Sadly losing territory - part of New York (4,6)
I believe the answer is:
long island
'part of new york' is the definition.
('Long Island' is part of 'new york')
'sadly losing territory' is the wordplay.
'sadly' indicates an anagram.
'territory' becomes 'land' (land is a kind of territory).
'losing' anagrammed gives 'longis'.
'longis'+'land'='LONG ISLAND'
(Other definitions for long island that I've seen before include "patch cut off in New York" , "part of America" , "Part of New York" .)