For those who aren’t lucky enough to own a summer house in the Hamptons, Marc Rowan has them covered.
For $2,900 a night some days during peak season, guests at his Duryea’s Sunset Cottages in Montauk can sip rosé in a private hot tub overlooking the sunset on Fort Bay Pond. They can eat lobster cobb salads from Rowan’s nearby Duryea’s Lobster Deck while dining on decks nestled into the bluffs, then collapse onto their choice of mattress — soft, medium or firm.
The cottages are the latest Hamptons hospitality play by the private equity billionaire, who spends his summers at an oceanfront Southampton estate. Rowan started buying properties the area in 2013 with a Sag Harbor restaurant purchase. He expanded his East End real estate portfolio to include motels and more restaurants, including Duryea’s, which he bought for $6.3 million from longtime owner Perry “Skip” Duryea in 2014.
Rowan isn’t the only New York City real estate player who’s planted a flag in the Hamptons, but he’s one of a growing group. BLDG’s Lloyd Goldman and Zucker Organization’s Donald Zucker have owned retail and commercial property on the East End for years. RFR’s Aby Rosen picked up the Southampton movie theater recently, and Blackstone president Jon Gray’s wife, Mindy, reopened the Sagaponack General Store this season after a five-year, $12 million renovation.
It’s no surprise that the East End’s commercial owners are the same cadre of wealthy real estate investors from Manhattan who’ve been summering for decades in their bucolic Hamptons estates. Now, by establishing a presence with high-end hospitality and retail ventures, they’re creating the summer they — and others in their orbit — want to enjoy.
“A lot of the time these investors have an affinity for the area. They have a house out here and know the lay of the land,” Compass commercial broker Jeffrey Sztorc said. “I don’t even look at a lot of these people as New York City people because they’ve owned out here for a long time and they are somewhat involved in the communities.”
Although many of Manhattan’s real estate elite may consider themselves locals, the entrenchment of the city contingent has created tension among some neighbors who bemoan the loss of small businesses when the new landlords renovate or raise the rents.
“People are sorry to see the old mom-and-pop stores close, but at the end of the day, the families have owned this real estate for sometimes multiple generations, and the timing was right to sell,” Hal Zwick, director of commercial real estate for Compass in the Hamptons, said. “That’s really the facts, and they’re entitled to as well.”
The long game
Perry Duryea Sr. moved to Montauk in the 1920s and bought a stake in a local fish business that shipped seafood to Manhattan by train. Duryea’s was passed down three generations over eight decades and became a local favorite for relatively affordable lobster rolls and a great view across the Sound. Rowan bought it and replaced the modest shack with a high-end restaurant and marina where well-to-do customers can park their boats and dine on $95 seafood towers.
“There’s definitely some legacy properties that get bought by the right people who have an affinity for the area and have a long-term vision,” Sztorc said. “Marc being that perfect example.”
Another is Lloyd Goldman, whose BLDG Management, along with Metrovest Equities, bought Gurney’s Inn in 2013 for $35 million. They pumped $54 million into refreshing the guest rooms, common areas, amenities and restaurants. They also added a $16.4 million spa that draws on ocean water to fill a full-size swimming pool.
“These days, it’s not necessarily just a vanity play. It’s part of their investment portfolio.”
Guests these days can order bottle service at a $750 beachside cabana or lounge on a $1,500-a-day daybed. The value of the property, now known as Gurney’s Montauk Resort & Seawater Spa, jumped to $280 million this year.
Although a personal connection may have drawn them to invest initially, real estate heavyweights view their Hamptons holdings as moneymaking ventures, according to local commercial brokers who’ve worked with them.
Mirroring the residential market, commercial property values exploded during Covid as the Hamptons changed from a seasonal to year-round community.
“These days, it’s not necessarily just a vanity play. It’s part of their investment portfolio,” Zwick said. “These are smart people. All of these people would look at a property and say ‘I’d like that property.’ Then they hear what it’s going for and it doesn’t make sense financially. No matter how wealthy they are, it’s usually a business decision.”
Retail plays
The investments aren’t just sprawling hotel properties. Real estate players also own the low-rise commercial buildings that line the South Fork’s quaint downtowns. Zucker Organization started buying storefronts in Sag Harbor almost two decades ago, angering some locals who worried the new landlord would raise rents and drive out mom-and-pop businesses.
“They had a problem — and they’re not wrong — that gradually the retail in East Hampton became more like Madison Avenue,” Donald Zucker, who owns a 3-acre estate in Bridgehampton, told The Real Deal in a 2016 interview. “The rents kept going higher and the locals got forced out, but there are still a few left.”
Most towns have strict limitations on new commercial development, so supply is limited. Bidding wars erupt over leases in prime sections of the three hottest villages, Southampton, East Hampton and Sag Harbor, Zwick said.
“The landlords are able to choose what tenants they want because there’s limited supply. That’s all it comes down to,” he said.
Meanwhile, sales of retail buildings are setting records. Tahari Realty, a relative newcomer to the Hamptons scene, has sold five East Hampton retail properties over the past few years, including the Prada store for $10.3 million in April, up from $6.1 million in 2022. Tahari’s Jordan Sutton is working on several more Hamptons retail deals.
“All of a sudden, you start to see some of the people in the town that have owned these properties for 20-plus years start to come out and say, ‘What’s my property worth?’” he said.
Passion projects
Although many owners naturally focus on balance sheets, other real estate players are taking on passion projects.
In Southampton, Rosen and his son Charlie bought the rundown local movie theater for $8 million after it closed during the pandemic. They spent two years and $15 million fixing up the 1932 building, which reopened in February as the Southampton Playhouse.
Rumors swirled that the Rosens planned to turn the theater into an upscale members-only club, but their updates turned out to be more benign: They put in stadium seating and an IMAX screen. The theater will operate as a nonprofit.
“I grew up going to this theater and had the best memories here,” Charlie Rosen told the Southampton Press.
Gray’s reinvented Sagaponack General Store was also born out of nostalgia. Gray’s four daughters grew up visiting the store for penny candy and ice cream, according to Air Mail. So she bought the store in 2020 for $3.8 million and oversaw a long, stylized renovation.
The store opened in April, drawing such large crowds for its $8 croissant and $13 breakfast sandwich that the store had to shut down for a few days to restock. Memorial Day weekend brought lines — and lots of Instagramming of the redone, photogenic space.
Might that set the Grays up as the East End’s next generational commercial owners?
“There’s a randomness to every market, especially our market,” Sztorc said. “I’ve always equated out here to an art market in a way because some of these properties, there’s no comps for them, they’re one of one. They can never be recreated.”
