Changing times challenge retailers

By THOMAS CASTLES

Staff Writer

A sign advertises available space in the Epicentre shopping plaza on Route 9 in Manalapan. The vacancy rate for retail space in central New Jersey climbed to 9.8 percent in the second quarter of 2013. STAFF PHOTOGRAPHER ERIC SUCAR Storefront vacancies have blemished many of New Jerseys busiest retail corridors in recent years, and experts say there is no shortage of reasons why.

According to a report published by retail broker R.J. Brunelli & Co., Old Bridge, the retail vacancy rate in central New Jersey climbed to 9.8 percent in the second quarter of 2013, up almost a full percentage point from the previous year. That amounts to 2.95 million square feet of vacant space on routes 1, 9, 18 and 35 in Middlesex, Monmouth, Mercer and parts of Ocean counties. If added up, the unoccupied space is equivalent to the size of about 20 vacant Walmart Supercenters.

But Walmart and other big-box stores of at least 20,000 square feet have been doing relatively well. According to Brunellis data, 225,000 square feet of previously unoccupied big-box space was filled by tenants over the past 12 months.

Empty retail buildings sit alongside Route 18 in East Brunswick. However, that positive trend was not enough to offset increasing losses of smaller spaces.

Much of the small-space woes can be attributed to the inability of small chains, mom-and-pops and franchisees to take advantage of vacancies, because financing for new ventures or business expansion remains so difficult to get, Brunellis report states. Until the economy improves and banks genuinely start to loosen the spigots, it will be difficult to make much of a dent in the small-store inventory. The impact of the 2008 financial downturn should not be understated when analyzing data like Brunellis, according to New Jersey Retail Merchants Association President John Holub.

PHOTOS BY KAREN KESTEN/STAFF Clearly, the economic environment has changed since 2008-2009, and I think businesses as a whole are continuing to scratch and claw their way out of the worst downturn in 70 years, Holub said. But it seems that every few years there are fits and starts and ebbs and flows, so I dont think the [recent] decline [in occupancy] is entirely surprising.

Economic uncertainty may just be another punch to roll with for area retailers, but competition from the Internet presents a much more sizable concern, according to Robert Burchell, professor and co-director of the Center for Urban Policy Research at the Rutgers University Edward J. Bloustein School of Planning and Public Policy, New Brunswick.

A rising tide lifts all boats and a decreasing tide puts all those boats back on the ground, so the economy is always present and a major influence on American life, Burchell said, adding that Brunelli representatives and analysts are very well-respected in their field. But there will be a long-term future increase in vacancy rates [no matter how the economy fluctuates] because of the competition of the Internet.

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Changing times challenge retailers