2018 Report Shows Retail Vacancy Rate Increases
as Retail Environment Changes
22 Retail Corridors, Totaling Over 4,250 Properties Surveyed
PARAMUS, N.J. (2018) – The retail vacancy rate has increased by almost .4% since last years survey done in the summer of 2017, according to the results of The Goldstein Group’s survey of 22 retail corridors in Northern and Central New Jersey. The survey, the most extensive retail vacancy report for Northern/Central New Jersey, totals over 4,250 properties and over 100 million square feet of retail space. The retail vacancy rate is now at 7.04 percent. Although retailers/restaurants continue to lease retail space, others are closing down locations including some big box tenants who have been part of the retail landscape for many years. New Jersey is still doing better in filling retail spaces, compared to the rest of the United States, where vacancies still average closer to 9% -10% nationwide.
“The increase in the vacancy rate mostly can be attributable to the Toys R Us/Babies R Us closures along with other retailers such as Kmart, Sears, Sports Authority and Mattress Firm that are closing down locations”, noted Chuck Lanyard, President of the Goldstein Group. “There is a major transformation in retail today, as landlords and retailers are working through a process of the impact of downsizing the stores, internet sales, and the increasing effort on retailers to create that unique experience to still drive people into traditional brick-and-mortar stores. Additionally, interestingly enough, we are also seeing longtime catalog retailers and internet only retailers such as Lands End, Untuckit clothing and Casper Mattress opening bricks and mortar stores for the first time”
In New Jersey, supermarket activity has been very strong, as new supermarkets are opening up, and others are in the planning stages. Restaurants have been very active, many expanding their units due to the success of their prior New Jersey locations. Urgent care facilities and other types of medical services continue to expand, and numerous types of furniture and home furnishings accessory stores are either expanding or coming to the New Jersey marketplace for the first time. Entertainment concepts, notably trampoline centers, indoor sky diving facilities, restaurant and entertainment facilities such as Dave & Busters are coming to New Jersey in a big way.
Sky Zone has opened several locations. I Fly opened in Paramus, and there are gun and pistol ranges soon to pen in Union, Wayne and Woodland Park. And of course, the ultimate in entertainment centers, the opening of the long awaited Meadowlands American Dream complex, is now slated to open its doors in mid 2019, as construction is going full steam ahead.
Strongest & Weakest Submarkets
The strongest retail markets with the lowest availability rates include: Route 3 – Clifton (1.33%); Route 17- Ramsey-Mahwah (3.51%); Route 22 – Union/Springfield (3.91%); Route 1 – Woodbridge/Edison (4.85%);
Markets with the highest vacancy rates include: Route 18 – East Brunswick (15.82%); Route 10 –Toms River- Hooper Avenue (11.36%); Morris Plains/Ledgewood (9.45%); Route 70 – Brick (9.39%); Route 35 – Hazlet/Middletown (8.81%)
“There was a continued increase in leasing activity throughout 2018 with several markets having minimal space available in corridors such as Route 3 Clifton, Route 22 Union/Springfield, Route 1 Woodbridge/Edison, Route 17 Ramsey/Mahwah,” said Lanyard. “Both national and regional retailers that continue to expand in the state include LA Fitness, 24 Hour Fitness, Chipotle, Aldi, Costco, Dollar General, Jersey Mike’s, T-Mobile, Quick Chek, Panera Bread, and Wawa.”
Leasing velocity in this current report totaled over 3.3 million square feet. Additionally, there’s over 1 million square feet of space currently being built and other projects in the planning stages throughout various communities in New Jersey including Paramus, Rochelle Park/Rutherford, Totowa/Fairfield, Wayne/Butler, Livingston/East Hanover, Morris Plains/Ledgewood, Montville/Rockaway, Union/Springfield, Scotch Plains/Bridgewater, North Brunswick/Lawrence Township, East Brunswick, Sayreville/Howell, Shrewsbury/Ocean, and Brick.
The Goldstein Group Vacancy Survey Matrix
Although the retail market has substantially improved from the recession that hit in 2008 and 2009, we still continue to see vacant space due to closings of Toys R Us, Babies R Us, Kmart, Sears, Mattress Firm, Macaroni Grill, Payless, Ruby Tuesday, and Staples. We’re also seeing banks such as M&T Bank, Capital One, Wells Fargo, TD Bank, Bank of America and Valley National Bank announce closings of select branches.
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 was a continued spike in big box retailers taking advantage of favorable market conditions and rental rates, especially those who have filled or are looking to fill some of the still vacant A&P and Pathmark supermarkets spaces as well as the Sports Authority locations that closed in 2016. Now there are more opportunities with Toys R Us/Babies R Us and more Kmart/Sears stores coming on the market. Some of the past years bigger box deals include LA Fitness in Lodi, Brick, Howell, Clifton, Newark & Lawrence Township, Aldi in Flemington, Livingston & Wall, Bob’s Discount Furniture in Union, Burlington Coat Factory in East Brunswick, Clifton, Garfield, Paramus & Newark, Hmart in Paramus, Home Goods in Brick, Lidl in Hazlet, Eatontown & Union, Raymour & Flanigan in Paramus & West Windsor, Trader Joe’s in Hoboken & North Brunswick, Target in Parsippany & Closter, Wegmans in Hanover, Montvale, & Middletown, Whole Foods in Bridgewater, Closter, Metuchen, Wayne, Weehawken & Newark. Restoration Hardware in West Windsor, 99 Ranch in Hackensack & Edison, Dick’s in West Long Branch, Shop Rite in Elmwood Park, Shrewsbury & Wyckoff and Weis Markets in Randolph.
Many of the retailers we are so familiar with continue to expand their presence in New Jersey. Those who have recently opened locations or will soonopen include: 7-Eleven in East Rutherford, Paterson, Denville, Newark, North Bergen, Red Bank & South Amboy, CVS in Jersey City, Lodi, Metuchen, Middletown & Shewsbury, Planet Fitness in Middletown, Fairfield, Wayne, Rockaway, Wall & Woodbridge, Quick Chek in Butler, Hanover, Middlesex & Hackensack, Sherwin Williams in East Windsor, North Brunswick & Bernardsville, and Wawa in Sayreville, Maplewood, Fairfield, Hackettstown, North Plainfield, Brick & Lakewood.
Many retailers/restaurants continue to expand in the very desirable NJ retail markets.
Some of those include:
- Wegman’s
- ShopRite
- T-Mobile
- Starbucks
- TJ Maxx
- WaWa
- LA Fitness
- Ulta
- Marshalls
- Lands End
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- Taco Bell
- Chipotle
- Quick Chek
- Michael’s
- Chick Fil A
- CVS
- Home Goods
- Verizon
- Chase Bank
- Untuckit
|
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. Blaze Pizza in Bridgewater & Livingston, Chipotle in Bridgewater, Flemington, Hillsborough, Jersey City & Woodbridge, Buffalo Wild Wings in Wayne, Halal Guys in Union, New Brunswick, North Brunswick & Teterboro, IHOP in Hanover, Panera in Paramus & Toms River, Popeye’s in Jersey City, Newark & Rockaway, Playa Bowls in Toms River, East Brunswick, Rutherford, Pompton Plains, Red Bank & Ridgewood, Shake Shack in Wayne & Livingston, Starbucks in Hillsborough, New Brunswick, Paramus, Rochelle Park, Wall & South Brunswick, Taco Bell in Newark, Hackensack, Jersey City & Wharton and Zin Burger in Edison, Bridgewater, Watchung & Jersey City.
The fast casual dining segment, which includes restaurants such as Chipotle, B Good, Shake Shack, Habit Burger, Buffalo Wild Wings, Qdoba, Blaze Pizza, Smash Burger, Jersey Mikes, Wing Stop, Firehouse Subs, Aroogas and Chopt 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.
Fast Food operations are not taking all this competition lightly and just lying down. These operators are improving on the quality of their menus and more recently are making big efforts in reconfiguring their stores to make them more comfortable, user-friendly, and appealing to the younger crowd looking of millennials to eat quickly. As for desserts, the fruit/yogurt segment has exploded with Playa Bowls, Frutta Bowls and Sweetberry Bowls taking numerous locations.
Health and Wellness industry retailers continue to flourish in the Garden State. LA Fitness in Lodi, Brick, Howell, Union, Newark & Lawrence Township, 24 Hour Fitness in Hanover, CKO Kickboxing in Allendale & Clark, Blink Fitness in Newark, East Orange, Irvington & Perth Amboy, Crunch Fitness in Franklin Township & Midland Park, Club Pilates in Livingston, Marlboro, Northvale, Denville & Bridgewater, Orange Theory Fitness in Shrewsbury, Jersey City & Hackensack, Max Challenge in Watchung, Fair Lawn, Pine Brook & Randolph, Fit 26 in Waldwick, Livingston & Midland Park, Cycle Bar in Livingston, Jersey City & Montclair and Code Ninja in Midland Park, Denville & Middletown .
Medical storefronts continue to flourish. City MD, AFC Urgent Care, MedExpress, Kinder Pediatric Care, PM Pediatrics, Trinity Rehabilitation, Twin Boro Physical Therapy, Health Plus Management, Excel Physical Therapy and others continue to open new locations throughout New Jersey.
“New kids on the block” include numerous retailers and restaurants that have decided to come to New Jersey for the first time to get into its very lucrative marketplace. Chopt Creative Salads,. The Green Turtle Sports Bar & Grille, Homesense, Design Within Reach, Car Max, Fortunoff Mattress, Tempurpedic, Cava Restaurant, Mamouns Falafel, Flatbread Grill, Duluth Trading, Pie Five Pizza, Sierra Trading Post, Which Wich, Wok the Walk, Hurricane BTW, At Home, Zoup, Safesplash Swim School and Goldfish Swim School all have either opened or will soon open New Jersey locations.
The ever-changing and expanding supermarket business in New Jersey continues to be very compelling. It’s been over four years since A&P and Pathmark closed their doors and the impact on New Jersey food shopping continues to evolve as supermarket chains pursue New Jersey sites for the first time or look to expand their store numbers in New Jersey. New operations like Uncle Giuseppe’s in Ramsey or the continuing expansion of HMart, which opened a Paramus store, Gourmanoff Supermarket opening in Paramus, and 99 Ranch which opened in Edison and Hackensack, are all taking advantage of the opportunities in northern and central New Jersey. They’re competing with the likes of Shop Rite, Stop & Shop and Acme. The much-anticipated opening of Wegman’s in Montvale and Hanover, will add greatly to the competition. European competitors Aldi and newcomer Lidl are opening up numerous stores in New Jersey as part of their expansion. Trader Joe’s hasn’t been idle either and of course food shoppers continue to go to Costco and other warehouse stores for their supplemental bulk food shopping.
Going Forward
Leasing activity in the Garden State the past 12 months is still quite brisk and a lot of the quality space is being leased. This is especially true in the stores sizes 10,000 sf feet and under. Many restaurant and traditional retailers are taking quality space when they can grab it. We anticipate seeing the vacancy rate improve going forward. The current vacancy rate has risen to 7.04% percent, but when you take in consideration all the recent vacancies from Toys R Us/Babies R Us, Sears and Kmart, this rate increase is temporary. Bib boxes take longer to lease due to the limited number of big box users. Overall, New Jersey, fortunately, continues to be one of the most desired state for retailers to do business in, with all its favorable demographics.
We are going to see some interesting times ahead for retail as the consumer has numerous options in their pursuit of purchasing their retail needs.
About The Goldstein Group
The Goldstein Group, New Jersey’s leading full-service commercial real estate brokerage firm, specializes in owner representation, retailer representation, investment sales and management services. The firm, founded in 1986, represents over 12,000,000 square feet of retail space and numerous national and regional retailers and restaurants. The Company is the New Jersey member of the Retail Brokers Network. As an RBN affiliate, The Goldstein Group provides clients assistance throughout the United States with qualified retail specialists in over 65 offices in the United States and Canada.
For more information on the Retail Brokers Network, visit www.retailbrokersnetwork.com.
For more information, contact Chuck Lanyard at (201) 703-9700, extension 115 or visit the Company’s website at www.thegoldsteingroup.com.
