Goldstein Group: 2015 Mid-Year Vacancy Report

On Oct 5, 2015

The retail vacancy rate has basically stayed the same for the first half of 2015 compared to the last survey done at the end of 2014, according to the results of The Goldstein Group’s end of year 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 at 6.2 percent after the first half of 2015.  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.

“With very little change in the vacancy rate for the past year, the 6.2 percent level is a welcome consistency,” noted Chuck Lanyard, President of The Goldstein Group. “Compared to the last recession when rates were close to 8-10 percent, and a lot more volatile, now the outlook continues to be promising.”

Strongest & Weakest Submarkets

The strongest retail markets with the lowest availability rates include:  Route 17 – Rochelle Park-Rutherford (1.8 percent); Route 46 – Totowa-Fairfield (2.1 percent); Route 17 – Ramsey-Mahwah (2.8 percent); Route 1 – Woodbridge-Edison (3.4 percent); Route 35 – Hazlet-Middletown (4.3 percent)

Markets with the highest vacancy rates include: Route 10 – Morris Plains-Ledgewood (12.5 percent); Route 17 – Paramus (11.4 percent); Route 18 – East Brunswick (10.6 percent); Route 9 – Sayreville-Howell (8 percent); Route 70 – Brick (7.7 percent).

“There was a continued increase in leasing activity through mid year of 2015 with several markets having minimal space available in corridors such as Route 17 Rochelle Park/Rutherford, Route 46 Totowa/Fairfield, Route 17 Ramsey/Mahwah, Route 1 Woodbridge/Edison, and Route 35 Hazlet/Middletown markets,” said Lanyard.  “Retailers that continue to expand in the state include Costco, Dollar Tree, CVS, Quick Chek, Panera Bread, Starbucks, Home Goods, WaWa, Walmart, T-Mobile, TJ Maxx, Marshall’s and Chipotle.”

Leasing velocity through mid 2015 totaled over 1.4 million square feet. Additionally, there’s nearly 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, Rochelle Park, Wayne, Livingston, Morris Plains, Ledgewood, Springfield, Edison, North Brunswick, East Brunswick, Sayreville, Howell, Eatontown, Ocean Township, Brick, Toms River, Montvale, Teterboro, Newark, Middletown and East Rutherford.

The Goldstein Group Vacancy Survey Matrix

Although the retail market continues to improve after the recession that hit in 2008 and 2009, we still continue to see space become vacant due to closings throughout the state. Radio Shack, K-Mart, A&P, Pathmark, Gap, Valley National Bank, Staples and Marburn Curtains 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 square feet range. However, there continues to be a substantial increase in big box retailers taking advantage of favorable market conditions and rental rates. Examples of this include Costco in Teterboro, Home Goods in Clark, Lord & Taylor Outlet in Paramus, Michael’s in Clark and Secaucus, Modell’s in Clark, Nordstrom Rack in Lawrence, Rockaway and Eatontown, Petsmart in Garfield and Kearny, REI in Lawrence, Walmart in Teterboro, and TJ Maxx in Linden and Woodbridge.

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: Aldi in Edison, Auto Zone in East Brunswick, Capital One in Edison, CVS in Howell, Dollar Tree in Colonia, Family Dollar in Newark, Hallmark in Clark, Great Clips in Brick and Parsippany, Mavis Tire in South Plainfield, Sherwin Williams in Hillsborough, Union City and Gillette, Payless in Bayonne, Quick Chek in Howell, Sprint in Linden, and Hand & Stone in Livingston, Pompton Lakes, Clifton, Woodbridge and Piscataway.

Many retailers continue to expand in the very desirable NJ retail markets.

Some of those include:

• Ulta
• Costco
• Verizon
• Stop & Shop
• Marshall’s
• Vitamin Shoppe
• Nordstrom Rack
• CVS
• BJ’s Wholesale Club
• Aldi
• WaWa
• McDonald’s
• Sherwin Williams
• Shop Rite
• Panera Bread
• Dollar Tree
• Whole Foods
• Capital One
• Modell’s
• Quick Chek

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. Applebee’s in Clark, Blaze Pizza in Clark and Wayne Buffalo Wild Wings in Linden and Flemington, Chick Fil-A in Woodbridge, Anthony’s Coal Fired Pizza in Englewood, Chipotle in Howell, Clark and Lodi, Jersey Mike’s in Union and Wayne, Jimmy John’s in Ramsey, Longhorn Steakhouse in Kearny, Moe’s Southwest Grill in South Brunswick, Noodles & Company in Clark, Panera Bread in Clark, Parsippany, East Hanover Englewood and Old Bridge, Qdoba in Woodbridge, Smashburger in Clark, Englewood and Lodi, Starbucks in Newark, Subway in Edison, Hazlet and Wayne, Roy Rogers in Franklin and Flemington, Shake Shack in Bridgewater and Livingston, and Taco Bell in Kearny, Shrewsbury and Franklin.

The fast casual dining segment, which includes restaurants such as Panera Bread, Chipotle, Moe’s Southwest Grill, Blaze Pizza, Habit Burger, Noodles & Company, Pocket Pita 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. Family dining, such as Anthony’s Coal Fired Pizza, Buffalo Wild Wings, and Applebee’s, also continue to open up new sites in strategic locations in New Jersey.

Health and Wellness industry retailers continue to flourish in the Garden State. Blink Fitness in Linden, CKO Kickboxing in Hillsborough, LA Fitness in Clark and West Orange, Planet Fitness in Hillsborough, and Title Boxing in Holmdel and Hackensack. Also, 24 Hour Fitness will soon open new sites in Wayne and Ramsey.

Medical storefronts continue to flourish. City Med, Doctor’s Express, The Doctor’s Office, Dr. Dental, Riverside Medical and others continue to open new locations throughout New Jersey.

“New kids on the block” include numerous tenants that have decided to come to New Jersey for the first time to get into its very lucrative marketplace. Macy’s Backstage, Pirch, Huddle House, Mellow Mushroom, Speedway Gas, Thomaston Feed, and Tim Horton’s all have opened New Jersey locations or have plans to.

Going Forward

“Although leasing activity has not been as robust as it once was, we are still seeing a continuous improvement in the marketplace year after year,” noted Lanyard.  “Retailers are still cautious as many continue to close underperforming locations throughout the state. However, retailers are continuing to expand, and, fortunately, retail is still going strong in the garden state.”

One important segment of retail real estate continues to play out in New Jersey. The state’s larger big box stores will see considerable activity with the advent of big box spaces coming available when the A&P/Pathmark/Food Basics stores change hands. Acme and Stop & Shop, recently announced through bankruptcy approval that they have been awarded certain stores. The next round of bankruptcy approvals is scheduled for October. Fortunately, most of these New Jersey locations will probably be leased in a short time due to their prime locations in densely populated communities.

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