2016 Report Shows Retail Vacancy Rate Rises Due to Recent Big Box and Supermarket Closings

On Oct 17, 2016

The retail vacancy rate has increased by just 1 percent since last years survey done in July 2015, according to the results of The Goldstein Group’s, located in Paramus, 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 is now at 7.2 percent. Retailers – both existing and new, coming to New Jersey for the first time – continue to lease retail space at a steady pace. New Jersey is still doing better in filling retail spaces, compared to the rest of the United States, where vacancies still average closer to 10 percent nationwide.

“Despite this increase over last year, there are many circumstances that attributed, but fortunately we see this change to be short lived, minimal, and we expect considerable improvement in the coming year,” noted Chuck Lanyard, President of The Goldstein Group. “Absorption or leasing of vacant space continues at a strong pace.”

Strongest & Weakest Submarkets

The strongest retail markets with the lowest availability rates include: Route 17 – Rochelle Park-Rutherford (2.59 percent); Route 1 – Woodbridge-Edison (4.01 percent); Route 17 – Ramsey-Mahwah (4.04 percent); Route 22 – Scotch Plains-Bridgewater (4.16 percent); Route 3 – Clifton Area (4.28 percent)

Markets with the highest vacancy rates include: Route 10 – Morris Plains-Ledgewood (15.13 percent); Route 70 – Brick (11.9 percent); Route 17 – Paramus (11.32 percent); Route 18 – East Brunswick (10.68 percent); Route 9 – Sayreville-Howell (8.79 percent)

“There was a continued increase in leasing activity throughout 2016 with several markets having minimal space available in corridors such as Route 17 Rochelle Park/Rutherford, Route 1 Woodbridge/Edison, Route 17 Ramsey/Mahwah, Route 22 Scotch Plains/Bridgewater, and the Route 3 Clifton Area,” said Lanyard. “Retailers that continue to expand in the state include LA Fitness, Chick-Fil-A, Costco, Dunkin Donuts, Wawa, Quick Chek, Target, Marshall’s, Home Goods, TJ Maxx, Starbucks and Verizon.”

Leasing velocity in this current report totaled over 2.9 million square feet. Additionally, there’s over 1 million square feet of space currently being built and other projects in the planning stages throughout various communities in New Jersey including Paramus, Mahwah, Maywood, Rutherford, Wayne, Livingston, Ledgewood, Union, Springfield, Bridgewater, Woodbridge, Edison, North Brunswick, Sayreville, Howell, Hazlet, Old Bridge, Jersey City, Parsippany, Hanover, Eatontown, Middletown, Ocean Township, and Brick.

The Goldstein Group Vacancy Survey Matrix

Although the retail market has substantially improved from the recession that hit in 2008 and 2009, we still continue to see vacant space due to some closings of Office Depot and Staples stores, the recent closings throughout the state of Sports Authority and the remaining Pathmark and A&P stores that haven’t been leased. Sears, Cups, Joyce Leslie, Subway, Staples, and Office Depot have also closed or announced planned closings of locations. We’re also seeing banks such as TD Bank, Valley National Bank, and Capitol One announce closings of branches.

Active Retailers in the Marketplace

The majority of leasing activity continues to be driven by retailers opening small stores in the under 5,000 square feet range. However, there was a substantial spike in big box retailers taking advantage of favorable market conditions and rental rates, especially those who have filled or are looking to fill the A&P and Pathmark locations that recently closed. Acme Supermarkets took advantage of the recent closings and availabilities and filled 33 locations. In addition, Super Fresh in Edison, Irvington, Paterson, Bloomfield, Landing and Jefferson, Foodtown in Bloomfield, Old Tappan, Washington Township, Elizabeth, and Bloomfield, Shop Rite in South Plainfield and Newark, Stop & Shop in Closter, Kinnelon, and South Orange, also took advantage of the recent big box availabilities. Other big box deals include Cost Plus World Market in Shrewsbury, Woodland Park and Paramus, Aldi in North Bergen, Edison, Freehold and Bloomfield, Bob’s Discount Furniture in Wharton, Hobby Lobby in Woodbridge, DSW in East Brunswick, and Raymour & Flanigan in Paramus and East Brunswick.

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 Jersey City, Little Ferry, and River Edge, Auto Zone in Wayne, Dollar Tree in Howell, Brick, Toms River, Green Brook and Fort Lee, Home Goods in Closter and Shrewsbury, and Sherwin Williams in West Windsor, Lacey, Butler, Shrewsbury, Hillsboro and Gillette, TJ Maxx in West Milford, Middletown and Woodbridge, and Whole Foods in Closter, Morristown, Newark and Metuchen.

Many retailers continue to expand in the very desirable NJ retail markets. Some of those include:

Verizon Advance Auto LA Fitness CVS Panera Bread Crunch Fitness Nordstrom Rack Hand & Stone

Sherwin Williams TJ Maxx Investors Bank Marshall’s Carters DSW Pet Supplies Plus Petsmart

Retail & Restaurant Trends

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. Bare Burger in Closter, Buffalo Wild Wings in Marlboro and Flemington, Chick-Fil-A in Woodbridge, Jersey City, Chipotle in Holmdel, Habit Burger in Eatontown, West Windsor, River Edge and Parsippany, Jersey Mikes in Rutherford, Ledgewood, Pompton Plains, Raritan, and New Brunswick, McDonald’s in West Windsor, Panera Bread in Somerset, Englewood and East Hanover, Qdoba in Woodbridge, Starbucks in Edison, Park Ridge, Ridgewood and New Brunswick, Anthony’s Coal Fired Pizza in Englewood, and Zin Burger in Parsippany and Edison.

The fast casual dining segment, which includes restaurants such as Panera Bread, Chipotle, Habit Burger, and Smashburger 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. Other restaurants, such as Buffalo Wild Wings, Texas Roadhouse and Red Robin continue to open up new sites in strategic locations in New Jersey.

Health and Wellness industry retailers continue to flourish in the Garden State. 24 Hour Fitness in Wayne and Avenel, Anytime Fitness in Somerset, Crunch Fitness in Old Bridge, Franklin Township, North Bergen and Morris Plains, Cycle Bar in Fort Lee and Closter, CKO Kickboxing in Marlboro and Ledgewood, LA Fitness in Union, Clifton and Kearny, Orange Theory Fitness in West Windsor, North Brunswick, Middletown and Bedminster, Planet Fitness in Marlboro and Brick, and Quest Fitness in Rutherford.

Medical storefronts continue to flourish. City Med, Doctor’s Office, Dr. Express, Eyes 1st Vision, The Joint, Kessler Rehab, and others continue to open new locations throughout New Jersey.

“New kids on the block” include numerous retailers and resturants that have decided to come to New Jersey for the first time to get into its very lucrative marketplace. 99 Ranch, Honeygrow, Primark, Seasons Kosher Market, Uncle Maddio’s Pizza, McAlisters Deli, Zoe’s Restaurant, B Good Restaurant, Amazing Lash, Bar Louie, Huddle House, The Halal Guys, and Top Golf all have opened New Jersey locations or have plans to.

Going Forward

Leasing activity in the Garden State the past 12 months is still quite brisk and a lot of the quality space is being leased. This is especially true in the stores sizes 10,000 sf feet and under. And many restaurant and traditional retailers are taking quality space when they can grab it. Although the vacancy rate crept up during mid-year, it was primarily a result of the big boxes that are still available. This is mostly due to the longer time period that it takes for a tenant to secure and open a large space. Thus, we are seeing big boxes gradually leasing up, even with all the big boxes spaces which were made vacant by the A&P/Pathmark bankruptcy, along with the Sport Authority closings in the summer and the additional closings of some Office Depot and Staples stores.

These spaces are being leased by new food market chains as well as the independent operators. Also there are many traditional hard goods, entertainment, and furniture retailers pursuing most of the vacant NJ Sports Authority sites and we expect to see most leased and opened within the next 12 months. We anticipate seeing the vacancy rate improve going forward. New Jersey, fortunately, continues to be one of the most desired state for retailers to do business in, with all its favorable demographics.

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