These days, retail real estate on Long Island is increasingly becoming a tale of the haves and the have-nots.
The contrast might be most stark when it comes to shopping malls, with some rebounding nicely from the depths of the pandemic and others headed for redevelopment.
Two struggling Long Island malls, the Sun Vet Mall in Holbrook and the Sunrise Mall in Massapequa, have new developers who are looking to reinvent the properties.
The nearly empty Sun Vet Mall, a 270,000-square-foot retail complex on 18 acres at the northwest corner of Sunrise Highway and Veterans Memorial Highway, is a shadow of its former self. Once anchored by a 60,000-square-foot Pathmark supermarket and a 100,000-square-foot Toys-R-Us, the two big-box stores that flank the mall have been vacant for a while, which has had a devastating impact on the 110,000-square-foot interior portion of the mall. Once home to 30 retail tenants, the mall is now a virtual ghost town with just a handful of remaining tenants occupying less than 10,000 square feet.
Syosset-based Blumenfeld Development Group has signed a 99-year ground lease for the Holbrook property with Marvin L. Lindner Associates, an affiliate of the Estate of Marvin L. Lindner, which is listed as the owner of Sun Vet. Though BDG has yet to reveal its plans, the developer aims to “de-mall” the property and transform it into an open-air retail complex.
“We will be meeting with town officials in the near future to determine how we’re going to proceed in the redevelopment,” Jon Cohen, a BDG principal, told LIBN earlier this month.
Plans for the redevelopment of the Sunrise Mall are less certain. Urban Edge Properties, the majority partner of a group that purchased the 1.2 million-square-foot shopping mall on 77 acres last year, isn’t renewing tenant leases in an effort to close the complex. Though the mall owner says it is ruling out residential uses for the property’s future, most everything else, including e-commerce fulfillment and logistics facilities, are on the table.
“As lease agreements with interior mall tenants continue to expire, Urban Edge Properties is poised to evaluate options for the redevelopment of Sunrise Mall,” John Villapiano, senior vice president of development for Urban Edge, said in an email statement. “In a real estate market and economy that are facing challenges, the company is taking a thoughtful and comprehensive approach to the analysis of a retail property that has clearly come to the end of its current mission. The process requires time as we seek to determine how best to add depth to the town’s economy, be consistent with acceptable land use, and generate meaningful jobs.”
And while these two malls are headed for a reboot, their distress is not shared by other Long Island shopping malls.
“Malls that are doing well, stay as malls. If they fail, it’s because they didn’t keep up with the times,” says BDG principal Ed Blumenfeld. “No matter what you do, if you don’t keep up with changing times then you’re not going to attract people, and if you can’t attract people, you’re not going to have tenants.”
BDG’s largest retail project on Long Island was the transformation of 80 acres of industrial property in Deer Park that became the 800,000-square-foot retail and entertainment complex called the Tanger Outlets at the Arches. Blumenfeld said the company could have built an enclosed mall in Deer Park but opted for an open-air experience that mimics a downtown environment.
“Even though it’s outdoors, we put roofs over part of the pathways, so in the winter or when it’s raining, people were covered,” Blumenfeld said. “It has an ice-skating rink as a centerpiece where we had concerts, tree-lighting ceremonies, everything that would normally go on in a downtown area.”
Despite taking a hit from COVID, enclosed malls and many outdoor shopping centers here have been rebounding in the last year or so. Indianapolis-based Simon Property Group, the largest owner of shopping malls in the country, has three of the most successful on Long Island, including Roosevelt Field in Garden City, Walt Whitman Shops in Huntington Station and Smith Haven Mall in Lake Grove.
“Across our three Long Island centers, we’re seeing a promising rebound in visitation, with traffic up 8 percent over 2021 at Roosevelt Field and similar increases at Walt Whitman Shops and Smith Haven Mall,” said Chris Brivio, general manager at Roosevelt Field. “We project continued growth as we look to 2023 and are pleased to see very positive interest in the centers from a leasing perspective.”
Overall occupancy at Simon’s three Long Island malls climbed from 90.8 percent at the end of Q1 2021 to 93.3 percent at the end of Q1 2022.
How have Simon’s mall properties stayed ahead of the curve? Brivio says they have focused on expanding retail offerings, adding chef-driven restaurants and first-to-market concepts that ensure the centers are more of a destination than a transaction.
“This year alone we’re introducing over 20 new stores at Roosevelt Field, six at Walt Whitman Shops and six at Smith Haven Mall, opening restaurants such as Nomiya, Bleecker Street Pizza, Carpaccio, Morgan’s Brooklyn BBQ, Mito Asian Fusion, and elevated offerings such as community programs, live music and in-store discounts that help attract visitors to our properties,” Brivio said.
But to avoid a boatload of vacancies, Simon has hedged its bet in recent years by acquiring tenants that would have left the company’s properties. In the last six years, Simon and partners have acquired several brands that are also tenants, including Aeropostale, Forever 21, Brooks Brothers, Lucky Brand Jeans, and J.C. Penney, which it acquired in partnership with Brookfield Asset Management. Simon and Brookfield are also reportedly interested in buying Kohl’s, too.
Flexibility is a crucial strategy when it comes to maintaining successful retail properties, with one example being the transformation of the former Sears department store into medical offices at Smith Haven Mall. Sold to Steel Equities and leased to Stony Brook Medicine’s Clinical Practice Management Plan, the repurposing of more than 218,000 square feet on 19 acres is sure to provide a boost to the mall.
“Simon looked at it and thought it was better than a vacant department store because the lease to Stony Brook is going to bring employees, it’s going to bring patients who will be customers at the mall, who will shop and eat at the mall and spend more time at the mall than the traditional shopper spends,” said Gene Spiegelman, and a vice chairman and principal of RIPCO Real Estate, who brokered the sale of the Sears property.
Spiegelman, who’s been a retail real estate brokerage professional for the last 30 years, says the predicted retail apocalypse never really materialized, though consolidation and bankruptcies in many consumer categories has created a lot of turnover amid the backdrop of a growing e-commerce sector.
“What was really happening is the nature of where the retail transaction was taking place was changing. We were shifting from traditional brick-and-mortar sales to online sales and all types of retail businesses, some more successfully than others, were making that transition,” Spiegelman says. “And that transition was creating this great uncertainty about how to address the traditional brick-and-mortar footprint and how to address logistics. The pandemic accelerated that whole trendline. It really shook out everyone who was not going to make it.”
After a record number of store closings and bankruptcies in 2020, Spiegelman says the retail sector has stabilized and there will be more store openings than closings in 2022.
While it doesn’t own any enclosed malls, Jericho-based Kimco Realty is the largest publicly traded owner and operator of open-air, grocery-anchored shopping centers in North America, with an operating portfolio of 537 properties totaling 92.7 million square feet of leasable space. On Long Island, the company owns 27 retail properties totaling 2.8 million square feet of leasable space.
Though it was briefly impacted by the pandemic, Kimco has bounced back strong. As of the end of the first quarter, the real estate investment trust had a robust pro-rata occupancy rate of 97.7 percent at its Long Island shopping centers.
“Outside of the couple of months in the depths of COVID, our space has been doing very well,” said Josh Weinkranz, president of the northern region for Kimco. “Our occupancy is up, our deal flow is up, I think our traffic flow to the centers has normalized again and retailers are doing fine.”
Though he wouldn’t comment on how enclosed malls are weathering the current retail climate, Weinkranz said an open-air setting puts parking significantly closer to stores.
“I think a lot of what people look for is convenience,” he said. “They want to be able to park and be close to the stores that they’re visiting and on top of that, we have been increasing the curb appeal of our assets and we’re trying to make them more inviting places to shop, adding common-area amenities and things that will attract customers to our assets.”
And whether a retail complex is an enclosed mall or an open-air shopping center, the formula for success hasn’t changed all that much.
“It’s tenant mix, it’s convenience, it’s location, it’s demographics, it’s the aesthetics of your shopping center, it’s all of those things together that are the ingredients for a strong retail asset,” Weinkranz said. “We try to check as many of those boxes as we can.”