NJ Retail Vacancy Rate Drops Below 3%

In its 17th annual study of the market, the firm found 810,167 sf of vacancies among the 27.6 million sf of space reviewed, with availabilities seen in 82 of the 803 properties evaluated. By comparison, the firm's 2005 report uncovered 797,333 sf of available space in 26.5 million sf reviewed. Collectively, vacancy factors along the region's six corridors have ranged over the last decade from a low of 2% in 2002 to a high of 5.4% in 1997.

The firm's latest study reviewed shopping centers and freestanding buildings of more than 2,000 sf along State Highways 4, 10, 17, 22, 23 and 46/3, and certain intersecting arteries in Bergen, Essex, Morris, Passaic, Somerset and Union counties. Freestanding restaurants and auto service facilities are included, while malls under construction or redevelopment are excluded.

"During 2006, declining vacancy rates on Routes 4, 22, 23, and 46/3 served to offset increases on Routes 10 and 17," says Richard Brunelli, president of the firm. "While vacancies persist in a number of the less desirable big-box locations that became available during the past two years through bankruptcies or targeted closings by Treasure Island, Levitz and Office Max, those effects were countered by absorption of some of those stores and other major vacant spaces, and the addition of several large, fully-leased centers to the region's inventory."

Looking ahead, Brunelli says that Comp USA's program to shutter under-performing stores nationwide will create six vacancies totaling more than 148,000 sf along the six corridors, "But these are very well located and most should be absorbed over the next year," he predicts. Absorption of the Comp USA sites and existing big-box locations should also be enhanced by the dearth of available land for new development in the market.

"The successful opening last year of the fully-leased, 267,000-sf Riverdale Crossing on Route 23 exemplifies the lengths to which developers will go to build in Northern New Jersey," he says. "In this case, the developer [Garden Commercial Properties] was compelled to carve out a side of a small rocky mountain to create a buildable site."