Retail Real Estate Market In Northern & Central NJ Continues To Improve
PARAMUS, N.J. (MARCH __, 2012) – 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 98 million s.f., the State’s retail vacancy rate dipped below 8.0 percent to 7.9 percent, the first drop below the 8 percent rate since January 2009. The State’s vacancy rate has continued to inch downward since 2009, as retailers continue to gobble-up retail space at attractive rental rates and secure locations not available in years.
“The Northern/Central New Jersey retail real estate market continues to stabilize and improve as evidenced by the slight decrease in the vacancy rate,” noted President Chuck Lanyard of The Goldstein Group. “Optimism is much improved among retailers who see consumers returning to spending and shopping, as the economy slowly improves and hiring picks up.”
Strongest & Weakest Submarkets
The strongest retail submarkets with the lowest availability rates include: Route 4 – Paramus (6.4 percent); Route 46 – Parsippany-Rockaway (5.8percent); Route 1 – Woodbridge-Edison (6.3 percent); and Route 37 – Toms River (6.3 percent). Most of these submarkets experienced positive net absorption and decreasing vacancy rates since the July 2011 survey. Submarkets with the highest vacancy rates include: Route 46 – Totowa-Fairfield (9.2 percent); Route 10 – Livingston/East Hanover (12.9 percent); Route 18 – East Brunswick (17.8 percent); Route 35 – Shrewsbury/Ocean (10.1 percent); and Route 17 – Paramus (11.9%). The majority of these submarkets also experienced a small increase in their vacancy rates since the July 2011 survey.
“We have seen an increase in leasing activity from tenants and those national retailers seeking to enter the New Jersey marketplace for the first time, noted Mr. Lanyard. “For the first time in years, retailers who have clamored to enter New Jersey but were unable due to higher rental and operating costs and are now considering and opening stores in the State due to decreased rental rates and attractive leasing terms being offered by landlords. Such tenants as Hobby Lobby, JoAnn Fabrics, Lord & Taylor Home, The Tile Shop, and Harbor Freight & Tool are examples of this trend as retailers seek to capitalize on this window of opportunity which is expected to close in coming years as the market grows stronger and rents begin to increase.”
Leasing velocity has steadily increased from 2008 through 2011, rising from 2.5 million s.f. four years ago to over 3 million s.f. this past year. Also contributing to the decreasing vacancy rate has been the decline in new construction since 2007. In 2007, more than 2 million s.f. of retail space was under construction. As of the end of 2011, only a quarter of this number – 557,000 s.f. – was under construction. There is new development as well as redevelopment projects underway and on the table for approval in such markets as Mahwah, Toms River, New Milford, Randolph, Closter, Newark, Fort Lee and Sayreville, and Hawthorne.
The Goldstein Group Vacancy Survey Matrix
In spite of the rash of store closing from such defunct retailers as 6th Avenue Electronics, Syms/Filene’s Basement, Blockbuster, Einstein Moomjy, and Borders, the majority of New Jersey’s 22 retail submarkets experienced decreases in vacancy rates, with several submarkets have little space available such Route 3 – Clifton Area, Route 17 – Ramsey, Route 46 – Parsippany-Rockaway, and Route 1 – North Brunswick/Lawrence Township.
Active Retailers in the Marketplace
Leasing remains primarily dominated by smaller size retailers looking for space below 5,000 s.f. However, large box retailers have also begun to take advantage of favorable market conditions and rental rates with retailers such as Home Goods opening in Lyndhurst, Harbor Freight & Tool in Clifton, Union and East Brunswick. 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. An example is the recently announced Fairway Supermarkets leasing a former Pathmark in Woodland Park. Retailers expanding and/or leasing space in the New Jersey marketplace include local specialty shops, restaurants and retailers as well as such national players as:
· 24 Hour Fitness
· Aldi Supermarkets
· Bone Fish Grill
· Sports Authority
· Dunkin’ Donuts
· Family Dollar
· Great Clips
· Hobby Lobby
· Moes Southwest Grill
· Musclemaker Grill
· Planet Fitness
· Dollar General
· Auto Zone
· White Castle
Fitness clubs continue to be the rage of medium and big box users, and have leased large blocks of space throughout the marketplace, in several cases taking large box vacant space. 24 Hour Fitness signed leases in Paramus and Ramsey, while Planet Fitness opened clubs in Toms River and Woodland Park. Local clubs such as Ledgewood Fitness opened in Ledgewood and Edge Fitness in Oakland.
Retail & Restaurant Trends
Notable retailer transactions and activity include 7-Eleven, a client of The Goldstein Group, recently opened stores in Fair Lawn, Bridgewater, Old Bridge, Marlboro and Pompton Plains. Musclemaker Grill is moving into Lodi, Clifton and other markets. Five Guys leasing in West Caldwell, Hackensack, Harrison, Lodi, Springfield and East Hanover. Smashburger, another of the fast casual restaurants and a client of The Goldstein Group, is opening restaurants in Paramus, East Hanover, Morris Plains and Ramsey. New restaurant concepts continue to be introduced and proliferate in the New Jersey market. Shannon Rose Restaurant, a new Irish pub restaurant, with locations in Clifton and Woodbridge, has recently opened in Ramsey. Miller Ale House, a large sports bar restaurant, will open in Paramus this year. Red Lobster, Oliver Garden and Joes’ Crabshack also continue to expand.
Another hot retail segment opening in multiple markets in New Jersey are the self-service yogurt shops. TCBY, Yogurtland, Twisted, Red Mango and CUPS have all opened locations. Also capitalizing on the health and body consciousness of today’s consumers, Hand & Stone, another client of The Goldstein Group, has also opened stores in Clark, Emerson and Wayne offering customers a walk-in spa and facial experience.
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.
“New Jersey’s strong demographics have always made retail a safer haven than most of the U.S. retail markets and kept our vacancy rate well below the national average of between 13 to 15 percent. As the most densely populated state and the second wealthiest state in per household income, we believe that the New Jersey retail market is poised to continue to gain strength and steam in 2012, albeit it slowly,” noted Mr. Lanyard. “We will still experience more store closings but their velocity has slowed down as business has picked-up for retailers and fewer retailers are filing for bankruptcy protection. We look to see more retailers take advantage of favorable rates and conditions and new retailers continue to flock to the state in opening up new stores and taking advantage of our affluent consumer base. Coupled with lower unemployment and consumer confidence rising, all bodes well for New Jersey’s improving retail marketplace.”
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.
For more information, contact Chuck Lanyard at 201-703-9700, extension 15 or visit the Company’s website at www.thegoldsteingroup.com.