Retail Vacancies Could Be Worse

So it comes as no surprise that new retail figures from the Goldstein Group place the overall Northern and Central New Jersey vacancy rate at 6.86% as of January 2009, up from 4.15% at the beginning of 2008. Goldstein's semi-annual survey spanned over 4,250 highway properties and upwards of 94 million square feet of retail space, excluding regional malls.

But despite a weakening retail market throughout the state, New Jersey continues to be one of the strongest retail markets in the Northeast, says Chuck Lanyard, president of the Goldstein Group. "Compared to other regions of the country, New Jersey is doing quite well; other states are reporting vacancy rates from 11% to 15%."

Among 22 primary markets, the survey reports over 6.5 million square feet of vacant retail space out of around 94 million square feet of evaluated space. There was 3.8 million square feet of vacant space at this time last year.

The Goldstein Group's findings also indicate that over one million square feet of new construction is currently under development, compared to almost two million square feet a year ago. The retail markets with the lowest overall vacancy rates include the Ramsey-Mahwah Route 17 corridor and the Route 17 Rochelle Park-Rutherford corridor in Bergen County, the North Brunswick-Lawrence Township Route 1 corridor and the Brick-Route 70/Brick Boulevard corridor in Ocean County. The highest vacancy rates are reported in the Route 35 Shrewsbury through Neptune corridor in Monmouth County and the Route 18 East Brunswick corridor in Middlesex County.

"The recession has hit consumers in their pocketbooks and many are shifting towards purchasing necessities such as food and household supplies at discounters such as BJ's, Costco, Wal-Mart or Kohl's and away from discretionary spending on clothing and luxury items," says Lanyard. "We're expecting more retailers to close stores or file bankruptcy over the next few months. The silver lining in all this turbulence will be for retailers able to expand as they are now presented with the opportunity to secure locations in markets that weren't available to them before but at much lower rents. There are tremendous opportunities out there and many retailers are taking advantage of them. Deals are being made and everyone is being creative."

Retailers operating in New Jersey that have filed for bankruptcy or announced store closings within the last year include Linens 'N Things, Circuit City, Office Depot, National Wholesale Liquidators, Marty's Shoes, Sharper Image, Value City, Kay Bee Toys, Bally Total Fitness, Lillian Vernon, Bombay, Levitz, Bennigan's, Steak & Ale, Boscov's, Harvey Electronics, Princeton Ski, Talbots, Borders, Hollywood Video, Domain, Ann Taylor, Blue Tulip, La-Z-Boy, Fashion Bug, Zales, Washington Mutual, Home Depot, Steve & Barry's, Loehmann's and Tweeter.

Despite what is happening in the economy, numerous national, regional and local retailers and restaurateurs are still seeking New Jersey locations. As an example, Lanyard says, "7-Eleven is one tenant forging ahead with an aggressive expansion plan for the New Jersey market. We have closed 13 deals with them in the past seven months and have numerous additional deals in negotiations."

Other retailers scouting the New Jersey market for sites, according to Lanyard, include Sonic Restaurants, Chipotle, Walgreens, Five Guys Burgers, Aldi Supermarkets, LA Boxing, Retro Fitness, Planet Fitness and Arby's.