Retail Vacancy Rates Climb in Northern New Jersey

With the rash of recent retailer bankruptcies and downsizings adding to an inventory that included unclaimed spaces from earlier failures, the vacancy factor in retail properties along northern New Jersey's six major shopping corridors jumped to 6.6% during 2008 from 3.6% a year earlier, according to R.J. Brunelli & Co., Inc. Routes 4 and 23 were the only roadways to show an improvement from 2007. While the six-county region remains one of the most vibrant retail markets in the nation, the firm warned that it could take several years for the vacancy factor to get back to customary levels.
In its nineteenth annual study of the northern New Jersey market, the Old Bridge, N.J.-based retail real estate brokerage found 1.84 million square feet of vacancies in the 27.96 million square feet of space it studied along the six corridors, with availabilities seen in 118 of the 808 properties evaluated. By contrast, the firm's 2007 study reported 1.01 million square feet of vacancies in 27.58 million square feet of space. Over the prior 10 years, the region's rate had stayed in a narrow range of 2.0% in 2002 to 3.6% in 2007.

Conducted in January 2009, the firm's 2008 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 and auto service facilities are also included, while enclosed regional malls and centers under construction or redevelopment are excluded. Stores running “going-out-of-business” sales earlier this year were accounted for as vacancies.

"The market has been flooded with an unprecedented number of 'big-box' spaces following the bankruptcies or closures of the Circuit City, Linens 'n Things, National Wholesale Liquidators, Levitz, Comp USA and Home Depot Expo chains, as well as downsizings by Office Depot and Office Max. For the most part, these are prime, well-located spaces," said Richard J. Brunelli, president of the firm. "Combined, those retailers accounted for 1.84 million square feet, or 58%, of the vacant space along the six corridors. Added to that are the numerous smaller vacancies arising from bankruptcies or downsizings at such chains as Marty's Shoes, Harvey Electronics, Bennigan's and LoneStar, as well as closings by a number of independent furniture, flooring and other home products retailers who have been impacted by the depressed housing market."