Retailers rush to open in the Hamptons

It's a "mad dash" for shop and restaurant space as a frenetic summer looms

(Image courtesy of Facebook)
(Image courtesy of Facebook)

Phil Zelonky has been planning to open a pop-up nightclub in the Hamptons ever since his first club, Noir, debuted in Manhattan two years ago. There’s just one issue: finding a space.

As New York City residents head east in droves, retailers have followed. But more than a year into the pandemic, it has become increasingly difficult to find commercial real estate.

“It’s a mad dash,” Zelonky said. “Everyone wants to be out there and there’s just not enough spaces for people to operate.”

Between March 1 and Oct. 31 of last year, 21,362 New Yorkers filed requests to change their address to Suffolk County, according to Postal Service data obtained by the New York Post. Another 18,731 filed a Nassau County address.

And the exodus to the Hamptons, even if it’s temporary, has not slowed since. Home sales in the first quarter of 2021 were 48 percent higher than in the same period last year, according to a Douglas Elliman report compiled by Miller Samuel.

Hamptons businesses typically make the majority of their revenue in the summer, when the population swells. The rest of the year, a business might be thankful if it is in the black.

Before the pandemic, pop-ups were often desired by retailers, but not ideal for landlords, as it left them with vacancies during the off-season.

“If the landlords would make those spaces available on a pop-up basis, because of prior seasonality, everybody would just want pop-ups or just want to pay for the summer,” said Compass agent Hal Zwick.

Before, landlords sometimes had no choice but to agree to short-term leases.

However, recent trends have spurred hope that the Hamptons could become a year-round community. Despite a historical inclination toward short-term leases, many retailers have committed to their spaces for a longer period.

“The retailers, once they figured out that everybody was staying out here, where a lot of them would normally give up their lease after the summer, they continued to stay,” said Lee Minetree, a commercial broker with Saunders & Associates. “That made less product available.”

Restaurants in the Hamptons have been operating under less stringent regulations than restaurants in New York City. For example, city eateries didn’t have the capacity limit raised to 75 percent until May 7, while the rest of the state has been operating at that level since March 19. Similar discrepancies have existed through most of the pandemic.

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“It’s really different when you see restaurants [in New York City] hanging on, living on PPP money, and the Hamptons is really a wild animal,” said Michael Murphy, who heads Douglas Elliman’s commercial division on Long Island.

Dinner rush

Some retailers have managed to edge their way in, leading to a handful of openings that may excite residents.

Japanese restaurant Kissaki’s original location on the Bowery opened just 45 days before the pandemic hit. The restaurant made the transition to offering takeout and delivery of omakase boxes. But its bread and butter, so to speak, is dining, so it opened in the Hamptons in June 2020.

“Thank god for the Hamptons location,” Kissaki owner Garry Kanfer said.

This summer, Kissaki is going even further. Its first Hamptons location, in Water Mill, has been completely gutted and renovated with plans to reopen in the middle of June. It’s also added two more locations. The second, in Montauk, will open by the end of May. The third, in East Hampton, will welcome customers in June.

But even for Kissaki, finding space hasn’t been easy. In East Hampton, Kanfer took to knocking on doors, ultimately persuading the owner of the restaurant that previously occupied the space to sell it to him.

Manolo Blahnik opened in East Hampton on April 30, following the lead of other luxury fashion brands, which expanded to the Hamptons last year. Jimmy Choo launched a pop-up for the first time, while Bergdorf Goodman and Saks Fifth Avenue rolled out a complimentary same-day delivery service to the Hamptons only.

Other notable Hamptons retailers have found new owners, allowing their legacies to live on.

Jeremy Morton, who is behind Morty’s Oyster Stand and Provisions Natural Foods Market & Cafe, recently bought Rick’s Crabby Cowboy Cafe on Lake Montauk. The five-acre property features 14 rental units and a restaurant, and the purchase included 6.75 acres of underwater land and 22 boat slips at the adjacent marina. The asking price was nearly $15 million.

Morton is also the buyer behind Ruschmeyer’s, a three-acre property with 19 hotel rooms, a restaurant and a separate bar. The property was last listed at $35 million.

“We expect an extremely busy summer here,” said Compass’ Zwick, who was involved in both the Rick’s Crabby Cowboy Cafe and Ruschmeyer’s deals. “I expect the population to be at its maximum this year.”