Two addresses on Veterans Road West in Charleston explain this deal. ShopRite of Veterans Rd sits at 3010 Veterans Road West and South Shore Commons is at 2965. South Shore Commons is an open-air center of roughly 157,000 square feet. Its tenants include Filoncino Bakery Cafe, Dunkin, Pronto Pizza, Sola Salon Studios, Retro Fitness and Sally Beauty, and none of them is a supermarket.
In September, Phillips Edison & Company bought South Shore Commons from Joyland Management for $57 million, or $362 per square foot, as Commercial Observer reported. PECO describes itself as one of the country's largest owners of grocery-anchored neighborhood centers. PECO's filings describe a strategy built on two things this center has: a leading grocer nearby that PECO doesn't have to own, and roughly a sixth of the space empty and ready to lease. That second reason matters to every landlord and tenant along this corridor.
The empty space is the part PECO paid for
PECO's third-quarter earnings presentation lists South Shore Commons at 157,574 square feet and a $57.0 million price. It closed on September 17, 2026, and was 83.8% leased. Across the whole portfolio, PECO reported 97.5% leased occupancy at September 30, 2026, with inline shop space at 95.1%. That leaves a gap of almost 14 points between the Staten Island center and the rest of the portfolio. The new owner's job is to close it.
The current leasing listing shows 25,554 square feet available. Measured against PECO's 157,574-square-foot figure, that is about 16% of the center, in line with the 83.8% leased rate. The listing itself states a smaller total area, so the share comes out closer to 18% on its numbers. Some of that space just opened up. Crumbl closed its South Shore Commons bakery in September after nearly three years, SILive reported, and kept its Forest Avenue shop open.
PECO files the center under a category it calls Everyday Retail™, meaning necessity-based centers without an owned grocery anchor. Next to the REIT's other Everyday Retail purchases this year, South Shore Commons is much larger and much emptier:
| Everyday Retail center, 2026 | Square feet | Price, $000s | Leased at acquisition | Closed |
|---|---|---|---|---|
| Plaza West Covina, West Covina, CA | 46,406 | 25,777 | 88.3% | 2/25/26 |
| The Shops at Hamilton Mill, Dacula, GA | 43,518 | 16,000 | 100% | 3/24/26 |
| Firethorne Plaza, Katy, TX | 29,986 | 15,500 | 100% | 4/23/26 |
| South Shore Commons, Staten Island, NY | 157,574 | 57,000 | 83.8% | 9/17/26 |
The Staten Island deal cost about as much as the other three combined. It is also the only one with meaningful vacancy beyond the California center. PECO usually buys smaller Everyday Retail centers that are already full. Here it paid a top-of-list price for a center with room to lease up.
Where a 10% return comes from on a partly empty center
On its October 27 earnings call, management said the assets PECO bought in 2026 were 94% leased on average, compared with 98% across its existing portfolio. Management put it this way:
"That gap represents visible upside for PECO. We know how to lease these centers to enhance the merchandising mix and to use our data and local market knowledge to move operating performance toward the level of our existing portfolio."
The same call set the return targets at 9% unlevered IRR for grocery-anchored acquisitions and "10% or better" for Everyday Retail. Management also said its Everyday Retail purchases this year averaged about a 6.8% cap rate. PECO's October 2026 investor presentation gives a 6.4% to 7.6% range for those purchases.
An entry yield in the high 6s can't produce a 10% IRR without growth, so the business plan has to supply the difference. PECO's third-quarter release names three levers for its quarter's acquisitions:
- Occupancy increases. At South Shore Commons, that means leasing the roughly 25,000 square feet now on the market.
- Rent growth. The investor presentation reports Everyday Retail new-lease rent spreads above 40% and renewal spreads above 25%, measured as of October 1, 2026.
- Ground-up outparcel retail. PECO lists this as a potential future source of value. It is not an announced project for this site.
The center's price history shows how much of the value has already been realized. South Shore Commons traded for $41 million in 2018. Joyland refinanced it with a $41.8 million loan in 2023, according to Commercial Observer. The $57 million price is about 39% above the 2018 sale. PECO paid that premium for a center that was still 16% empty, so the buyer is counting on the next lease-up to make its return.
A nearby grocer anchors the center at no cost to PECO
PECO's investor presentation says its Everyday Retail strategy targets markets "near the #1 or #2 grocer." Grocers supply 27% of the company's annualized base rent, as of June 30, 2026. At South Shore Commons, the grocer operates on someone else's property. ShopRite is at 3010 Veterans Road West. Bricktown Centre at 2752 Veterans Road West counts BJ's among its tenants. South Shore Commons sits next to Bricktown Commons, but the two centers are run separately.
This setup works in the owner's favor. The supermarket and the warehouse club bring shoppers to the corridor, and none of their leases sit on PECO's rent roll. So every square foot the REIT owns at South Shore Commons can be leased as small-shop space: fitness, beauty, food and services. Recent arrivals fit that mix. Froyolicious, a frozen yogurt, gelato and coffee shop, opened at 2955 Veterans Road West, Suite 1D, with a grand opening planned for March 2026, SILive reported. Asking rents on the listed spaces with disclosed rates run from $37 to $50 per square foot per year, triple net. These are listing figures for one center, not a borough benchmark.
Grocers are filling Staten Island's empty boxes, and small shops follow
The rest of the island this fall helps explain why a buyer would underwrite grocery traffic it doesn't own. Supermarkets have been filling large boxes that other retailers left:
- Lidl opened its second Staten Island store on September 30 at 1545 Forest Avenue. It took about 19,667 square feet that Party City used to occupy.
- Widdis Food Market, an independent supermarket, opened in the former Ideal Fresh Market space at the Rossville Shopping Center, 1006 Rossville Avenue. The store is 13,000 square feet, and its ribbon-cutting was set for October 30, according to SILive.
- Hylan Common in New Dorp is co-anchored by Aldi and Planet Fitness. Magnolia Bakery picked the space between those two anchors for its first Staten Island shop. The grand opening was scheduled for November 3, and franchisee Ereny Ghobrial is the brand's first New York franchise owner, SILive reported.
A national dessert brand making its Staten Island debut chose a spot between a discount grocer and a gym. Both anchors produce frequent, repeat visits. A grocer's traffic is the thing an inline tenant pays for, whoever owns the grocer's building. Lidl and Widdis show that grocery operators still want Staten Island space. Magnolia shows the small-shop demand that grocery traffic brings with it. PECO's purchase prices that same pattern into a center where the grocer happens to be a neighbor.
What the new owner's plan means at the lease table
A landlord that has told public shareholders it expects occupancy gains and new-lease spreads above 40% will negotiate with that plan in mind. That affects several groups along Veterans Road West and at similar centers across the borough:
- Prospective tenants at South Shore Commons will be talking to an owner that needs to fill about 25,000 square feet. The same owner also has a record of pushing rents. Vacancy gives a tenant some leverage on concessions or term. The rent-growth target means the asking rate will be defended.
- Existing tenants with renewals coming up should assume the new owner will compare their rent to the $37 to $50 asking range on the vacant suites. PECO reported record renewal spreads across its portfolio in the third quarter of 2026.
- Owners of nearby unanchored strips now have a fresh, public comparable: $362 per square foot for a center that was 83.8% leased, priced on the strength of a neighbor's grocer. A center within walking distance of a strong supermarket may be worth more to a national buyer than its current rent roll suggests.
- Buyers competing for similar assets are bidding against a REIT that has raised its full-year 2026 acquisition guidance to $600 million to $700 million and has said it is under contract or awarded on about $250 million more.
If PECO gets the center close to its 95% inline level, the comparable it set in September will probably support pricing for other Staten Island centers that sit next to someone else's supermarket.
If you own, lease or are weighing a neighborhood center that depends on a nearby grocer's traffic, Tide Realty Group can run the lease-up math alongside you. We underwrite vacancy, renewal exposure and co-tenancy the way an operator would, because we operate assets too. Rise With Us.
