East Meadow landlord sues over Amazon Fresh lease pullout

The owner of an East Meadow property is among the growing number of landlords nationwide suing Amazon over pulling out of leases for new Amazon Fresh grocery stores.

Salisbury Partners LLC, a family-owned real estate company in Lake Success, is suing the e-commerce giant, alleging breach of contract over a lease signed in April 2022 to open an Amazon Fresh grocery store at 2000 Hempstead Turnpike in East Meadow. Construction of the 43,000-square-foot store never started.

“Unfortunately for us, we’re very small and it cost us several million dollars to get to this point where we’re at right now. … Now that we’re holding this large liability of money we spent, you know we have no way of refinancing and getting money back because we don’t have a tenant,” said Mark Sagliocca, a principal in Salisbury.

Salisbury alleges that Amazon used false pretenses to breach the contract in January. 

Since Amazon announced in February that it was pausing opening any new Amazon Fresh supermarkets to examine “the economic value” of the concept, Salisbury claims that the ecommerce company broke the lease for the planned East Meadow store because Amazon Fresh was an “economic failure.”

“Over an eight-month time period, plaintiff's team held weekly and biweekly calls with Amazon's team to work through the performance of the substantial upfront work that plaintiff agreed to perform at its own expense, while addressing Amazon's requests along the way,” Salisbury’s complaint says.

Salisbury spent more than $3 million for a site engineer, expediters, attorneys, architects, contractors for preliminary work, submitting building-related documents to the town of Hempstead and other costs, Sagliocca said. 

No one else is in the wings to lease the property, he said.

“With today’s higher interest rates and financial institutions tightening up on commercial loans, our prospective tenant market disappeared,” he said.

The real estate company is seeking a judgment against Amazon for more than $37 million, according to the complaint filed in the Supreme Court of the State of New York in Nassau County in March.

Amazon, which is countersuing Salisbury for $250,000 plus interest for its “out-of-pocket costs,” denies the real estate company’s allegations, according to a court filing.

Amazon claims that it had the right to terminate the lease because it never approved the initial landlord’s plans, according to a court filing.

The 10 acre East Meadow site has a 17,000-square-foot former Modell’s Sporting Goods space, which is currently occupied by a seasonal Spirit Halloween store, and a CarMax used vehicle dealership that opened in 2022. The car dealership replaced a building that was occupied by Home Depot for 28 years until 2017, when the business relocated to Levittown.

Salisbury alleges that Amazon first attempted to terminate the East Meadow lease Jan. 9 by claiming that the Front Street entrance to the site was too narrow for delivery trucks, despite Home Depot and CarMax having no issues with the entrance.

Salisbury agreed to widen the entrance but Amazon still sent a second letter of termination Jan. 17, the real estate company claims.

Amazon, based in Seattle, declined to comment on the lawsuit Thursday, saying it does not comment on ongoing litigation.

Regarding store leases in general, the company said it regularly reviews its portfolio.

“Like any retailer, we periodically assess our portfolio of stores and make optimization decisions that can lead to closing existing locations or choosing not to pursue building a planned location,” spokeswoman Jessica Martin said.

Launched in Woodland Hills, California, in 2020, the Amazon Fresh model leans heavily on “Just Walk Out” technology that allows shoppers to pay digitally without going through checkout lanes.

There are now 44 stores in eight states and Washington, D.C.

But Amazon halted opening new Amazon stores this year, leaving vacant stores that landlords had remodeled, at least on the exteriors, for occupancy by Amazon Fresh.

The only Amazon Fresh in New York state is on Long Island, where a store opened in Oceanside in July 2022.

Amazon Fresh stores were also planned for three other Long Island locations: in East Setauket (4054 Nesconset Hwy.), Plainview (50 Manetto Hill Rd.) and Farmingville (3017 North Ocean Ave.)

The stores never opened but they have light green and gray paint and large glass windows — the signature look for Amazon Fresh — and nameless storefronts. Their future is uncertain.   

Neither the landlords of those properties nor Amazon would comment Thursday.
 

By Tory N. Parrish

tory.parrish@newsday.comToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.