Total existing-home sales—completed transactions that include single-family homes, townhomes, condominiums and co-ops—rose 3.1% from December to a seasonally adjusted annual rate of 4.00 million in January.
Reimagining ‘Big Box’ Retail in the Hudson Valley
Back in the days before COVID, when large parties, corporate events, weddings and galas were in vogue, there was always one place to go where you knew you’d find the perfect outfit. But, after almost 200 years in business, Lord & Taylor is shuttering all of its 38 retail locations throughout the country.
In our region, this includes its 107-year-old flagship store on Fifth Avenue in Manhattan, its 74-year-old Eastchester store and its newest Westchester County location in Yonkers at Ridge Hill. Two Connecticut stores, in Stamford and Danbury, are also on the chopping block.
Following the same forlorn path is Macy’s at the Galleria Mall in White Plains, an anchor retailer for the past 40 years. While other area locations in Yonkers, West Nyack, Poughkeepsie, Jefferson Valley and Stamford, CT are safe for now, the 162-year-old retailer is set to close a total of 125 stores in the coming year.
The Cortlandt Town Center recently added Bed, Bath & Beyond to its growing list of large retail vacancies, along with Pier One Imports and Office Max. In neighboring Yorktown, the former Kmart and Food Emporium buildings have remained empty for years, and the trend seems to be repeating throughout the Hudson Valley.
Over the past year, we’ve learned of the demise of Sears, New York & Company, Dress Barn, Modell’s Sporting Goods, AC Moore and many others. A few chains including Men’s Warehouse, Game Stop, Kay Jewelers, and Victoria’s Secret are hanging on, but have closed numerous locations across the nation.
Published reports indicate competition from online sales and COVID are the culprits for the demise of “big box” retail, but this continuing glut of huge available spaces is now creating new challenges for both landlords and commercial real estate professionals.
Paul Adler, Esq., Chief Strategy Officer at Rand Commercial in New City, actually views these challenges as opportunities. “Reuse and reimagination are the keys to dealing with this new situation,” he said. “I am not pessimistic about all of these vacant spaces. It will require creativity, and I think you’re going to see local planning and zoning authorities also having to think outside the box.”
Adler cited recent plans to bring a Resorts World Catskills Casino Video Gaming Machine (VGM) facility to the ailing Newburgh Mall. The $32-million “Resorts World Hudson Valley” project would convert 90,000-square-foot of space, including the now vacant Bon Ton Department store, into the VGM facility. This would include almost 1,300 VGMs along with Resort World’s signature lounge, Bar 360.
Orange County Partnership President and CEO Maureen Halahan applauded the Resorts World project, adding that new breweries, mixed-use developments and destination locations are starting to replace former retail buildings, strip malls and restaurants all over Orange County. “While COVID has changed the landscape, the infrastructure for a lot of these vacancies is already there with parking and easy access from the highways,” she said. “Local towns need the sales tax, so I think they’re going to be more open to new ideas for usage now.”
Halahan also mentioned the new LEGOLAND New York project, expected to open later this year. “The original opening date was delayed, but once it does open, it’s going to help the local retailers and may even bring in some new ones, as well as eateries,” she added. Plans are also in the works for a dinosaur theme park in Wallkill.
At the Shops at Nanuet in Rockland County, a former Macy’s now houses a Home Goods on one floor and a movie studio on another. The Jefferson Valley Mall in Yorktown has been reinventing itself over the past two years and now offers two fitness centers, a virtual reality studio, amusement center and weekly farmer’s markets in the food court. “Going to the mall won’t be just about shopping anymore,” added Adler. “We’ll be seeing a lot more services, including medical practices.”
Adler recently received an inquiry from a medical client seeking 12,000-square-foot locations for surgery practices in Rockland and Orange counties, as well as Poughkeepsie in Dutchess County. “Former large retail buildings or vacant mall spaces are great locations—there’s ample parking and open layouts for easy conversion to things like exam rooms or surgery suites,” he said.
Referring to the new commercial real estate landscape as the “liberation of space,” Adler believes worried landlords will be able to lease properties sooner than they think. “They just have to consider something besides retail,” he explained. “In addition to medical uses, we could see adult day care, learning centers, some type of amusement center or other experiential uses.”
As more large retailers continue to close, Adler predicts we could even see smaller, boutique style department stores that operate almost like a showroom with a fewer number of products in stock and more online ordering opportunities.
Tom LaPerch, director of Houlihan Lawrence’s Commercial Group in Rye Brook, agrees with Adler’s assessments and adds that now is probably the best time for businesses to take advantage of a real value play in commercial real estate offerings. “Between E-commerce and COVID killing a lot of ‘big box’ retailers, there are some very good opportunities for deals at much better rates,” he said. “Before, we used to see rates around $35-per-square-foot, but now a lot of them have dropped to the 20’s.”
LaPerch and his team have also seen a lot of vacancies from the restaurant fallout due to COVID. “But, people are beginning to come in with money to start up new restaurants, spending a lot less for leases,” he indicated. “I think with the vaccines now in place, people are starting to be more optimistic.”
As for the future of large empty retail buildings, LaPerch also sees exciting possibilities. “There’s a need for warehousing for E-commerce, and indoor sports offering rock climbing walls and other extreme sports activities,” he added. Some shopping areas with a large amount of vacancies are even changing over to residential use.
“I think the days of the ‘big box’ retailers may be over,” noted LaPerch. “But, they can be resized and re-leased in a good way. Of course, it all starts with communities updating their zoning and master plans to work with the new environment.”
The Town of Yorktown is currently considering a proposal by a New Jersey-based real estate development firm to transform the mostly vacant Food Emporium and Kmart shopping center into a new mixed-use development with 150 rental housing units and ground-floor retail.
Oster Properties’ concept for the new “Yorktown Green”, would demolish the 90,000-square-foot former Kmart store and construct a residential development with 84 one-bedroom and 66 two-bedroom homes. The $25-million project would also include a new supermarket, ground floor retail and underground resident parking.
Yorktown Town Supervisor Matt Slater indicated the local community is very positive about the proposal, especially since the former Food Emporium has been vacant for the past 15 years. “The plan is now for a possible new grocery or specialty food store, and while the owners have been maintaining the building, they will be upgrading it for a new tenant,” he said. The remainder of the shopping center, currently housing businesses including the Yorktown Grille Suburban Wine & Spirits, and others will be getting a façade facelift to match the look of the new development.
Slater said a new “overlay district” in the town would encourage mixed-use and live/work spaces. “E-commerce has really changed things and in light of what’s happening with large retail spaces, I think it’s important that our zoning be more flexible,” he added. “We want to be more open-minded and work with commercial landlords and business owners to see them succeed.”
Yorktown recently launched a marketing campaign, letting everyone know they are open for business. “Yorktown – Up Where You Belong,” is the town’s new mantra.
Meanwhile, the neighboring Town of Cortlandt is working with owners and managers of the 900,000-square-foot Cortlandt Town Center to help fill vacancies left by “big box” retailers that include Bed, Bath & Beyond, Office Max, Payless, Modell’s Sporting Goods and Pier One Imports.
The good news, noted Town Supervisor Linda Puglisi, is that the Regal Movie Theaters will be reopening soon. “This is one of the few movie theaters in northern Westchester and it’s a real hub to bring people into our area,” she said.
One of the largest retail vacancies—Bed, Bath & Beyond—could be the future home of a Christmas Tree Shop or Home Goods. “It would be great to have a Christmas Tree Shop in our area as well, since the only other Westchester locations are in White Plains and Yonkers,” added Puglisi. “This would be another draw that could have a ripple effect for other retailers and restaurants.”
The Modell’s location is being considered for a new indoor sports center and Town Consultant George Oros noted that a new chain restaurant, Dog Haus, is in the process of obtaining a building permit for the former Payless location. Dog Haus offers craft beers, hot sandwiches and sides. “The town is also working with the center to set up a permanent outdoor area for the new restaurant, as well as others there,” said Oros. “A new franchise offering Greek food will also be going in at the former Smashburger location next to Starbucks.”
Across the street at Cortlandt Crossing, new retail stores and restaurants have been sprouting up over the past couple of years and now include a brand-new ShopRite, Home Sense, Verizon and Chipotle Mexican Grill. Puglisi indicated that a Texas Road House restaurant may also be a possibility for filling some of the newly constructed space.
As for the fate of the old, now abandoned ShopRite further down on Route 6, Oros said the site is expected to be purchased by a well-known global organization and be reconfigured. “They may have additional space there, so they could be looking for specialty food stores, a micro-brewery, or other types of venues that will complement the main space,” he explained.
Puglisi and the Town Board are continuing to work to streamline the process for new businesses to set up. “We have already passed legislation to expedite building permits and we are doing everything we can to help business owners get up and running,” she said. “Our new slogan here in Cortlandt is ‘Where Life Works,’ so we are ready to roll up our sleeves and do what needs to be done.”
From a commercial real estate perspective, Adler believes there can be some sort of silver lining to the surge of e-commerce and the pandemic. “As a result, I think we’re going to see retail, warehouse, commercial and office spaces coming together as a new type of zoning,” he said. “The bottom line is that if you don’t accept change, you’re going to perish.”