Retail Vacancy Rate In Northern NJ Rises To 8.2% As More 'Big Box' Spaces Go Empty, R.J. Brunelli Survey Reports

OLD BRIDGE, N.J., June 13, 2012 /PRNewswire/ -- With new big-box store closures negating the benefits of absorptions, the vacancy rate in retail properties along northern New Jersey's six major shopping corridors edged up to 8.2% in April from 8.1% a year ago and 8.0% in 2010, according to R.J. Brunelli & Co., LLC.The Route 10 and 46/3 corridors were the only highways to show improvement during the past 12 months.

The Old Bridge-based retail brokerage firm's 22nd annual study of the six-county northern New Jersey market uncovered 2.33 million square feet of vacancies in the 28.34 million square feet of space examined along the six corridors, with availabilities seen in 159 of the 818 properties evaluated. This compared with 2.33 million square feet of vacancies in 28.78 million square feet of space in the 2011 study, in which openings were seen in 173 of the 817 properties reviewed.

Traditionally one of the tightest retail real estate markets in the nation, the northern region has seen its vacancy factor increase for five consecutive years as big box closures began to take a toll. The region's vacancy rate escalated from just 2.9% in 2007 to 3.6% in 2008 before jumping to 6.6% in 2009 and 8%-plus in the last three years. Over the last 10 years, the region's rate was as low as 2.0% in 2003.

R.J. Brunelli's 2012 study reviewed shopping centers and freestanding buildings exceeding 2,000 square feet along State Highways 4, 10, 17, 22, 23 and 46/3, and certain intersecting arteries in Bergen, Essex, Morris, Passaic, Somerset and Union counties. Freestanding restaurants, auto service facilities and auto dealerships are also included, while enclosed regional malls and centers under construction or redevelopment are excluded.

Big-box spaces exceeding 20,000 square feet were once again a major driver of the region's vacancies, representing 1.09 million square feet, or 46.8% of the empty space along the six corridors, up from a 45.7% share in 2011. Notably, approximately 798,500 square feet, or 73%, of this year's empty big box space came from stores that remained vacant since the firm's 2011 survey and, in a number of cases, from 2010 and before. This represented an increase from the 62% ratio of held-over big-box inventory in 2011, but comfortably below the 84% ratio seen in the firm's 2010 survey.

"The Chapter 11 filing of The Great Atlantic & Pacific Tea Co., which has since emerged from bankruptcy protection, and the demise of Borders continued to have the biggest impact on the northern New Jersey market," said Richard J. Brunelli, president of the firm. "Of A&P's six Pathmark stores that went dark along the corridors in 2011 or 2010, only two--a 60,000-square-foot location on Route 46 that's been leased to Fairway and a 42,000-square-foot location on Route 10 that is reportedly leased to LA Fitnesshave been absorbed so far. Consequently, over 226,000 square feet of empty Pathmark space lingers on the corridors."

Borders, meanwhile, shuttered a trio of 25,000-square-foot locations on Routes 17, 22 and 23 in the past year, adding to the 28,000-square-foot store closed on Route 10 in the firm's 2011 survey. With that, approximately 103,000 square feet of former Borders locations remains on the market. Moreover, the bankruptcies of Sixth Ave. Electronics, Syms and Einstein Moomjy added four stores aggregating 120,000 square feet along Routes 10, 17 and 22 to the inventory this past year. An additional 30,000-square-foot Sixth Ave. location on Route 46 in Wayne, however, was snapped up by Planet Fitness.

"On a positive note, besides the aforementioned absorptions of the Pathmark and Sixth Ave. stores on Route 46 and Pathmark on Route 10, we continued to see some of the older big box vacancies take on new life," Mr. Brunelli continued. These included Conway Stores' lease for the former Linens 'n Things on Route 46 in Totowa; Dick's Sporting Goods lease for the former Circuit City on Route 22 in Union; Harbor Freight's lease for the former Office Max on Route 22 in Union; Sears Outlet & Appliance's lease of the former Office Depot on Route 22 in Watchung; and Lord & Taylor Home's lease of the former Loehmann's on Route 17 in Paramus.

Results for the individual northern New Jersey roadways are as follows:

Route 17. The vacancy rate along the 15-mile corridor extending from Paramus to Mahwah increased to 8.2% this year from 7.4% in 2011, but is still below the 10-year high of 8.7% reached in 2010. Over the last 10 years, the roadway's vacancy factor has been as low as 1.9% in 2003.

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Retail Vacancy Rate In Northern NJ Rises To 8.2% As More 'Big Box' Spaces Go Empty, R.J. Brunelli Survey Reports