print header

# 1 Commercial Real Estate Information Company

  • Find Properties 
  • Market Properties 
  • Analyze Properties 
Products
Commercial Real Estate News

Target Ramps Up Small-Store Strategy in NYC

By End of 2018, Retailer Aims for 11 Stores Open Across the Five Boroughs
April 4, 2018
Courtesy of Target, Corp.

Target is making sure Walmart and Amazon can’t rest on their laurels in the New York City metro, unveiling three new small-format stores slated to open in the coming years: one each in Manhattan’s Upper East Side, Staten Island and Brooklyn.

The retailer signed a lease with landlord TF Cornerstone to anchor ground-floor retail space within The Fairfax (pictured, above), a 315-unit apartment building located at 1201 Third Ave. in New York City. When the 22,600-square-foot store opens next year, it will be Target's seventh in Manhattan. This summer, locations on the Lower East Side and East Village will come online. A Hell’s Kitchen location will follow in 2019.

Steve N. Gonzalez, director of leasing for TF Cornerstone, said his company was "thrilled to be partnering with Target to open its first-ever store on the Upper East Side at The Fairfax," adding its quick shopping experience will make it "a valuable resource" for both Fairfax residents and the Upper East Side community.

Ripco's Richard Skulnik, who is working with Target for its ongoing small-store rollout, represented the retailer in lease negotiations. Cushman & Wakefield's Christian Stanton and Andy Kahn acted on behalf of TF Cornerstone.

Stanton said he thinks the steady foot traffic to come with Target’s Fairfax location could jump start the retail market within that Upper East Side corridor which has dealt with a steady stream of retail vacancies.

Pending development approvals, Target has also signed a long-term lease for 47,000 square feet of space at 20-22 31st Ave., according to Robert Adjimi of A&H Acquisitions, the property’s landlord. The store is expected to come online in 2022 and will be Target’s third Queens Location featuring this format, with the others in Forest Hills and Jackson Heights.

Target’s first small-format store on Staten Island will land in Forest Avenue Plaza as the shopping strip’s sole anchor tenant. The 46,000-square-foot location will open in fall 2019, according to landlord Kimco Realty.

About 50-100 employees will work at each of the three stores, according to Target. All three new locations will offer Order Pickup.

Target is investing $3 billion into operations, according to its fourth-quarter and full-year 2017 earnings call on March 6. The retailer is focusing on shortening its delivery times by investing in fulfillment and supply chain capabilities, such as increasing click-and-collect through drive-ups at small-format stores, and redesigning current stores. It is also opening new smaller-scale format stores in urban centers, what it calls dense suburban neighborhoods, and nearby college campuses.

In 2018, which the retailer is calling a transition year, Target plans to open 30 new small-scale stores and expects to see a 50 basis-point increase from its new format stores during the year, CFO Kathy Smith noted in her presentation. It is targeting a total of 130 small-format stores opened by 2019.

Target tells CoStar News that in 2018 it will open two more small-format stores in Manhattan and one on Long Island. That will bring total small-format store counts across the five New York City boroughs to 11.

Within the New York City market, these stores have ranged in size from 18,000 to 46,000 square feet. Undoubtedly, the retailer has options. CoStar research shows 29 Manhattan properties with retail availability in this size range. In Queens the figure is 18 and in Brooklyn, 22. Staten Island’s availability in this range tallies at two properties. And in the Bronx, 20 such potential properties exist.

Brokers are seeing the opportunity.

"With small-format Target lease now in our New York metro portfolio, it’s clear that there is strong demand for the concept, especially in densely populated areas," noted Joshua Weinkranz, president of the Northern region at Kimco Realty.

In a retail environment where store closures and rightsizing efforts have pushed headlines, Target is seeking to make its stores more salient to shoppers by efficiently curating the selection of goods offered to their respective neighborhoods. Investing in better-matching demographics and consumer trends is part of Target’s investments into technology and research.

As an example, Target says the Staten Island store will host a CVS Pharmacy and Starbucks while the Upper East Side location will sell a wider array of beauty gear and prepackaged foods.

Target is filling a void by unique offerings of quality retail products as a one-stop shop, which should make it tremendously successful, added Stanton.

"Target takes into consideration the neighborhood and guests that will likely be shopping in each location to determine the right mix of products at each store, leveraging insights from our district team and area stores, guest insights research and local focus groups," the company relays to CoStar News.

In 2018, the retailer will also ramp up Grand Junction, a San Francisco-based transportation technology firm it acquired in 2017. Target plans to utilize Grand Junction to facilitate same-day delivery in New York City. The acquisition follows a similar move by Walmart, which acquired Parcel to leverage same-day delivery. In 2017, Target also acquired Shipt, a same-day online delivery service, for the same purpose.

Target adds that it "is investing to modernize its supply chain to be faster and meet guests’ ever-changing expectations. That effort includes continuing to refine how it services Target’s increasing number of these smaller stores in urban and densely populated areas."

The question is, when is Amazon going to get in the mix, brokerage sources say, noting that retailer is amongst the most best-equipped to compete on a small-store strategy.



Diana Bell, New York City Market Reporter  CoStar Group   
GET IN TOUCH        Contact CoStar News Team:   News@CoStar.com

 Find us on 

Welcome To CoStar's
Industry-Focused,
Award-Winning News

Winner of three Journalism Awards from the National Association of Real Estate Editors (NAREE)

Award-Winning News