Northern and Central NJ Vacancy Rate Continues to Drop as Job Market Rises

On Sep 3, 2014

The retail vacancy rate is at its lowest for the first time in 5 years according to the results of The Goldstein Group’s mid-year survey of 22 retail corridors in Northern and Central New Jersey. The survey, totals over 4,250 properties and over 100 million square feet of retail space. The retail vacancy rate dropped to 6.38 percent, a sixth of a percentage point drop from the previous vacancy report in January 2014. Retailers – both existing and new, coming to New Jersey for the first time – continue to lease retail space at a strong pace. This continued improvement is especially significant considering the average retail vacancy rates across the country are still hovering in the 10% range.

“This is the lowest retail vacancy percentage we’ve seen in the Northern and Central New Jersey markets in over 5 years,” noted Chuck Lanyard, President of The Goldstein Group.

Strongest & Weakest Submarkets

The strongest retail markets with the lowest availability rates include:  Route 3 – Clifton (1.9%); Route 1 – Woodbridge-Edison (2.2%); Route 17 – Rochelle Park-Rutherford (2.8%); Route 37 – Toms River (3.5%); Route 35 – Hazlet-Middletown (4.52%).

Markets with the highest vacancy rates include: Route 18 – East Brunswick (11.7%); Route 4 – Paramus (10.7%); Route 10 – Morris Plains-Ledgewood (8.8%); Route 17 – Paramus (8.7%); Route 70 – Brick (8.2%).

“As expected, there was a continued increase in leasing activity throughout the first half of 2014 with several markets having minimal space available in corridors such as Clifton Route 3, Woodbridge/Edison Route 1 and the Route 17 Rochelle Park/Rutherford market,” said Lanyard.  “Well established retailers that continue to expand in the state include Whole Foods, Verizon, Vitamin Shoppe, 7-Eleven, Advance Auto, Chipotle, Bob’s Discount Furniture, Sherwin Williams, GNC, Dunkin Donuts, CVS, Costco, Hobby Lobby, IHOP, Planet Fitness, Sleepy’s, Subway, Walgreens and Target.”

Leasing velocity throughout 2014 totaled over 3.7 million s.f., with over 1.8 million s.f. of space currently being built in various communities such as Paramus, Ramsey, Mahwah, Rochelle Park, Rutherford, Totowa, Fairfield, Morris Plains, Ledgewood, Montville, Rockaway, Union, Springfield, Woodbridge, Edison, North Brunswick, Lawrence Township, East Brunswick, Sayreville, Howell, Shrewsbury, Ocean, Brick and Toms River.

While the retail market continues to improve after the recession that hit in 2008 and 2009, we continue to see space become vacant due to closings throughout the state. Staples, Thomasville Furniture, Dots, Ashley Stewart, Brookstone, Family Dollar, Loehman’s, Mandee, Marty’s, Office Depot, Pearle Paint, Rent-a-Center, White Castle, Arby’s, and Crumbs have all closed or announced planned closings of locations.

Active Retailers in the Marketplace

The majority of leasing activity continues to be driven by retailers opening small stores in the under 5,000 s.f. range. However, this has been a substantial increase in big box retailers taking advantage of favorable market conditions and rental rates. Examples of this include Ashley Furniture in Green Brook, Costco in North Brunswick, Bob’s Discount Furniture in Freehold, Bloomingdale’s Furniture in Wayne, Big Lots in Ocean and North Bergen, BJ’S Wholesale Club in Howell, Aldi in Lodi, DSW in Livingston, Ethan Allen in Marlboro, Hobby Lobby in Howell, Phillipsburg, Totowa and Woodbridge, Nordstrom Rack in Livingston, Pet Supplies Plus in Rockaway and Wall, Petsmart in Edison, Price Rite Supermarket in Garfield, Target in North Brunswick, and Shop Rite in Howell, Belleville, Union and Wallington.

Many of the retailers we are so familiar with continue to expand their presence in New Jersey. Those who have recently opened locations or plan to open include: 7-Eleven in Toms River, AAA in East Brunswick and Ledgewood, Advance Auto in South Plainfield, Middletown and Parsippany, Dollar Tree in Elizabeth, CVS in Ocean, South Orange and West Orange, GNC in Union, Goodwill in Elmwood Park, Guitar Center in Ocean, Hand & Stone in Howell, Five Below in Howell, Investors Bank in Garfield, Massage Envy in Fair Lawn, QuickChek in Wayne and Ocean, Sally Beauty Supply in Howell, Staples in North Brunswick, Verizon in Fair Lawn and Marlboro, Vitamin Shoppe in Marlboro, Walgreens in Manchester and Wawa in Garfield, Lawrence and Howell.

New Jersey’s long list of restaurant choices and eating establishments continues to grow as new restaurant concepts and established ones have opened or announced planned openings. Anthony’s Coal Fired Pizza in Wayne, Livingston and Fair Lawn, Bonefish Grill in Manalapan, Buffalo Wild Wings in Toms River and Woodbridge, Chipotle in Parsippany, Chocolate Works in Millburn and Livingston, Cups in Fair Lawn and Manalapan, Dunkin Donuts in Holmdel, Golden Corral in Freehold, Houlihan’s in Parsippany, Jersey Mike’s in Ramsey and Northvale, Jimmy John’s in Roseland, Lodi, Union and Montclair, Just Salad in Wayne, Let’s Yo in Parsippany, Noodles & Company in Fair Lawn, Qdoba in Woodbridge and Fair Lawn, Quaker Steak & Lube Restaurant in Edison and Phillipsburg, Red Robin in Brick, Shake Shack in Paramus, Smashburger in Edison, Toms River, Totowa, Lawrence and Neptune, Starbucks in Cranford, Fair Lawn and Toms River, Subway in Woodbridge, Taco Truck in Morristown, Texas Roadhouse in Holmdel, and Tilted Kilt in Hamilton.Retail & Restaurant Trends

The fast casual dining segment, which includes restaurants such as Panera Bread, Chipotle, Smash Burger, Noodles & Company, and Shake Shack will continue to expand throughout the state. People enjoy the fast service along with the much higher food quality and healthier food choices that fast casual provides in comparison to fast food, and as a result, fast casual dining is flourishing.

Health and Wellness industry retailers continue to flourish in the Garden State. 24 Hour Fitness in Ramsey, Blink Fitness in Clifton and Lodi, CKO Boxing in Green Brook, LA Fitness in East Brunswick, Planet Fitness in East Orange and Somerset, Powerflow Yoga in Wayne, and Title Boxing in Hillsdale.

Medical tenants continue to open facilities in traditional retail spaces and shopping centers although we have seen this market start to hit a plateau compared to the steady increase we had seen in recent years. Med Express, PM Pediatrics, Doctors Express and City MD all have opened stores in the past year or are about to open stores in New Jersey as landlords have become more receptive to their tenancy than in the past.

Going Forward

“Though consumer confidence continues to improve, we still have a ways to go before the market returns back to its original healthy strength before the economic downturn that hit retailers in 2008.” noted Lanyard.  “We will still see cautious optimism on behalf of many national retailers in their plans to continue opening stores in New Jersey. However, fortunately New Jersey continues to be one of the most desired states for retailers due to its strong demographics. Things are really looking up for New Jersey as far as retail goes. 2014 has continued to shape up to be a great year for retail space being leased with desirable retail locations now reaching a new premium.”

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