vacancy sign

A&P Bankruptcy Pushes Central NJ Retail Vacancy Rate to 8.8%, Study Finds

The demise of The Great Atlantic & Pacific Tea Co. elevated the retail vacancy rate along central New Jersey’s major shopping corridors to 8.8 percent from 7.5 percent in 2014, according to the latest study by R.J. Brunelli & Co., LLC. Despite the uptick, the region’s 2015 vacancy factor remained a healthy distance from the 10.2 percent recorded in 2013 and the eight-year high of 10.5 percent set in 2011, but was well above the period’s low point of 4.8 percent posted in 2008.

In its 26th annual study of the central New Jersey market, the Old Bridge-based retail real estate brokerage  uncovered 2.87 million square feet of vacancies in the 32.58 million square feet of space reviewed along State Highways 1, 9, 18 and 35 in Mercer, Middlesex and Monmouth counties, and a small section of Ocean County.  A slight reduction in the vacancy factor along Routes 1 was unable to compensate for A&P-induced increases on Routes 9, 18 and 35.

R.J. Brunelli’s 2015 study found vacancies in 179 of the 821 sites visited throughout the region during this year’s third quarter. The study evaluates shopping centers and freestanding buildings exceeding 2,000 square feet—including restaurants, auto service facilities and vacant auto dealerships whose location and configuration makes them viable for retail use. Regional malls and centers under construction or in the early or mid-stages of major redevelopment are excluded.

When combined with the year-over-year increase in the vacancy factor for six northern New Jersey highways to 7. 9 percent from 7.3 percent, the overall north/central vacancy rate for the 10 retail corridors surveyed by the firm rose to 8.4 percent from 7.4 percent a year ago. R.J. Brunelli found a total of 5.23 million square feet of empty space in the 62.36  million square feet reviewed in the two regions, with big-box spaces (20,000 square feet and above) representing 2.07 million square feet, or 45.7 percent, of the vacancies—up sharply from 1.41 million, or 31.2 percent, in the 2014 study.

“Clearly, the A&P bankruptcy was the big story for New Jersey retail real estate in 2015,” said R.J. Brunelli CEO/Principal Ron DeLuca, who directs the firm’s annual survey. “Along the four central New Jersey corridors alone, recent closures of four A&P and two Pathmark locations that have yet to find new occupants threw approximately 322,000 square feet of space on the market. Indicative of the impact of the closings, had those stores remained occupied, the central region’s vacancy factor would have ticked up 30 basis points from a year ago to 7.8 percent.”

Mr. DeLuca added that those A&P totals exclude a number of locations off the four corridors that remain vacant. “A&P’s bankruptcy exacerbated another difficult year for supermarkets in central New Jersey, compounding the effects of closures of a Stop & Shop on Route 9 in Manalapan and several Foodtowns off the corridors.  The closings point to heightened competition from the likes of volume-leader ShopRite, such higher-end players as Wegman’s and Whole Foods, Aldi at the low end, as well as Walmart Supercenters, Costco and other warehouse clubs, and the growing web-based delivery services,” he said.

“On the other hand,” Mr. DeLuca continued, “there was some good news in the central region, highlighted by Acme’s re-opening of five former A&P sites in Monmouth and Middlesex counties, including corridor locations on Route 9 in Old Bridge and Route 35 in Wall. Acme was far and away the most opportunistic buyer at the A&P auction, beefing up its presence in New Jersey by snapping up 35 sites statewide, including 25 in northern counties, the five central stores and another five in the southern

Shore region. These accounted for nearly half of the 72 locations the chain took in an area extending from Maryland to Connecticut.”

Stop & Shop, the second largest player in the A&P auction, took 24 locations in the metro New York area, including three in northern New Jersey. The eight other New Jersey locations acquired to date through the auctions—all but one in northern counties—were taken by smaller operators, including several focused on ethnic fare. That ethnic group includes California-based Tawa Supermarket Inc., which announced lease acquisitions of Pathmark locations on Route 1 in Edison and in Jersey City. This will pave the way for a Garden State debut for Tawa, which currently operates 39 Asian supermarkets under the 99 Ranch Market name in California, Washington, Nevada and Texas.

“Tawa’s move is emblematic of ethnic grocers’ efforts to seize opportunities in areas whose demographics are appropriate for their offer,” noted Mr. DeLuca. “We suspect that some of A&P’s remaining locations throughout the state could go to ethnic operators in the months ahead. More conventional chains looking at former A&P sites include The Fresh Market, Best Market, Kings, and others. However, given the competitive climate, we believe that a fair number of locations will ultimately go to non-food uses. Examples to date include the long-vacant Pathmark on Route 35 in Middletown, now being subdivided to accommodate TJ Maxx and Bed, Bath & Beyond stores, and the re-leasing of another previously vacant Pathmark and adjoining space on Route 1 in North Brunswick to accommodate Raymour & Flanigan. In a number of cases, where zoning allows, landlords will be also looking at non-retail uses that can fill space and drive traffic to satellite tenants.”

After experiencing a decline in the firm’s 2014 survey, the amount of empty big-box spaces (20,000 square feet and above) along the central New Jersey corridors expanded once again in the wake of the A&P bankruptcy to 1.02 million square feet from 796,053 square feet a year ago. Big boxes accounted for 43.6 percent of all empty space, up from 34.1 percent a year ago.

The 2015 ratio would have been higher but not for several key big-box absorptions that partially offset the impact of the 322,000 square feet of recently closed A&P and Pathmark space, the 50,000-square-foot Stop & Shop in Manalapan, and a 21,600-square-foot Tuesday Morning in Howell. In addition to the aforementioned re-leasing of the previously vacant Pathmarks in Middletown and North Brunswick, Auto Zone took a 36,000-square-foot portion of the long-empty 54,700-square-foot former Home Depot building on Route 18 in East Brunswick.  Finally, on Route 35 in Ocean, Prime Fitness took over the vacant 20,000-square-foot Ocean Fitness space.

“Outside of the turbulent supermarket situation, the central region’s big-box inventory was relatively stable during the past 12 months,” noted Danielle Brunelli-Albrecht, the firm’s President/Principal. “Major tenant changes that did not impact the vacancy factor were highlighted by Hobby Lobby’s current renovation of the freestanding former American Signature Furniture building on Route 1 in Woodbridge,  Gourmet Giant’s takeover of the ShopRite on Route 9 in Lakewood that was vacated when ShopRite opened a new World Class store a few miles north in Howell’s redeveloped Friendship Plaza, and the recent debut of Nordstrom Rack in new space added to the Eatontown Crossing center at the junction of Routes 35 and 36.”

Vacancies also increased in the central region’s small-store and restaurant space, albeit at a slower pace than the 27.9 percent jump in big-box inventory. All told, the corridors’ inventory of vacant smaller (sub-20,000 square feet) spaces grew by a net of 312,388 square feet, or 20.3 percent to 1.54 million square feet. These included multiple closings in the region by chains that filed for bankruptcy, are in downsizing mode or are selectively shutting unproductive locations. These included Radio Shack, Buddy’s Small Lots, Friendly’s, Staples, AAA, and GAP, to name a few.

Active players in central New Jersey included R.J. Brunelli clients AAMCO, Dollar Tree, Max Fitness, and Red Robin. Other operators with multiple deals along the corridors include AT&T, Auto Zone, CKO

Kickboxing, Farmer’s Insurance, Jersey Mike’s, Sports Clips, and Starbucks, while convenience store/fuel centers Quick Check and WAWA, have been active players on and off the corridors.

“In terms of non-retail concepts, full-scale gyms, specialized exercise and dance studios, children’s gyms, tutoring and day-care centers continue to expand, while family recreation and entertainment concepts have been accelerating their growth,” Mr. DeLuca noted. “The e-cigarette business has also spawned a large number of so-called vape shops. Demand from urgent care and other medical facilities appears to have slowed a bit, perhaps due to the consolidation of hospitals and concurrent moves by some to open their own, off-site outpatient facilities. The latter trend is exemplified by Monmouth Medical Center’s plans to build a 50,000-square-foot facility on an empty outparcel at nearby Monmouth Mall (a property not included in the vacancy study).”

On the new development front, progress remains mixed on several major projects proposed for the central region. Among those now out of the ground, Greenleaf at Howell (formerly The Grove at Howell), a 200,000-square-foot power center on Route 9 North, welcomed its first tenant, an 88,000-square-foot B.J.’s Wholesale Club, earlier this year. Next in line for the site is Xscape Theatres, which is reportedly opening in March 2016. On Route 1, Edison Town Square announced that its long-open  Sam’s Club will be joined late next year by Topgolf, a family entertainment and event venue combining a multi-level driving range, upscale sports bar/restaurant, kids play area, and more. Upon completion, the development on the site of a former General Motors plant is expected to house up to 600,000 square feet of retail, restaurant and entertainment space.  Further south on the roadway, Target and Costco remain the sole occupants of Main Street North Brunswick, a major mixed-use transit village with up to 450,000 square feet of retail and restaurant space, along with multi-family housing and a new NJ Transit train station.

In eastern Middlesex County, Bass Pro Shops and Regal Cinema are signed as the initial anchors for the 550,000 -square-foot power center at The Point at Sayreville, a phased, mix-use development of a former industrial site that’s proposed to include an upscale enclosed regional mall and waterfront housing. R.J. Brunelli & Co. brokered a deal that will bring a Wawa convenience store and fuel center to the site. On Route 35 in Monmouth County, pre-leasing is under way on The Shoppes at Middletown, a proposed 380,000-square-foot town center that calls for a special grocer, luxury movie theater, and a mix of specialty retailers and restaurants.

Results for central New Jersey’s individual roadways are as follows:

Route 1.  The 30-mile corridor extending from Woodbridge to Trenton was once again the strongest highway in central New Jersey, as the vacancy factor declined for the seventh straight year to 6.0 percent from 6.3 percent in 2014. Over the past eight years, the corridor’s vacancy factor has ranged from a low of 3.5 percent in 2008 to a high of 9.5 percent in 2009.

R.J. Brunelli’s 2015 study found 624,137 square feet of vacancies in 10.4 million square feet; availabilities were seen in 37 of the roadway’s 140 retail sites.

Route 1’s big-box vacancies edged down 2.7 percent to 247,662 square feet, or 39.7 percent of the roadway’s empty space—vs. 43.8 percent in 2014. The only new big box vacancy to emerge in 2015 was the 55,300-square-foot A&P in North Brunswick—not far from the previously empty Pathmark that, along with adjoining space, was absorbed this past year by the 62,000-square-foot Raymour & Flanigan. The balance of the inventory comes from a number of longstanding vacancies.


In addition to the aforementioned Hobby Lobby in Woodbridge, another bog-box newcomer to the corridor was Value City Furniture, which rapidly took over the 40,000-square-foot Sports Authority in Iselin.





Route 18. The closure of a 55,600-square-foot Pathmark pushed the vacancy rate along the five-mile retail corridor in East Brunswick to 13.9 percent from 12.1 percent a year ago. Over the last eight years, the roadway’s vacancy factor has been as high as a whopping 22.1 percent in 2011 and as low as 7.3 percent in 2008.

All told, there were 378,090 square feet of vacancies in the roadway’s 2.72 million square feet of space; availabilities were found in 22 of the 89 properties reviewed.


With the Pathmark vacancy partially offset by the aforementioned move by Auto Zone to take 36,000 square feet of the former small-format Home Depot in that same center (leaving 18,700 square feet available), Route 18’s inventory of empty big-box space increased by 25.2 percent to 96,947 square feet, or 25.6 percent of the corridor’s vacancies—up from 23.5 percent a year ago.


Meanwhile, the 15,000-square-foot former 6th Ave. Electronics building was subdivided, with R.J. Brunelli brokering a deal for a 6,600-square-foot AAMCO that was joined by a pet hotel and deli, leaving 3,000 square feet available. Elsewhere, newcomers in the 10,000- to 20,000-square-foot range included Room & Home Furniture and The Learning Experience.


Route 9.  Closings of a 59,250-square-foot Pathmark in Old Bridge, the 50,000-square-foot Stop & Shop in Manalapan and 21,600-square-foot Tuesday Morning in Howell caused the vacancy rate along the 35-

mile Woodbridge-to-Lakewood corridor to jump to an eight-year high of 11.2 percent from 7.7 percent in 2014. Over that period, the roadway’s vacancy factor reached a low of 3.6 percent in 2008.


A total of 1.05 million square feet was vacant in the 9.41 million square feet studied by the firm, with availabilities in 62 of the 249 properties visited.


The three aforementioned closures caused the inventory of empty big-boxes to surge by 67.8 percent to 323,853 square feet, or 30.7 percent of the highway’s total vacancies—up from 27.8 percent in 2014. The three new big box vacancies are joined by two longstanding ones: a 165,000-square-foot former Lowe’s in Old Bridge and a 28,000-square-foot former Linens ‘n Things in Howell. Route 9’s big-box picture would have been worse but not for Acme’s re-opening of the A&P in Old Bridge and Gourmet Giant’s absorption of the Lakewood ShopRite.


As noted, the roadway’s big-box activity during 2015 was also marked by BJ’s debut as the first anchor in the new Greenleaf at Howell power center.


Openings in the 10,000- to 20,000 square-foot range included Power House Gym in Old Bridge Plaza.


Route 35.  Following a steep decline in 2014 to 7.2 percent from an eight-year high of 13.0 percent in 2013, the vacancy rate along the most heavily-retailed corridor in central and northern New Jersey escalated to 8.1 percent, with A&P again playing a major role. Looking back over the last eight years, the vacancy factor was as low as 6.1 percent in 2008.


R.J. Brunelli’s 2015 study found 812,865 square feet of vacancies in the 10.06 million square feet reviewed along the 25-mile Aberdeen to Brielle corridor and an adjoining section of Route 36 extending from its intersection with Route 35 in Eatontown to West Long Branch. Availabilities were seen in 58 of the 821 properties studied.


Closures of A&P stores in Aberdeen and Holmdel and a Pathmark in Hazlet—all within several miles of one another—added nearly 152,000 square feet to the corridor’s inventory of empty big boxes. With those closings offsetting the aforementioned absorptions of the long-vacant Middletown Pathmark to TJ Maxx and  Bed, Bath & Beyond, and the former Ocean Fitness in Wall to another gym, empty big-box space climbed by 29 percent to 349,742 square feet, or 43.0 percent of the corridor’s vacancies—up from 37.2 percent  in 2014.




On a positive note, Acme re-opened the recently shuttered A&P in Wall, just south of a new Whole Foods that, in late-2014, had leased the former Brielle Sports Club space.


Notable openings in the 10,000- to 20,000-square-foot category included New Jersey’s second Cost Plus World Market in Shrewsbury, R.J. Brunelli client Athena Learning Center in Middletown, an AAA car care, travel and insurance center in Middletown, Value City Furniture in Eatontown, and Ulta in  Consumer Square on Route 36 in West Long Branch.


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