In spite of ongoing concerns in the credit markets, retailproperties in Bergen, Essex, Hudson, Morris, Passaic and Unioncounties are performing well and will post strong performance overthe near term. A consistently steady level of retailer demand willmaintain vacancy around 4% this year. Indeed, six of the area'sseven submarkets currently sport vacancy rates less than 5%.

With space availability limited, owners are implementing healthyrent increases and could increase rents nearly 4% annually as longas current supply-and-demand fundamentals persist. On the supplyside, completions are expected to rise this year, compared with2006, but the square footage to be added will increase retailinventory only 1%.

Looking ahead, the planning pipeline is not extensive, ensuringthat future completions will be gradual and in line with long-termdemand trends. Given the difficulties inherent in bringing newprojects to fruition, some areas of the market may lack sufficientretail space.