Retail Real Estate Market Vacancy Rate Drops

On Apr 21, 2014

The retail vacancy rate has dropped under 7% for the first time in 5 years according to the results of The Goldstein Group’s year end survey of 22 retail corridors in Northern and Central New Jersey. The survey, the most extensive retail vacancy report for New Jersey, totals over 4,250 properties and over 100 million square feet of retail space.  The retail vacancy rate dropped to 6.9 percent, a .3 percent decrease from what The Goldstein Group saw in the 2013 midyear report.  Retailers – both existing and new, coming to New Jersey for the first time – continue to absorb retail space. This continued improvement is especially significant considering the average retail vacancy rates across the country are still in the 10-12% 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 (2.8%); Route 17 – Rochelle Park-Rutherford (2.99%); Route 37 – Toms River (3.79%); Route 46 – Montville-Rockaway (4.72%).

Markets with the highest vacancy rates include: Route 10 – Livingston-East Hanover (12.39%); Route 18 – East Brunswick (11.4%); Route 4 – Paramus (10.89%); Route 17 – Paramus (10.22%); Route 35 – Shrewsbury-Ocean (9.1%).

“There was a substantial increase in leasing activity throughout 2013 with several markets having minimal space available in corridors such as Clifton Route 3, Woodbridge/Edison Route 1 and the Route 46 Montville/Rockaway market,” said Lanyard.  Well established retailers that continue to expand in the state include Costco, Marshalls, Whole Foods, Walmart, Big Lots, Hobby Lobby, Target, Stop & Shop, Petsmart, GNC, Home Goods, Dollar Tree, Planet Fitness, Ethan Allen, and Harbor Freight.”

Leasing velocity through 2014 totaled over 1.5 million s.f., with over 800,000 s.f. of space currently being built in various communities such as Paramus, Ramsey, Mahwah, Rochelle Park, Rutherford, Morris Plains, Ledgewood, Montville, Rockaway, Union, Springfield, North Brunswick, Lawrence Township, East Brunswick, Sayreville, Howell, Shrewsbury, Ocean Township, and Brick Township.

The Goldstein Group Vacancy Survey Matrix

The market has continued to rise over the past two years from the downturn that hit retailers in 2008 and 2009. However, The Goldstein Group still continues to see space become vacant due to closings throughout the state. Shop Rite, Rite Aid, Capital One, Children’s Place, Lenscrafters, Loehman’s, Sleepy’s, Staples, Stop & Shop, Radio Shack, Dots, and Thomasville Furniture have all closed or announced planned closings of locations and these vacated spaces are generating strong interest from retailers.

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, Goldstein Group has seen a substantial increase in big box retailers taking advantage of favorable market conditions and rental rates. Examples of this include Ashley Furniture in Toms River, Buy Buy Baby in Livingston, Costco in Plainfield and North Brunswick, Home Goods in Philipsburg and Flemington, Marshalls in Garfield and Philipsburg, Petsmart in Edison, TJ Maxx in Totowa, Walmart in East Brunswick and Old Bridge, Big Lots in Woodbridge, Bob’s Discount Furniture in Freehold, Hobby Lobby in Lawrence, Philipsburg and Totowa, and Whole Foods in Newark, Cherry Hill, Closter, Clark, Morristown, Parsippany and Marlboro.

Other active retailers include: Auto Zone in East Brunswick, Ethan Allen in Marlboro, Guitar Center in Ocean Township, Ace Hardware in Chatham, Advance Auto Parts in Old Bridge, Fortunoff Backyard in Brick Township, Buddy’s Small Lots in Oakhurst and Mansfield, Hand & Stone in Allendale, Pet Supplies Plus in Rockaway, and Rent-a-Center in Hazlet.
Many retailers continue to expand in the very desirable NJ retail markets.

Some of those include:

• Walmart
• Wawa
• Auto Zone
• Costco
• Marshall’s
• TJ Maxx
• Starbucks
• Buy Buy Baby
• Stop & Shop
• Big Lots
• AT&T
• Hobby Lobby
• Dollar Tree
• CVS
• Walgreens
• QuickChek
• GNC
• Harbor Freight
• Hand & Stone
• Massage Envy

Retail & Restaurant Trends

New Jersey’s long list of restaurant choices and eating establishments continued to grow as new restaurant concepts and established ones have opened or announced planned openings. Chipotle in Lodi, Newark and West Orange, Buffalo Wild Wings in Secaucus and Parsippany, Moe’s Southwest Grill in Florham Park, Joe’s Crab Shack in Newark, Starbuck’s in Cranford, Fair Lawn, New Providence, Somerville and Toms River, Panera Bread in Wayne and Riverdale, Qdoba in Fair Lawn and Watchung, Red Robin in Paramus and Secaucus, Shake Shack in Paramus, Bonefish Grill in Manalapan, Noodles & Company in Eatontown, and IHOP in Howell.

Health and Wellness industry retailers continue to flourish in the Garden State. Blink Fitness in Union and Parsippany, Crunch Fitness in Woodbridge and North Brunswick, LA Fitness in East Brunswick, Lifetime Fitness in Montvale, Retro Fitness in West Orange, 24 Hour Fitness in Ramsey, Anytime Fitness in Oak Ridge and Planet Fitness in Linden, Somerset, and South Plainfield.
Also, medical tenants continue to open facilities in traditional retail spaces and shopping centers more and more. Doctors Express, MedEx, The Doctors Office, PM Pediatrics, City MD, Dr. Dental, and Vein Clinics USA all have opened stores in the past year or are seeking sites as landlords are much more receptive to their tenancy than in the past.

Going forward

“Consumer confidence continues to rise with our improving economy as results have shown a continuing decrease in New Jersey’s retail vacancy rate,” noted Lanyard.  “These numbers confirm that the retail climate is improving. We will still have some retailers who will conservatively wait for a more sustained improvement, but, all in all, 2014 looks to be another good year for retail space being leased, and as a result, desirable retail locations will soon be at a premium.”

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