2012 Year End Retail Vacancy Report
RETAIL REAL ESTATE MARKET IN NORTHERN & CENTRAL NJ
SEE SMALL INCREASE IN LEASING VELOCITY
Vacancy Rate Maintains Below 8%
22 Retail Corridors, Totaling Over 4,250 Properties Surveyed
PARAMUS, N.J. (March 1, 2013)– “Status Quo” characterizes the sustained minimal improvement of retail space leasing up in New Jersey. According to the results of The Goldstein Group’s year end survey of 22 retail corridors in Northern and Central New Jersey, totaling over 4,250 properties and over 98 million s.f of retail space. As of December 2012, the State’s retail vacancy rate remained at approximately 7.8 percent virtually the same as we saw in 2012 midyear report. Retailers – both existing and many new retailers setting-up shop in the State for the first time – continue to absorb retail space at a steady pace.
“The Northern and Central New Jersey retail real estate market continues to improve but it is still a ‘tenants’ market,” noted President Chuck Lanyard of The Goldstein Group. “Opportunistic retailers are leasing at attractive rental rates and securing locations by taking advantage of market conditions.”
Strongest & Weakest Submarkets
The strongest retail markets with the lowest availability rates include: Route 3 - Clifton (2.3%); Route 17 – Rochelle Park-Rutherford (2.3%); Route 1 – Woodbridge-Edison (3.8%); Route 22 – Union-Springfield (4.5%); Route 37 – Toms River (4.7%); Route 1 – North Brunswick-Lawrence Township (5%); Route 17 – Ramsey-Mahwah (5%); Route 35 – Hazlet-Middletown (6%); Route 46 – Montville-Rockaway (6.4%); Route 9 – Sayreville-Howell (7.5%).
Markets with the highest vacancy rates include: Route 18 – East Brunswick (18%); Route 10 – Livingston-East Hanover (12.6%); Route 17 – Paramus (11.4%); Route 35 – Shrewsbury-Ocean (10.5%); Route 46 – Totowa/Fairfield (9%). Northern New Jersey markets historically continue to fare stronger in terms of demand and lower vacancy rates while several Central New Jersey markets continue to experience lackluster leasing velocity.
“The stronger submarkets saw a flurry of leasing activity in 2012 with several having little remaining space available in such corridors as the Paramus Route 4 and Clifton Area Route 3 markets. Larger blocks of space have been absorbed in these markets,” said Lanyard. “Also, the mix of tenants is changing. With the opportunities that have come up along the various retail highways, new to New Jersey retailers such as Fairway Market, Harbor Freight, Uniglo, Millers Ale House, Hobby Lobby, and numerous others have opened, or will soon open new locations in New Jersey. Well established retailers that continue to expand in the state include Home Goods, Trader Joe’s, Dollar General, Big Lots, Family Dollar,, Panera Bread, Planet Fitness, 7-Eleven, Sherwin Williams, Smashburger, Great Clips, and Five Guys. which all opened up new locations. New Jersey has no shortage of retailers wanting to take advantage of its strong demographics, which is near the top nationally.”
Leasing velocity through the end of 2012 totaled more than 3.1 million s.f., a considerable increase over prior years. Exciting construction and redevelopment projects are moving forward currently in Sayreville, Newark, North Plainfield, East Brunswick, Wayne, Fort Lee and North Brunswick.
The Goldstein Group Vacancy Survey Matrix
The market still appears to continue its slow recovery from the downturn that hit retailers in 2008 and 2009. However, we continue to see blocks of space become vacant, such as Electronics Expo, Loehmans, 6th Ave Electronics, Staples, A&P, Barnes & Noble, Daffy’s, Lord & Taylor Home Stores, Sleepy’s, Blockbuster Video and Fashion Bug. These all continue to impact on certain markets.
Active Retailers in the Marketplace
Leasing activity continues to be driven by retailers opening shops in the 1,000 to 5,000 s.f. range. However, large box retailers are taking advantage of favorable market conditions and rental rates. While A&P and Pathmark continue to close excess stores, this has given large box retailers and other grocers new large box opportunities to relet in New Jersey. Examples of this include the recently approved Costco in North Plainfield, ShopRite in Wyckoff, and Whole Foods in Morristown which we can expect to see open in the future. Two new Wegmans sites are going through the approval process in Morris Plains and Montvale. Also in the planning stages a new Whole Foods which is slated to open on Route 46 in Parsippany at a new shopping center site. Whole Foods is also under construction on Route 9 in Marlboro.
Other big box deals this year include: Pennsylvania based Weis Supermarkets in Hillsborough, a new ShopRite on Route 35 in Hazlet, Dicks Sporting Goods in South Plainfield and BJ’s Wholesale Club in North Brunswick.
Many retailers continue to expand in the very desirable NJ retail markets. Some of those include:
Retail & Restaurant Trends
New Jersey’s long list of restaurant choices and eating establishments continued to grow as new restaurant concepts have opened while others expanded. Chipotle has opened locations in South Plainfield, Madison, Toms River and West Windsor. Joe’s Crab Shack will be opening in Newark and Brick. Smashburger, another of the fast casual restaurants and a client of The Goldstein Group, has recently opened a restaurant in East Brunswick. Zinburger, Subway, Sonic, Pot Belly, Popeyes, Quakersteak & Lube and Chick-Filet all also continue to expand.
Convenience stores continue to thrive in New Jersey. Convenience stores combined with gas pumps keep opening in New Jersey. A new QuickChek is under construction in Jefferson and Wawa has opened locations in Kearny and Woodbridge and has a new site in Old Bridge under construction. Wawa and QuickChek also have numerous new sites in for approval with anticipated openings in 2014. 7-Eleven, a client of The Goldstein Group, opened stores in East Brunswick, North Arlington, West Orange and North Plainfield.
Frozen yogurt establishments continue to open more locations in many markets in New Jersey. Cups opened new locations in Parsippany and South Plainfield and Paramus. Let’s Yo Yogurt is leasing space in Florham Park. Red Mango also recently opened in West Caldwell and Watchung.
Hospitals, doctors, dentists, and therapists continue to locate closer to their customer base by opening in shopping centers, and make it more convenient for patients. We are seeing this new trend of shopping center spaces being now utilized by medical and dental practices. Prior to the recession, landlords were reluctant to lease space to the medical community, but having space leased is critical and landlords are now more receptive and these uses do create additional traffic to a retail center. Some of the new medical tenants utilizing retail space include Dr. Dental, PM Pediatrics, Doctors Express and Doctor’s Office Urgent Care.
Health and Wellness industry retailers continue to flourish in the Garden State. Fitness Equipment Superstore opened locations in Paramus, Wayne, Green Brook and East Brunswick. Massage salons continue to find their niche in the NJ marketplace, primarily catering to women clientele. Massage Envy opened in East Rutherford. Elements Salon opened in New Providence, and Hand and Stone, a client of The Goldstein Group, opened locations in both North Brunswick and Franklin Lakes. Boxing gyms, the newest entry into the ever growing gym business, have become widely popular with their combination facility providing boxing, kickboxing and mixed martial arts studios all in one. LA Boxing is now in Totowa, CKO Boxing opened in Eatontown, Edison, Lyndhurst and Middletown. Title Boxing has new gyms in Rutherford, Wayne, Parsippany and West Windsor. Weight Watchers is now in Riverdale and Tiger Schulman has opened a martial arts facility in Wayne.
Some new stores and restaurants have come to New Jersey for the first time in 2012 or will soon open include:
“The recovery of the retail market in New Jersey is continuing at a slow, but steady pace with solid growth in leasing activity and decreasing vacancies,” noted Mr. Lanyard. “We expect this moderate pace of growth to continue throughout 2013 as much of the recession’s impact on the retail marketplace is appearing to be behind us. Fortunately, people are feeling a little better about our economy and consumer confidence has improved. We are still dealing with pockets of vacancies that remain due to past retail bankruptcies but New Jersey’s attractiveness as a retail market has made it more resilient than most major markets in the US. Expect continued retail leasing and new retail construction as we go into 2013 and beyond.”
About The Goldstein Group
The Goldstein Group, New Jersey’s leading full-service commercial real estate brokerage firm, specializes in owner representation, retailer representation, investment sales and management services. The firm, founded in 1986, represents over 12,000,000 square feet of retail space and more than 50 national and regional retailers. The Company is the New Jersey member of the Retail Brokers Network. As an RBN affiliate, The Goldstein Group provides clients assistance throughout the United States with qualified retail specialists in over 60 offices in the United States and Canada.
For more information on the Retail Brokers Network, visit www.retailbrokersnetwork.com.
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