It’s virtually impossible to miss the new boutiques, restaurants and other businesses that seem to be sprouting throughout the East End of Long Island. The commercial real estate market there is alive and well, and it’s experiencing record growth, according to leading real estate brokerage firms in the area.
Further evidence to support the healthy outlook for East End’s commercial development is the Corcoran Group’s recent decision to create a new division solely dedicated to commercial properties for these communities. Rick Hoffman, a regional vice president for Corcoran, said the new division “is not intended to promote more development,” clearly trying to defuse the local municipalities’ longtime concerns that development will diminish the area’s charm and natural beauty.
“The move reflects changes in the lifestyle in the area,” Hoffman said. “We are seeing more and more of a year-round community, and now we have retail, shops and restaurants staying open year-round that never did.”
An obvious example of change is the rejuvenation of Riverhead. After many years of seeing streets lined with vacant homes and shuttered storefronts, the town is enjoying a powerful commercial resurgence. Droves of people come to town to shop at the popular Tanger Outlet Centers and sample local family-friendly activities like the Splish Splash Water Park, the Atlantis Marine World Aquarium and the beautifully restored downtown waterfront.
The revival is capped by the recent $155 million purchase by Riverhead Resorts of 755 acres from the Town of Riverhead. With plans reminiscent of Disney World — a project that redefined Orlando — developers hope to erect multiple hotels and a convention center, along with nine separate theme resorts, a 35-story man-made mountain (complete with ski runs and jumps), ski shops, a wilderness lodge, indoor ice skating and a host of other commercial activities, with their own Main Street lined with shops on either side. Apartments, condos and other retail properties are also part of the approved plan.
While area brokers agree that this kind of development is surging, typically, they said, the demand for commercial space is handled by residential brokers because of the traditionally small amount of commercial activity on the East End — less than 10 percent of all property deals.
They question Corcoran’s strategy of creating a separate division for the area’s commercial properties. The new division has 13 agents and its own Web page, signs and marketing plans.
Brown Harris Stevens associate broker Tony Cerio agrees that there has recently been “mind-boggling growth” in the East End’s commercial market. But even with the heightened activity, Cerio can’t identify a reason for launching a separate division for commercial properties. “Without a doubt, there is incredibly heightened activity and interest across the entire area, including, and especially in, Montauk and Shelter Island. But to have a separate division just doesn’t make any sense to me; I can’t imagine what benefit could possibly be in that.”
Linda Kouzoujian, a senior sales associate with Coldwell Banker, agreed. “It’s absolutely not necessary to have a different division for commercial properties. Commercial real estate is very black and white. If the property and the dollars work, it’s a done deal; that’s all there is to it,” said Kouzoujian. “Following the terrorist attacks on Sept. 11, we definitely saw many East End communities experience a surge in year-round residents,” she added. “It’s no surprise that the commercial real estate market is experiencing related growth; where there are more consumers, there are always increasing opportunities for business owners.”
And what about the little guy? The East End’s commercial real estate boom may be good news for property owners, but for business owners looking to launch a new venture or expand their existing company, the outlook is not as positive. Numerous zoning and permit restrictions hurt business development possibilities, significantly limiting the number of potential commercial properties in these communities. Demand for commercial space is increasingly high, but inventory is minimal at best. The results are predictable.
“Properties that you couldn’t give away two years ago are now going for record numbers,” said Cerio.
Kouzoujian said, “Business owners are at the mercy of the property owners. They know they can afford to stand firm on their price, and they take advantage of that.”