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Outside broker negotiates big rent hike with major tenant in Bartow

The Rite Aid Pharmacy in the Bartow Shopping Center will continue to serve Co-op City residents for many years to come following its lease renewal negotiations with Riverbay by outside commercial real estate broker KZA Realty Group.

Rite Aid, has been in the Bartow Center for over 20 years, extended its lease for the 8,045 square foot space for another 15 years and will pay a significant increase on its current rent that will provide shareholders with several million additional dollars over the life of the renewed lease.

The Riverbay Board of Directors approved the Rite Aid lease extension by vote of 11-0, with four members absent, at its December 17, 2015 meeting.

KZA Realty was retained to attract and retain commercial tenants into Co-op City's three shopping plazas at market rent prices in order to increase the rental income for Co-op City shareholders. The Rite Aid lease is the first deal that KZA Realty has negotiated for Riverbay.

"Because Bay Plaa is across the street from Coop City, I think it's important to start repositioning the shopping centers within Co-op City. I think it's time for them to be revitalized," said Kathy Zamechansky president of KZA Realty and a veteran of more than 30 years in the local real estate industry. Zamechansky was named president of the Bronx-Manhattan Association of Realtors (BMAR) in December of 2014.

"The residents use their own shopping centers and I think it's time to bring some of the current retailers up to market rate so the residents and the community can benefit by having significant income from their shopping centers," she said.

Peter Merola, Riverbay's Director of Finance, said the Rite Aid lease extension illustrates management's goal of maximizing income from commercial properties for shareholders.

"Riverbay's current management is focused on increasing the rents paid by its commercial tenants," Merola said. "As retail developments continue to increase in the surrounding areas of Coop City, Riverbay's property commands a higher value."

"Management recognized this and engaged a well established and respected commercial real estate broker in the Bronx who is helping Riverbay obtain market rents for its commercial stores. All of this benefits the shareholders since more rents received from commercial tenants help keep carrying charges affordable for the shareholders." Merola said.

KZA Realty conducted studies of the commercial rents in the local area and determined that the existing Rite Aid lease was now well below market value, according to Daniel McVeigh, a broker with the firm. "We went back to Rite Aid with a market present value lease proposal and after several weeks of negotiations we came to an agreement that was presented to the Riverbay Board and they approved it." he said.

Earlier this month, by a 9-4 vote, with two directors absent, the Board approved a resolution to seek market rent for the commercial space at the former Bingo Hall on Bartow Avenue.

That resolution made the case that the 9,531 square foot space has the potential to bring in $40,000 a month in market rent to Riverbay and the 6-month delay authorized by the prior Bronx resolution on the bing hall could result in a $240,000 loss of income to the corporation.

"The Board has an obligation to provide the most economical operation of Coop City in order to maintain the lowest possible carrying charges, and the potential loss of $240,000 in commercial rent income is not in the best interest of shareholders," the resolution stated in regard to the former Bingo Hall site.

KZA Realty was recently assigned to secure a tenant for the Bingo Hall site and is now analyzing what tenants are in Bay Plaza and the Peartree Center to determine which retailers to target.

"We want to see who's missing," Zamechansky said. "For example, if a pet store is in Bay Plaza, another pet store might be willing to go across the street in Bartow, Bay Plaza has exclusives, so I'm sure there are many retailers who would love to be there but can't. We are going to reach out to them and say you can be right here across the street and have high, high visibility where thousands of cars go by every day."

KZA Realty will set out to lease whatever vacancies now exist in the shopping centers to new tenants, and, as lease renewals come up, will work with Kim Umstead of Riverbay Leasing Department and Michael Munns from the Riverbay Legal Department to develop strategies to re-sign those tenants, McVeigh said.

"We work in upper Manhattan, the Bronx and lower Westchester, so we can bring a bigger picture regarding what the trends are, who's looking and what they're looking for." Zamechansky said. "We will be working with the Riverbay staff to enhance the retail services that the shopping centers now provide to residents."

By Jim Roberts
Co-op City Times is now online

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