Survey: Big-box closings drive up retail vacancy rate to 8.2% in northern New Jersey market
Old Bridge, N.J. -- Driven by new big-box store closures, 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.
The Old Bridge-based retail brokerage firm's 22nd annual study of the six-county northern New Jersey market uncovered 2.33 million sq. ft. of vacancies in the 28.34 million sq. ft. of space examined along the six corridors, with availabilities seen in 159 of the 818 properties evaluated. This compared with 2.33 million sq. ft. of vacancies in 28.78 million sq. ft. 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 sq. ft. 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 sq. ft. were once again a major driver of the region's vacancies, representing 1.09 million sq. ft., or 46.8% of the empty space along the six corridors, up from a 45.7% share in 2011.
Notably, approximately 798,500 sq. ft., 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.