Risk vs. reward equation makes Long Island an incredible place for retailers and retail growth - by Russell Helbling

April 04, 2017 - Long Island
Russell Helbling, Sabre

Long Island. 

It’s an island and it is long.

The longest in the continental U.S. to be exact. Measuring 118 miles long from New York Harbor to Montauk Point and 23 miles wide from the Atlantic Ocean to the Long Island Sound and yet despite its diminutive size, Long Island is powerful. 

Broken down into two distinct counties, Nassau and Suffolk, Long Island boasts a population of 2.8 million people, a number that would make it the third largest city in the U.S., eclipsing Chicago, Houston and Philadelphia. In addition, with most of our residents making incomes above the national average, the retail buying power of Long Island is something that retailers should continue to take note of. 

The retailers that are here and have established their brands are reaping the benefits of this buying power.  Long Island is home to many national retail chains’ top volume locations in the country.  So although our barriers to entry are high, the rewards are higher. 

Let’s talk about some of the barriers to entry that national retailers are faced with on a daily basis:

• First, because we are small geographically, space is limited.  The better trade areas are extremely competitive and typically, once you see a sign posted in the window of a vacancy, the space is already spoken for. 

• Secondly, because space is limited, prices are high.  Rents in the better markets are considerably higher than what most retailers are accustomed to seeing in other parts of the country.  Sprinkle in the high cost of real estate taxes, and many retailers are looking at the highest operating costs they have seen in any suburb, anywhere. 

Master planning; what’s that?  When Long Island was originally developed, no one knew that it would draw the residential density that it has today, so the infrastructure to support such high density was not put into place.  Sewer service is limited, creating challenges for developing restaurants and we need wider highways to handle the vehicular traffic. 

Despite these challenges, retailers continue to expand into the market, opening up stores that eclipse their national average unit volumes. For some retailers, Long Island is home to the top units in the chain from a sales volume perspective. 

In our top regional trade area, that covers portions of Westbury, Garden City and Carle Place, we are anchored by the Roosevelt Field Mall. Owned by Simon Properties, Roosevelt Field Mall is ranked as one of the top malls in the country, boasting 20 million visitors per year with $1.5 billion in sales annually. The retail real estate surrounding the mall is extremely desirable as the sheer pull of the mall helps to drive sales to all of the users in its shadow. The proof is in the pudding, or bread and hamburgers for that matter. This trade area is home to the top volume Panera in the country, highest performing suburban Shake Shack in the U.S. and Cheesecake Factory is doing in excess of $25 million in sales out of two units approximately two miles apart from each other. 

At our firm, Sabre Real Estate Group, our roots started in Long Island. Our founders have a rich history in the market and Long Island has been home base since our inception.  We have grown our footprint outside of Long Island, into the outer boroughs, New Jersey and nationally, but we will never forget that Long Island is where it all started.

In 2016, we saw a banner year for our company, which was fueled by our highest deal volume to date in this trade area, both on the landlord side as well as our tenant representation business. Currently, we exclusively represent approximately 4 million s/f of space on Long Island and we are rapidly filling those spaces and taking on more. 

From the tenant rep side of the business, we see our tenants extremely active.  As a firm, we have positioned ourselves to be nimble enough to change with the trends in retail.  We continue to see the growth on the tenant side in the service-oriented sector of the market so we have focused on fitness, wellness, entertainment and food service.

Our most recent successes in this market share are exemplified by the deals we have most recently completed.  We just opened our 81st Starbucks store on Long Island with 10 new leases signed for the company in 2016 and another 10 on target for 2017.     

On the urgent care front, we represent CityMD on Long Island, whose growth is on a tear.  In the past four months we have signed seven leases with the brand. We also continue to excel in the fitness sector, executing expansion plans for, Blink Fitness, [solidcore],  Flywheel and Orangetheory Fitness.

As a firm, we have also had the pleasure of bringing many amazing restaurant brands into the market, such as honeygrow, Anthony’s Coal Fire Pizza, Burgerfi and Maggiano’s.

So, although the market may have its challenges, the risk vs. reward equation makes Long Island an incredible place for retailers and retail growth.  For me, I say bring on more, we truly need it.  Long Islanders have money and like to spend it, which is the prefect combination for retailers. So hey retailers, yes I am talking to you, if you can get passed the initial sticker shock on our rents, I can promise that you won’t be disappointed at your sales volumes and brand awareness that you build expanding onto our Island, our very Long Island.

  

Russel Helbling is a vice president at Sabre Real Estate Group, Garden City, N.Y.

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