’s most recent survey found 43 percent of Long Islanders desire to live and work in mixed-use downtowns, Alexander noted, and “the next logical piece of that is shopping.”
While tenants are not yet exclusively pursuing downtowns, bypassing traditional malls and strip shopping centers entirely, they are definitely looking to Main Streets as additional potential locations, said Jayson Siano, a retail broker and managing principal at Garden City-based Sabre Real Estate.
“Historically, national companies wouldn’t pursue downtowns,” Siano said. “Their preference would be very high-traffic, regional trade areas.”
In recent years, however, “we have a lot of restaurant tenants actively pursuing these downtown locations,” Siano added.
Panera Bread made a recent entry on Main Street in Huntington, while the Tampa, Fla.-based Bonefish Grill chain is about to open on the site of a former movie theater in the heart of Rockville Centre.
“That is a big accomplishment for us,” Siano noted of Bonefish Grill – one of the 40 retailers and restaurants represented by Sabre Real Estate – choosing Rockville Centre over a regional mall.
“We understand the strength of the downtowns,” he said. “Our clients, especially our restaurant clients, enjoy locating in pockets that have other restaurant occupants that they can benefit from.”
Rents in Long Island’s downtowns are currently moderate, Siano said, noting they’ve stabilized as a result of the economic downturn.
When times are tight, many business owners look for better buys on Main Streets, agreed Julie Marchesella, president of the Nassau County Chamber of Commerce and owner of Queen of Hearts, a full-figure formalwear store in downtown Merrick.
“The costs involved with operating a store in the mall are high,” Marchesella said, noting additional required advertising costs and percentages of sales that go to the mall.
“Specialty stores have always preferred to be in a downtown area,” she added, noting retailers are attracted to the ambiance many downtowns have tried to create.
“It’s a warmer, softer touch and more customer service-oriented than the rush of a mall,” she said.
Still, national companies considering a move into the Long Island marketplace need to commit to comparably high rent and taxes. Long Island landlords demand much higher rents than nearby suburban areas such as Northern New Jersey and Westchester County, according to Long Island Index Director Ann Golob.
“It may take a while for people from out of town to understand Long Island, because it’s so unique,” Siano said. “But once they take the leap, nine out of 10 [retailers] are pleasantly surprised. So many top retailers and restaurants see their highest volume on Long Island, out of all of their chains.
“It takes them a while to commit to the market,” he added. “But when they do, they understand the value of high rent and high taxes.”Kristen D’Andrea