PARAMUS, NJ–The New Jersey retail vacancy rate continued to drop at the end of 2014, according to The Goldstein Group's end of year survey of 22 retail corridors in Northern and Central New Jersey.

The survey totals more than 4,250 properties and over 100 million square feet of retail space.  The survey says the retail vacancy rate dropped to 6.2 percent in the 2nd half of 2014, similar to the decline in the first half of the year.  Retailers – both existing and new, coming to New Jersey for the first time – continue to lease retail space at a strong pace, The Goldstein Group study says. This continued improvement is especially significant considering the average retail vacancy rates across the country are still hovering in the 10% range.

Smaller retail spaces are seeing stronger demand than big box properties, Goldstein Group president Chuck Lanyard tells GlobeSt.com in an exclusive interview.

“When it comes to all retail sizes, a very high percentage is space under 10, 15 thousand feet, it's the smaller spaces where we're seeing the activity,” says Lanyard. “Having said that, the big boxes that are out there are getting leased up and that's a good sign.”

Lanyard pointed to a “perfect storm” situation in Livingston, NJ, where one center included three big box stores that closed—Borders, Circuit City, and Linens 'n' Things—and the center remained empty for several years.

“Now the center has made a complete turnaround with Bed, Bath & Beyond, World Market, and they've also put in a Nordstrom's Rack, a TJ Maxx store, DSW, and the whole center has made a turnaround,” he says.

You can hear our complete, exclusive audio interview with Lanyard in the player below.

Strongest & Weakest Submarkets

The strongest retail markets with the lowest availability rates include:  Route 17 – Ramsey-Mahwah (3.8 percent); Route 1 – Woodbridge-Edison (2.8 percent); Route 46 – Totowa-Fairfield (4.1 percent); Route 17 – Rochelle Park-Rutherford (1.9 percent); Route 37 – Toms River (3.9 percent).

Markets with the highest vacancy rates include: Route 18 – East Brunswick (11.6 percent); Route 17 – Paramus (11.3 percent); Route 10 – Morris Plains-Ledgewood (10.3 percent); Route 4 – Paramus (9.5 percent); Route 70 – Brick (7.8 percent).

“There was a continued increase in leasing activity throughout 2014 with several markets having minimal space available in corridors such as Route 17 Ramsey/Mahwah, Woodbridge/Edison Route 1, and the Rochelle Park/Rutherford Route 17 market,” says Lanyard.  “Retailers that continue to expand in the state include Sherwin Williams, 7-Eleven, Hobby Lobby, Whole Foods, Verizon, Auto Zone, Chipotle, CVS, Dick's, Costco, McDonald's, Raymour & Flanigan, Sherwin Williams, ShopRite, Starbucks, Target, T-Mobile, Panera Bread, Nordstrom Rack, WaWa, QuickChek, Advance Auto and Walmart.”

Lanyard says he's not sure why, but the Route 18 submarket never performed as well for retail as Route 1 and some other areas.

The fast casual dining segment, which includes restaurants such as Chipotle, Panera Bread, Shake Shack, Smash Burger, Qdoba and Corner Bakery, 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.

“While 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, the continuous drop in the New Jersey vacancy rate is reassuring and confirms consumer confidence is back as national retailers continue their ongoing expansion plans,” says Lanyard.  “There are a variety of reasons New Jersey continues to be one of the most desired states for retailers to expand and open up shop. With qualities like affluent demographics and densely populated marketplaces, these are just a few of the main reasons things are continuing to look up for New Jersey as far as retail goes. We saw over a half percent drop in the NJ vacancy rate from just a year ago and hope to see this rate gradually decline in 2015 as well.”