The usual game of musical chairs — or, in the case of East Hampton, musical stores and restaurants — that takes place each year is hotter than it’s been since the downturn. Buildings and restaurants are selling, and stores are renting — at consistently higher prices.
Perhaps the most significant turnover has been the Cavagnaro building, perched on the corner where Newtown Lane meets Railroad Avenue. Built in 1923 by Albert Cavagnaro, it was once known for its tin-ceilinged ground-floor bar, which served the coldest beer in town, according to former customers, and has eight one-bedroom, upstairs apartments.
If a patron was getting too deep in his cups, “Albie would say, ‘Eat this,’ and throw down a loaf of bread, a slab of liverwurst, and some scotch bonnet peppers marinating on top of the fridge,” recalled Laurie Trujillo-Mamay, a former neighbor.
“It was frequented by famous people,” said Alan Schnurman of Saunders & Associates, the selling broker, who named Jackson Pollock, Billy Joel, Alan Alda, and Jackie Kennedy Onassis as patrons. For many years after that, the building was home to Bucket’s Deli, and more recently Mary’s Marvelous has occupied two of its three storefronts (the third is a nail salon).
The village fixture was purchased two weeks ago by a group of investors from Manhattan for $5 million, reduced from its original 2007 asking price of $13.5 million. According to Mr. Schnurman, the group plans to renovate each apartment as it becomes available. Mary’s has a lease lasting eight more years. “Tell me where you can find eight apartments, three storefronts, a commercially zoned four-bay garage, and commercially zoned four-bedroom home in today’s world,” said Tony Cerio of Brown Harris Stevens, who, with his partner Mitch Natter, was the listing broker for six years. Prospects who coulda, woulda, shoulda bought it are beating themselves up for letting it slip by. “It was the best deal in town,” he said.
Neil Hausig, a broker at Sotheby’s, recently sold the former East Hampton Bowl on Montauk Highway. It will be a turned into stores, he said. And the 1.3-acre Spielberg Nursery on Montauk Highway between East Hampton and Amagansett sold for $1.65 million to Khanh Sports early in the summer, he said.
With a strong retail season behind us, commercial rents have risen accordingly, said Hal Zwick, director of the commercial division for Town and Country Real Estate. Where there have been up to 15 stores available for rent each year in East Hampton Village, there are now only a handful. And the pop-ups — season-only leases — of yesteryear seem to be disappearing too in the current upswing.
There’s a sense of excitement in the air, with rental negotiations that have in recent years taken place in February or March happening now, in October. “Retailers have the confidence to come back in the market,” said Mr. Zwick. He has several listings in the village. The lease at Tiffany & Co. on Main Street is up, and that company will be vacating, leaving behind a building with 4,200 square feet and an asking price for a long-term lease of $425,000 per year. The space at 46 Main Street, that has housed the Sam Edelman shoe store of late, is 1,650 square feet and asking $240,000 a year. For the space at 27 Newtown Lane, where a Catherine Malandrino store has been located, the landlord is asking $175,000 per year for its 1,000 square feet, for which Mr. Zwick currently has two offers. A tiny 525-square-foot shop in an alley off of Newtown is going for $70,000, he said.
The former UPS Store on Newtown Lane, vacated when the company moved next door, had an asking price of $6,200 a month. This month, the Golden Eagle art supply store moved in after losing its longstanding space on Gingerbread Lane.
“There’s a good tension between the sellers and landlords and buyers and tenants,” said Mr. Zwick, who refers to it as “post-recession negotiations.” Shops, inns, and restaurants in the village also had a “very strong post-Labor Day” period, helped along by consumer spending and mild weather.
And restaurant sales are booming. “If we had a hundred restaurants,” said Mr. Cerio, “we could sell them all.” The space on the highway that was the Polo Club in 2012, but stood unoccupied this season, is “in the process of selling now,” with three interested parties and another set to see it this past Tuesday, Mr. Cerio said. He expects the property, which boasts ample parking and two single-family houses for staff, to fetch between $2.2 million and $3 million.
Mr. Cerio and Mr. Natter just sold the building most recently housing Muse in Sag Harbor, to the restaurant’s owner, who had been renting the space and “saw the writing on the wall” when many interested parties came forward. “There was furious bidding on that building,” said Mr. Cerio. Meanwhile, rumor has it that another two restaurants are in contract: Sag Harbor’s Madison & Main, which was converted from the New Paradise Cafe just this past year, and the East Hampton space that was Turtle Crossing.
Commercial real estate here lags behind the residential market. As the residential market heated up about a year ago, the commercial market is right on target, a year later.
“The residential market dragged the commercial market down with it,” said Chris Chapin, a broker at Douglas Elliman. “It’s illogical, because the fundamentals are different.” Mr. Chapin points out that, while much of the highways in Southampton Town are commercially zoned, allowing for delis and car dealerships where field crops once thrived, “the town fathers in East Hampton” were more astute in their foresight, creating strict zoning to avoid the commercial strips farther west, which has resulted in a dearth of commercial real estate. “In East Hampton the amount of commercial real estate to land mass and number of people is limited,” making it “not gold, but platinum.”