Retail Vacancy Rate In Central NJ Drops To 9.1% Following Numerous 'Big Box' Absorptions, According To R.J. Brunelli …

OLD BRIDGE, N.J., June 22, 2012 /PRNewswire/ --The retail vacancy rate along central New Jersey's major shopping corridors fell to 9.1% in April from a 10-year-high of 10.5% a year ago and 9.8% in 2010 as a series of 'big box' absorptions triggered improvements on three highways and a stable picture on the fourth, according to R.J. Brunelli & Co., LLC. The performance snapped a string of five consecutive years of rising vacancies, but the region's current rate remains well above the 10-year low of 3.4% attained in 2006.

In its 23rd annual study of the central New Jersey market, the Old Bridge-based retail real estate brokerage found 2.79 million square feet of vacancies in the 30.53 million square feet of space studied along State Highways 1, 9, 18 and 35 in Mercer, Middlesex and Monmouth counties, and a small section of Ocean County. Route 18 posted the steepest drop in its vacancy factor, while Routes 1 and 35 also improved and Route 9 held even.

Vacancies were seen in 195 of the 785 sites evaluated throughout the region. The study evaluated shopping centers and freestanding buildings exceeding 2,000 square feetincluding 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 major redevelopment are excluded.

Taken together with the slight increase to 8.2% from 8.1% in the vacancy rate along six northern New Jersey highways announced by R.J. Brunelli last week, the vacancy factor for the 10 retail corridors surveyed by the firm in the central and northern parts of the state declined to 8.7% from 9.3% in 2011. All told, the firm found 5.11 million square feet of empty space in the 58.87 million square feet evaluated. Big box spaces accounted for 2.41 million square feet, or 47.0%, of the vacancies.

"The improved picture in central New Jersey over the past 12 months is largely due to positive activity on the big-box front, where full or partial absorptions of 10 spaces more than offset three fresh vacancies," said Richard J. Brunelli, president of the firm. "Still, lingering vacancies in nearly 30 other big-box spaces along the corridors continued to keep the region's vacancy rate elevated."

By virtue of those absorptions, vacant big boxes of 20,000 square feet or more combined for approximately 1.31 million square feet, or 47.1%, of available retail space along the four corridors, down from a 54.5% share in the firm's 2011 study. Notably, 1.20 million, or 91.4%, of the region's big-box space has been on the market for a year or moreand, in a number of cases, for several years. These longer-term vacancies primarily emanated from bankruptcies or downsizings at such retailers as The Great Atlantic & Pacific Tea Co. (which subsequently emerged from Chapter 11), Levitz, Linens 'n Things, Circuit City, Office Depot, Value City, and, more recently, Borders. All told, those chains accounted for approximately 726,000 square feet of vacant space along the four corridors this year, down from 953,000 square feet in 2011a net absorption of 227,000 square feet.

A&P's Chapter 11 remained the biggest contributor to the region's big-box vacancies, with four Pathmark stores aggregating approximately 218,000 square feet still available since last year. The only location absorbed since the 2011 survey was a 59,700-square-foot former A&P in East Brunswick that was snapped up by Stop & Shop.

Among the other chains that shed multiple locations in the region, Office Depot's five stores totaling approximately 118,000 square feet are all still empty; three Linens 'n Things totaling 98,000 square feet remain available following the absorption of two locations aggregating 69,000 square feet on Route 35 to Best Market in Holmdel and Lord & Taylor Home in Shrewsbury; the long-vacant 82,000-square-foot Levitz on Route 35 in Wall is still unclaimed, while Ashley Furniture took the chain's 70,000-square-foot showroom in Eatontown; the former 126,000-square-foot Value City at Seaview Square on Route 35 is still available, but the bulk of the remaining 53,000 square feet in the chain's former building at the Manalapan Epicenter on Route 9 is now being subdivided for Sports Authority and a 6,000-square-foot tenant that's in negotiations, leaving just 5,300 square feet. These newcomers to Manalapan will join the PC Richard and Son that opened last year in a deal brokered by R.J. Brunelli, which is the exclusive leasing agent for the property. Meanwhile, the region's one remaining former Circuit City--a 32,000-square-foot space at Woodbridge Crossing on Route 1--remains available, while two Borders along the corridors totaling over 52,000 square feet are empty, as the West Windsor location closed in last year's survey was joined this past year by the site in Eatontown.

The other major bankruptcy contributing to the spike in 2011 vacancies, Blockbuster, continued to have an impact in 2012. Of the 13 locations aggregating 74,000 square feet that were closed along the corridors last year, just one on Route 35 in Ocean Township was leased to a 3,600-square-foot yogurt shop.

"The drop in central New Jersey's retail vacancy rate from 10.5% to 9.1% this year confirms that fact that the retail space market has 'bottomed out.' I believe its recovery will accelerate through 2013, especially if the national Presidential election results in business friendly regulations with no increase in taxes and if the financial crisis in Europe is solved," Mr. Brunelli said.

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Retail Vacancy Rate In Central NJ Drops To 9.1% Following Numerous 'Big Box' Absorptions, According To R.J. Brunelli ...