The wave of New York City expats that came to the East End early in the pandemic continues to shake up the Hamptons retail market, moving it further away from traditionally seasonal businesses.
Space is hard to come by, especially in in-demand locales like Sag Harbor, according to Lee Minetree, a Bridgehampton-based real estate agent at Saunders. The trend stems in part from the longer retail leases signed after folks flocked to the area during the peak of Covid, which has crowded out seasonal business.
“We expected a downturn in 2023, but it didn’t happen.”
Hal Zwick, Compass
“There’s tons of people looking for pop-ups, and there’s nothing around,” Minetree said.
“Retail is the most active right now because there’s very little of that available,” he added. “The smarter people were looking in the fall. They may have found something but … there’s just not much available compared to past years.”
One example: Main Street Tavern in Amagansett sold in four months, according to Behind The Hedges, with Minetree representing the buyer. The building was initially listed for $4.995 million and is set to become the new location of East Hampton’s Rowdy Hall.
Compass real estate agent Hal Zwick said “very few” seasonal leases are available, with some retail buyers now seeking multi-year deals instead of seasonal or even annual ones.
Heeding calls from their employers, many full-timers who left Manhattan for Long Island have since returned to the Big Apple, Zwick said. But they come back more often. Though wintertime is still quiet out East, offseason weekend visits have boomed, triggering more year-round retail leases.
“City people come out to the weekends more often, and they have the disposable income,” he said.
As for other property types, like office and industrial, Minetree says there isn’t as much demand as for retail.
“People are still looking at individual offices [in the area],” Zwick added, noting that the office market hasn’t surged in the way that retail, lodging and restaurants have.
According to the agent, the post-pandemic real estate landscape in the Hamptons hasn’t only changed how retailers function, but who they are.
“We’ve had some very new retailers, very new people who’ve never been in the South Fork,” Zwick said.
High interest rates have made some investors hesitant to jump on East End real estate, Zwick said, though sellers aren’t reducing prices, resulting in a waiting game until interest rates come down.
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Nevertheless, in what he called an unusual development, businesses are already scouring the Hamptons for 2024 leases, with European retailers coming in droves. Bidding wars have erupted in East Hampton and Southampton, fueled by high-quality tenants.
“The [commercial] market is actually much stronger than we anticipated,” Zwick said. “We had a very strong 2021 and 2022, and we expected a downturn in 2023, but it didn’t happen.”