WAL-MART REGROUPS FOR NEXT NEW YORK CITY ATTEMPT

Sharon Edelson / Additional reporting: David Moin

NEW YORK -- With its plans to open a store in the Rego Park neighborhood of Queens thwarted, Wal-Mart Stores, Bentonville, Ark., might be licking its wounds. Yet the retail giant won't go quietly into the night.

Real-estate sources and retail experts said the company will be back, but the next time it may have to tailor its approach to the New York City market.

Wal-Mart has considered, or may still be considering, several other locations in New York, including The Gallery at Fulton Street in downtown Brooklyn, a site in the Sunset Park-Red Hook area of Brooklyn, Coney Island in Brooklyn, and the Bronx Terminal Market next to Yankee Stadium.

The Gallery would offer 130,000 square feet, over two levels, with most of the space on the upper level. Wal-Mart would prefer closer to 180,000 square feet, and Fulton Street commands a price much higher than Wal-Mart is used to paying. Joseph Sitt, chairman and chief executive of Thor Equities, developer of The Gallery at Fulton Street, could not be reached for comment.

The Gallery and Sunset Park-Red Hook sites are considered "as of right" and do not require a change in zoning, which is necessary for the retail component of the Rego Park project. The Related Cos., which is developing the Bronx Terminal, has proposed as much as 1 million square feet of retail space. Formal applications have not yet been filed.

Target, a competitor of Wal-Mart, has been successful in New York with stores in the Bronx, Queens and Brooklyn. "They know how to do it," said Michael Burke, director of the Downtown Brooklyn Council. "They got immediately involved in the community with local elected officials and community groups. They are philanthropic. They manage a good store and have a reputation for being generous."

Wal-Mart, however, became a lightning rod for criticism when it was revealed that the chain was part of a Vornado Realty Trust proposed mix-use development in Queens, with 700,000 square feet of retail space and 450 residential units above the mall. Vornado apparently got cold feet when labor unions and some City Council members voiced opposition to Wal-Mart.

"I think this was a good, eye-opening experience, and they'll probably go back to the drawing board and the next time be a little more sensitive to their surroundings," said Jeffrey Roseman, a retail real-estate broker at Newmark/New Spectrum. "The chains that are always successful in the city are the chains that come in and change for the city and react to New York. When Bradlees first opened in Union Square, their first whole floor was lawn furniture. If you're going to come into New York thinking that you can do things the way you do in Arkansas, you're not going to be successful."

Wal-Mart was rebuffed in Staten Island and has scrapped projects in other areas of the United States, including neighborhoods near Los Angeles and Dallas.

Calls to Wal-Mart were not returned.

"At this point, it's not going to be easy for Wal-Mart to get public approval here. It's sort of a blue state-red state phenomenon," said a city official, referring to Wal-Mart's conservative values and the most recent presidential race, where states that voted for George W. Bush were designated red and those that went to Sen. John Kerry were blue. "It's probably not a great place for Wal-Mart to be. Target has produced such a hip image. Wal-Mart's ads say 'Kentucky' and not 'New York.' They have a lot of baggage."

A retail developer who works with big-box retailers said, "Eventually, Wal-Mart will find something. Somehow, some way. Maybe they'll buy a Kmart lease. Some opportunity will arise, and they'll end up in the city."