Urban Edge Properties has a deal to sell part of a former suburban New York mall for $79.5 million, a property that the landlord previously said it had a deal pending for with e-commerce giant Amazon.
The New York-based real estate investment trust reported Wednesday that as of the end of the first quarter it was under contract to sell a parcel of Massapequa’s Sunrise Mall on Long Island. Urban Edge didn't identify the buyer in its 10-Q securities filing and declined to comment Friday.
But in February, Urban Edge officials said they had a transaction pending to sell about one-third of the roughly 77-acre Sunrise Mall site to Seattle-based Amazon for a distribution center. The REIT has already gone before local officials for approval to subdivide the land, with plans to sell one plot to Amazon to open an industrial facility, according to Newsday.
The strategy isn't new for Amazon. For years now it's been taking over former retail brick-and-mortar space at troubled malls to open operations and distribution centers to fulfill online orders. In 2018, for example, a former Sears at the Seaview Square Mall in Ocean Township, New Jersey, was converted to an Amazon fulfillment center. Euclid Square Mall in Ohio was also transformed into a fulfillment center, and the Greendale Mall in Worcester, Massachusetts, into a warehouse and distribution center.
Amazon had done similar retail-to-industrial conversions at malls in other places, by either razing buildings or repurposed existing ones.
Amazon didn't respond to an email from CoStar News on Friday asking about Sunrise Mall.
Urban Edge — managing member of Sunrise Mall Holdings, which acquired the retail center in 2020 — is planning to redevelop the entire property.
Urban Edge was part of a group that acquired Sunrise Mall from Unibail-Rodamco-Westfield for $29.7 million, plus up to $6 million of additional contingent consideration, in December 2020. At the time, the REIT said the mall "provides tremendous redevelopment opportunities given its unique scale and in-place zoning which provides for industrial and other uses."
This week Urban Edge CEO Jeffrey Olson was asked for an update on the mall on the company's first-quarter earnings call.
"The entitlement process is advancing on schedule," Olson said. "We had disclosed previously that Amazon is going to occupy about one-third of the property ... and we're finalizing our plans to develop the remaining land for retail and other uses."
Jeffrey Mooallem, the REIT's chief operating officer, added that the last tenant at the mall, Dick's Sporting Goods, would be "giving the keys back to" Urban Edge on this week.
"That will allow us to advance our plans rapidly into later this year," he said.
Urban Edge plans to deliver "a great result for the town of Massapequa and also for our investors," according to Olson. Massapequa, located on Long Island, has various claims to fame. For example, it's the hometown of Jerry Seinfeld, the four Baldwin brothers — Alec, Daniel, William and Stephen — and actor Steve Guttenberg.
This week Urban Edge also reported that it had closed on its $54.3 million acquisition of The Village at Bridgewater Commons from Los Angeles-based Pacific Retail Capital Partners, That 92,000-square-foot shopping center in Bridgewater, New Jersey, features a freestanding medical building for Summit Health as well as tenants such as Chipotle Mexican Grill, Shake Shack, Cava and Starbucks.
The REIT saw occupancy dip a bit in the first quarter, primarily because of the closing of a Saks Off 5th store at the Hanover Commons shopping center in East Hanover, New Jersey, according to Mooallem. Urban Edge is "evaluating multiple potential uses, ranging from grocer to apparel to creating additional shop space" for that location, he said.