Selling the Mall Boom in the Bronx

Selling the Mall Boom in the Bronx

Selling the Mall Boom in the Bronx
May 13, 2015
Standing on a makeshift stage erected amid a Master Wok, a Sbarro, a Subway and a Dairy Queen, Bronx Borough President Rubén Díaz Jr. launched into his 2015 State of the Borough speech by welcoming attendees to the largest indoor shopping center in New York City.

The scent of fast food wafting through the food court as shoppers began strolling through the gleaming new Mall at Bay Plaza, Díaz highlighted a $7.2 billion surge in Bronx development over the last six years. About 16 percent of that growth has been commercial, according to Díaz’s annual development report, with much of that fresh retail sprouting up inside new shopping centers.

Díaz has made development the cornerstone of his tenure, and retail has been a key focus. Two days after his victory in 2009, he attended the grand opening of the first store in the Gateway Center at Bronx Terminal Market, and he’s taken it from there.

Developers have opened or announced plans to build at least seven shopping centers since Díaz was elected borough president. And while he touts these hubs as much-needed job creators in a county with the state’s second-highest unemployment rate and lower-than-average educational attainment, some argue that inviting low-wage jobs and chain stores does little to address the borough’s most pressing problems.

Between 2007 and 2012, the number of Bronx retail establishments grew from 3,460 to 3,959, according to the U.S. Census Bureau, a 14 percent increase that represents the second-fastest growth rate of all five boroughs. Though the Bronx had fewer stores than some of its counterparts in 2012, the retail sector made up a larger share of its business establishments, about 23.5 percent, compared with 19.3 percent in Brooklyn and 11.2 percent in Manhattan.

In 2013, Díaz supported the River Plaza expansion, which straddles the neighborhoods of Marble Hill in Manhattan and Kingsbridge in the Bronx. By 2015, he had helped cut the ribbon for the Mall at Bay Plaza and the Throggs Neck Shopping Center in the eastern part of the borough and supported the city Economic Development Corporation’s plans for the Broadway Plaza mall and the Riverdale Crossing shopping center in the northwestern corner.

Over the next three years, The Prusik Group is preparing to open the Crossing at Southern, a retail hub in Hunts Point; Grid Properties and Gotham Organization are scheduled to complete work on Baychester Square, a pedestrian-oriented shopping square. Youngwoo & Associates is also expected to revamp and add retail space to the Bronx General Post Office in Melrose.

For retail developers, places like the Bronx offer new opportunities as old ones dry up. Younger Americans throughout the country have moved closer to urban cores since the 2008 recession, and shopping centers have struggled in the suburbs, according to industry experts.

Developers have been especially bullish on the Bronx because it offers a strong consumer base with less competition, according International Council of Shopping Centers spokesman Jesse Tron.

Tron said developers are reassessing markets and realizing that even in “poor” areas, retailers can tap into “an aspirational consumer base,” made up of people who covet products that are nevertheless unaffordable to them.

So far, the Bronx has proven lucrative. The borough president has boasted that a stand-alone J.C. Penney across the street from the Mall at Bay Plaza had the company’s most profitable Black Friday in the nation.

“That’s why Macy’s wanted to go there,” Díaz said of the Bay Plaza mall’s flagship store, in remarks to a group of architects, investors, developers and planners visiting the borough last year.

Retail establishments can serve as anchors by attracting other kinds of commerce and helping to usher in a more vibrant economy, says Jonathan Bowles, executive director of Center for an Urban Future, a nonprofit that has published reports on retail and workforce development in the Bronx.

But Bowles noted that the Bronx has the highest proportion of residents working retail jobs across the five boroughs, as well as the highest percentage of adults with low-wage jobs, defined as those earning $26,818.06 annually. On-the-job-training is one way to help people climb out of that cycle, he said.

A retail sales job “needs to be one rung of the career ladder, and not the top one,” he said. “It’s clearly not a great-paying career.”

Díaz made headlines early in his tenure by spurring living wage legislation when he scuttled a developer’s request for subsidies to convert the Kingsbridge Armory into a shopping complex. The deal-breaker was that Related Companies was offering no commitment to hire locally or to pay a “living wage,” now on the books as $13.13 hourly, or $11.50 with benefits.

The living wage law enacted by the City Council requires employers receiving $1 million or more in city benefits to pay workers more, but it only applies to city benefits that are administered on a discretionary basis and does not cover most property tax benefit initiatives.

“Though we have passed the strongest ‘living wage’ law in the United States, not every project was covered by those efforts,” Díaz said in a statement, adding that his office is still working “to ensure that all developers who do business in the Bronx treat our borough with respect and do well by their employees.”

When asked about the living wage standards at the new malls he’s backing, Díaz said: “I am still a strong believer, and always will be, that if you are a developer and you want to use taxpayer dollars to the tune of $1 million or more, you should pay a living wage.” At Bay Plaza mall, he said, “there was no subsidy.”

But Díaz’s office, by way of its Bronx Overall Economic Development Corporation, used its leverage to convince the state to invest in a new exit ramp from a nearby highway to the new mall. And city property records show the developer is slated to receive a property tax exemption worth $4,199,780 in 2016 under the Industrial and Commercial Incentive Program, which offsets increases in real estate taxes for new construction, modernization or rehabilitation of commercial or industrial properties.

River Plaza, built before the living wage law passed, is also scheduled to receive a $17,016,750 exemption under the program. Neither River Plaza nor Bay Plaza has to pay living wages.

While many malls do not have to pay a living wage, Díaz contends developers and retailers alike have hired borough residents, contributing to a drop in the Bronx unemployment rate from 13.9 percent to less than 9 percent since he took office.

Figures provided by his office show the Mall at Bay Plaza employs more than 1,800, people, more than 90 percent of them Bronxites; more than 70 percent of Gateway Center workers are also local. Once fully leased, Broadway Plaza is expected to employ 200, while Riverdale Crossing will employ more than 500, the borough president’s office said.

Nick Iuviene, program director for an initiative by Massachusetts Institute of Technology’s Community Innovators Lab aimed at spurring economic development in the Bronx, encourages community benefit agreements to ensure communities get the most out of the surge. CBAs are  deals between developers and communities like the one Díaz helped broker for the Kingsbridge Armory after turning down the mall.

Iuviene argues that the “any job is better than no job” mantra “misses the point of where we need to be going.”

But while the borough president has said he will use his leverage to favor green development and employers who hire locally, it is the market that prevails at the Bronx’s growing network of shopping centers.

S. Andrew Katz said his firm planned a 40,000-square-foot shopping complex in Hunts Point because the area lacked sit-down eateries and national chains. So far, the Crossing at Southern has inked deals with Red Lobster, Bank of America, Dollar Tree, McDonald’s and Dunkin’ Donuts.

For blogger Ed García Conde, who counted two other McDonald’s within walking distance from the site, that doesn’t exactly cut it.

“McDonald’s recently told its own employees that eating their food is unhealthy,”

Conde wrote in a post. “So why should we allow another one in the area?”

Sarina Trangle
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