The following was first published in The Real Deal Magazine’s August 2019 Tri-State edition. You can read the original here.
The seas of parking surrounding the Manhasset store presents a new opportunity for development — if it ever gets approved
By Richard Murdocco
Surrounded by acres of parking lot asphalt, the Macy’s in Manhasset reflects the retail norms of yesteryear. With an eye on the future, a developer is now looking to bring the site into the 21st century — even as local opposition begins to mount.
Many believe the department store and its 16 acres of parking lots are out of sync with the current real estate development trend: projects that mix residential units with innovative, experiential retail. To bring the property into the modern age, New York-based Brookfield Properties is pitching an ambitious $400 million mixed-use project for the site called Manhasset Square.
Brookfield is proposing 355 rental apartments, 72,000 square feet of office space and 73,400 square feet of newly created retail areas, while also throwing into the mix a 200-room hotel. The Manhasset Macy’s, which caters to the affluent residents of Nassau County’s Gold Coast, is slated to remain open after the projected transformation is completed in 2023.
The approach by Brookfield highlights a growing trend that Long Island builders have been trying to break ground with in recent years — infill growth, or repurposing existing sites, such as dated retail hubs. The Macy’s in Manhasset is one of a growing number of 20th-century postwar retail spots and shopping centers ripe for transformation.
In Hicksville, a commuter hub in the town of Oyster Bay, a 156,000-square-foot former Sears store that closed in April is also being targeted for its own mixed-use makeover. Seritage Growth Properties is looking to turn the empty store, which sits on 26 acres, into nearly 600 apartments and 200,000 square feet of retail. In 2015, as Sears (which filed for Chapter 11 bankruptcy in 2018) scrambled for cash, the retail chain sold over 230 locations to Seritage, a New York-based REIT specifically formed by Sears for the task of converting Sears and Kmart stores.
The plan aligns closely with that of Brookfield’s for Manhasset.
“The Macy’s Manhasset redevelopment is a perfect example of the opportunity towns and cities have to reimagine their aging retail real estate,” said Aanen Olsen, Brookfield’s vice president of mixed-use projects. “As the retail industry continues to evolve with e-commerce, ride-sharing and autonomous vehicles, vast seas of surface parking will no longer be necessary and [will be] available for more productive uses.”
Brookfield, a REIT that acquired Chicago-based shopping mall giant General Growth Properties just last year, has support for its redevelopment efforts.
“The large scale of retail is being threatened significantly by Amazon and other online retailers,” said Mitchell Pally, CEO of the Long Island Builders Institute. “There is no question that the property in Manhasset is worth more than the store is.” As such, Pally expects more retail landlords to follow Brookfield’s lead. “The significant amount of parking can be used for more important uses that can get some revenues back to the owner,” he added.
Residents and local elected officials, meanwhile, are bracing themselves for a formal proposal from Brookfield to the town of North Hempstead. According to reports in the local press, a petition against the development led by Concerned Citizens of Manhasset garnered more than 1,100 signatures after its late-June launch. The group’s petition claims new residents drawn to Manhasset as a result of the development will increase school costs by $13 million. The civic group has been successful in opposing a proposed nearby medicinal marijuana dispensary.
“Traffic has been a main concern of both elected officials and community stakeholders since learning about the project. Brookfield will provide a complete traffic impact analysis with its formal application to the Town of North Hempstead,” the developer said in response to local concerns. “The key concepts of the project are placemaking, community building, economic benefit and ongoing vitality.”
Allies and opposition
North Hempstead Town Council member Veronica Lurvey, who represents the district where the Manhasset Macy’s is located, was measured in her assessment of the redevelopment plans.
“My understanding is that Brookfield has been speaking to various civic groups and organizations,” she told The Real Deal. “They’ve been getting feedback that the size of the project is too big. People are concerned with the size and impact on infrastructure.”
Lurvey said she has not yet met with Brookfield but expects to do so soon. She noted that it’s unclear whether the project Brookfield presented to local civic groups will be the same as the one presented to town officials. “I suspect there might be some tweaks to address the concerns,” added Lurvey, acknowledging to TRD that traditional retail outlets in her district must reinvent themselves to compete with the proliferation of online retail.
“We’re seeing the challenges faced by brick-and-mortar stores, especially when it comes to competing with online merchants,” Lurvey said. “The challenge is figuring out what can go into those retail locations that still bring people out [and] how to make these locations destinations that people want to go and visit.”
Nonetheless, one of Lurvey’s colleagues is already opposing Brookfield’s plans. Council member Dina De Giorgio, who represents residents in neighboring Plandome and Munsey Park, is blunt in her assessment of the project.
“I believe the proposed development is out of character with the surrounding community, insofar as density, height and potential traffic impacts on Northern Boulevard,” she wrote TRD in an email. “My Manhasset constituents are overwhelmingly against the current proposal. Absent any community support, it is unlikely the proposal will be approved.”
When asked about such brewing opposition, Brookfield’s Olsen said his firm is open to local input and expressed confidence that public officials will eventually come around given the amenities and tax revenues the development will generate. “The project presented in Manhasset is the product of two years of market research, site planning and negotiation with Macy’s,” Olsen said. “We’re eager to meet with the local groups to learn about specific community needs that can be integrated into the project, if feasible.”
The resistance from residents doesn’t surprise Pally, head of the builders’ trade association and a backer of Brookfield’s project.
“The Manhasset proposal is going to get kickback because people in that area are used to no threat from the parking lots,” Pally said. “In the end, communities would rather have parking than something that would make money.”