Staten Island is New York’s least populous and most sparsely settled borough. Its fewer than 500,000 residents have political and developmental sensibilities that are often out of sync with the rest of the metropolis.
But the growing population is rapidly exposing a shortage of retail development on this patch of the city, which is almost as large as Queens but still has plenty of room to grow.
Staten Island’s populace grew more than 7 percent between 2000 and last year, according to census data, faster than any other borough the in city, placing it among the fastest growing counties in the state. By contrast, Manhattan’s population grew 4.5 percent during the same period, while Brooklyn, Queens and the Bronx each grew at around half that rate or less.
“It’s like there’s a Wall of China around Staten Island,” said J. Delbert Smith, a commercial property specialist who runs a firm bearing his name and whose roots in the borough go back seven generations. “We have the same area and population of St. Louis, and we’re like any middle- to upper-middle-class American town of 475,000 people. The only difference is that even after the arrival of the big-box stores, retail is underserved here.”
Retail growth to accommodate the burgeoning population is inevitable, Smith said.
This time, though, strip malls are out, and large, upscale malls are in the works, he said, signifying a shift in the retail landscape. More big boxes are arriving, even if opposition has for now spiked plans by Wal-Mart to set up shop in the borough after the mammoth retailer scouted sites on the South Shore.
Smith pointed to the 1.5 million square feet of retail under development along the South Shore and his involvement with several malls that he expects to be completed over the next two years. The developers are seeking brands like Bloomingdale’s and Saks.
Even at the Staten Island Mall, the island’s only indoor shopping center, change is afoot.
Owned by General Growth Properties of Chicago, which plans to add 110,000 square feet, the mall has attracted Swarovski Crystal, Coach, Talbots and Ann Taylor to join longtime anchor tenants Macy’s, Sears and JC Penny.
“Ten years ago, these retailers wouldn’t have touched us with a 10-foot pole,” said Jay Anderson, director of services at the Staten Island Economic Development Corporation. “This indicates that we’ve arrived.”
Near the mall, a Best Buy, Marshall’s and Pier 1 have sprouted. In the Charleston neighborhood, the Bricktown retail complex at the foot of the Outerbridge Crossing includes a Target and a Home Depot.
Anderson noted other success stories: the Related Companies expressed interest in building a destination retail component near a proposed NASCAR speedway site — regardless of the controversial track’s future.
In 2004, Massey Knakal Realty Services became the first major Manhattan-based firm to enter Staten Island when it assigned personnel from its Brooklyn Heights office to cover the borough.
The company is marketing one of the largest commercial properties on the block, the former UA Theater, which is leased to the LA Fitness health club chain for 15 years. The asking price for the property, the borough’s largest multiplex when it was built in 1987, is $21 million — $13 million more than it sold for last year.
“It’s exactly what you want for an income property located in the midst of a young population with disposable income,” said Paul Rich, director of sales at Massey Knakal.
The latest figures available (from 2004) indicate Staten Island offers 5.2 million square feet of rentable retail space, 1.2 million of which was in the Staten Island Mall, a number that has undoubtedly increased, said Rich.
Like in Queens, retail remains concentrated along wide boulevards and mainly consists of small shops and modest strip malls.
“The local corridors are very strong,” Rich said. “Vacancy rates in the most trafficked areas are 98 or 99 percent.”
Retail rates along major thoroughfares range from $32 to $45 a square foot on Hylan Boulevard to the mid $30s to high $40s along Victory Boulevard. Richmond Avenue rents start in the high $30s and reach the mid $60s. Rents in the mall exceed $100 a square foot.
Despite the influx of national chains, Staten Island retains its local character. In addition to a robust maritime industry, which includes dredging firms, dry docks and tugboat operations, said Anderson, the island contains many rusting industrial sites, some formerly owned by Bethlehem Steel, which are in need of transformation into turnkey properties. The borough has long been home to projects that are untenable elsewhere, including oil depots along the northwest shore and the Fresh Kills landfill, which is now being transformed into parkland.
Retailers, however, have felt a pinch from the big chains moving in.
“The onset of national tenants has hurt local merchants and small business owners,” said Rich, “but there is no question that the general retail corridors are going to maintain their traditional color, at least in the medium term.”
Island’s office market lags as rents stay flat
The Staten Island office market remains volatile, says broker Paul Rich of Massey Knakal Realty Services.
Rents range from $24 to $30 a square foot and rarely exceed $35, prices that have not increased over the last year, and vacancy rates are much higher than in other real estate sectors.
“Most space is generally under 15,000 square feet and caters to accountants, lawyers and doctors,” said Rich. His firm recently sold a 7,000-square-foot building on Hylan Boulevard for $350 a square foot.
Near the Goethals Bridge, which links with Perth Amboy, N.J., the 100-acre Teleport complex consists of six Class A buildings with 875,000 square feet of space wired with high-speed fiber optic lines and linked to a satellite transmission apparatus. Nearby, the Staten Island Corporate Park consists of 300,000 square feet of space plus a Hilton Garden Inn.
Staten Island’s only downtown area centers on the ferry terminal in St. George on the north shore, the legislative center of Richmond County. Consisting mainly of Class B office space, the area is home to a minor league ballpark and many development opportunities with a view of Manhattan and New York Harbor. The ferry terminal is undergoing a $106 million makeover.
Attempts to woo businesses include the creation of a high tech district, offering pre-wired space and tax abatements for eligible firms, and the establishment of the North Shore Empire Zone.
As plans unfold to shape the St. George gateway’s future, tension has developed between groups who favor maintaining the area’s small-scale character and others who envision large development projects.
“There’s a lot of area to redevelop and plenty of head-butting over those who favor keeping a small-town feel and others who envision larger projects,” said Jay Anderson at the Staten Island Economic Development Corporation.