Central NJ Retail Vacancy Rate Hits 7.6%, Lowest Rate in Six Years

Big box and smaller store spaces combined to push the retail vacancy rate along central New Jersey’s major shopping corridors to a six-year low of 7.6% from 9.8% in 2013, according to the latest study by R.J. Brunelli & Co., LLC. Looking back over the past 10 years, the 2014 figure compared with the high of 10.5% in 2011 and low of 3.4% in 2006.

Our 25th annual study of the central New Jersey market found 2.33 million square feet of vacancies in the 30.94 million square feet of space reviewed along State Highways 1, 9, 18 and 35 in Mercer, Middlesex and Monmouth counties, and a small section of Ocean County.

Steepest decline in vacancies: Route 35

The region’s most heavily retailed road, Route 35, experienced the steepest decline in vacancies, followed by Routes 9 and 1, while Route 18 showed a slight increase.

The study found availabilities in 180 of the 815 sites visited throughout the region during this year’s third quarter. As in the past, R.J. Brunelli’s study evaluates shopping centers and freestanding buildings exceeding 2,000 square feet – including restaurants, auto service facilities and vacant auto dealerships whose location and configuration makes them viable for retail use. Regional malls and centers under construction or in the early or mid-stages of major redevelopment are excluded.

Taken together with the year-over-year decline reported last week in the vacancy factor for six northern New Jersey highways to 7.3% from 8.1%, the overall north/central vacancy rate for the 10 retail corridors surveyed by the firm fell to 7.4% in 2014 from 9.0% a year ago. R.J. Brunelli found a total of 4.52 million square feet of empty space in the 61.06 million square feet reviewed in the two regions, with big-box spaces (20,000 square feet and above) accounting for 1.45 million square feet, or 32.2%, of the vacancies.

The improvement in the two regions was triggered by a significant number of new leases that accounted for more than 3.4 million square feet during the past 12 months, according to the firm’s research. Big-box chains doing multiple deals across the two regions’ corridors included Nordstrom Rack (Routes 10, 1 and 35); Hobby Lobby (Routes 1, 9 and 46); and Big Lots (Routes 10, 1 and 35). Smaller-space operators with multiple deals along the corridors were led by R.J. Brunelli client Dollar Tree (five locations), followed by Jersey Mike’s, Med Express and Tiger Shulman martial arts (each with four).

“While empty big-boxes continued to be absorbed in central New Jersey during 2014, one interesting development was the steeper reduction in smaller-store vacancies,” said Richard J. Brunelli, president of the firm. Indeed, vacancies in big-boxes along the four corridors were trimmed by a net of 293,814 square feet, or 27%, to 796,053 square feet. Concurrently, the region’s inventory of vacant smaller (sub-20,000 square feet) spaces was reduced by a net of 324,211 square feet, or 17.4%, to 1.54 million square feet. “This contrasted sharply with what we saw in northern New Jersey, where a very strong reduction in big-box vacancies was partially offset by rising vacancies in smaller spaces,” he noted. In all, the big-box share of total vacancies on the central corridors slipped to 34.1% from 36.9% in 2013.

The big drop in the central region’s inventory of empty spaces below 20,000 square feet was fueled by multiple leases with some of the company-operated and franchised chains named above, as well as others like STS Tires, Turning Point, 7Eleven, Advanced Auto, and Pet Valu. Additionally, the central corridors saw a number of single-location leases in the 10,000- to 20,000-square-foot range with chains like AC Moore, Furniture King, Harbor Freight, Guitar Center, CVS, Mattress Factory, Party City, Smashburger, as well as a variety of local operators. “These deals offset the impact of closures from bankrupt chains like Coldwater Creek and Dots (the latter now being resurrected under new ownership), as well as strategic downsizings by such chains as Radio Shack, Game Stop and Shoe Carnival,” said R.J. Brunelli senior vice president Ron DeLuca.

– This is part 1 of our “Vacancy Survey” series, we will be putting up “Central NJ Retail Vacancy Rates 2014 – Part 2” in the next few days, or receive updates to your inbox for our retail realty news by subscribing to our newsletter here.

For copies of R.J. Brunelli & Co.’s central or northern New Jersey studies, please click here to contact us.