OLD BRIDGE, N.J., Nov. 12, 2014 /PRNewswire/ -- An improved picture in both 'big-box' and smaller store spaces combined to push the retail vacancy rate along central New Jersey's major shopping corridors to a six-year low of 7.6% from 9.8% in 2013, according to the latest study by R.J. Brunelli & Co., LLC. Looking back over the past 10 years, the 2014 figure compared with the high of 10.5% in 2011 and low of 3.4% in 2006.
In all, the Old Bridge-based retail real estate brokerage's 25th annual study of the central New Jersey market found 2.33 million square feet of vacancies in the 30.94 million square feet of space reviewed along State Highways 1, 9, 18 and 35 in Mercer, Middlesex and Monmouth counties, and a small section of Ocean County. The region's most heavily retailed road, Route 35, experienced the steepest decline in vacancies, followed by Routes 9 and 1, while Route 18 showed a slight increase.
The study found availabilities in 180 of the 815 sites visited throughout the region during this year's third quarter. As in the past, R.J. Brunelli's study evaluates shopping centers and freestanding buildings exceeding 2,000 square feet—including 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 in the early or mid-stages of major redevelopment are excluded.
Taken together with the year-over-year decline reported last week in the vacancy factor for six northern New Jersey highways to 7.3% from 8.1%, the overall north/central vacancy rate for the 10 retail corridors surveyed by the firm fell to 7.4% in 2014 from 9.0% a year ago. R.J. Brunelli found a total of 4.52 million square feet of empty space in the 61.06 million square feet reviewed in the two regions, with big-box spaces (20,000 square feet and above) accounting for 1.45 million square feet, or 32.2%, of the vacancies.
The improvement in the two regions was triggered by a significant number of new leases that accounted for more than 3.4 million square feet during the past 12 months, according to the firm's research. Big-box chains doing multiple deals across the two regions' corridors included Nordstrom Rack (Routes 10, 1 and 35); Hobby Lobby (Routes 1, 9 and 46); and Big Lots (Routes 10, 1 and 35). Smaller-space operators with multiple deals along the corridors were led by R.J. Brunelli client Dollar Tree (five locations), followed by Jersey Mike's, Med Express and Tiger Shulman martial arts (each with four).
"While empty big-boxes continued to be absorbed in central New Jersey during 2014, one interesting development was the steeper reduction in smaller-store vacancies," said Richard J. Brunelli, president of the firm. Indeed, vacancies in big-boxes along the four corridors were trimmed by a net of 293,814 square feet, or 27%, to 796,053 square feet. Concurrently, the region's inventory of vacant smaller (sub-20,000 square feet) spaces was reduced by a net of 324,211 square feet, or 17.4%, to 1.54 million square feet. "This contrasted sharply with what we saw in northern New Jersey, where a very strong reduction in big-box vacancies was partially offset by rising vacancies in smaller spaces," he noted. In all, the big-box share of total vacancies on the central corridors slipped to 34.1% from 36.9% in 2013.
The big drop in the central region's inventory of empty spaces below 20,000 square feet was fueled by multiple leases with some of the company-operated and franchised chains named above, as well as others like STS Tires, Turning Point, 7Eleven, Advanced Auto, and Pet Valu. Additionally, the central corridors saw a number of single-location leases in the 10,000- to 20,000-square-foot range with chains like AC Moore, Furniture King, Harbor Freight, Guitar Center, CVS, Mattress Factory, Party City, Smashburger, as well as a variety of local operators. "These deals offset the impact of closures from bankrupt chains like Coldwater Creek and Dots (the latter now being resurrected under new ownership), as well as strategic downsizings by such chains as Radio Shack, Game Stop and Shoe Carnival," said R.J. Brunelli senior vice president Ron DeLuca.
Notably, no new big-box vacancies were seen along the central corridors since the firm's 2013 survey. Among the spaces absorbed over the past 12 months, the remaining 62,600-square feet in the long-vacant former Lowes building at Seaview Square on Route 35 in Ocean Township was subdivided between Big Lots and the Sky Zone trampoline park. Coupled with the aforementioned leases for AC Moore, Guitar Center and several smaller spaces, the vacancy rate in the once-struggling, approximately 800,000-square-foot outdoor center was lowered to just over 10%; the 65,000-square-foot former Value City building is the biggest single remaining space. Also on Route 35, indoor arcade Funtime America opened in a 27,000-square-foot Eatontown space vacated several years ago by Avalon Carpets.
Elsewhere in the region, big-box absorptions along Route 9 included two deals on the Freehold Raceway Mall ring road: Huffman Koos leased a 33,000-square-foot space that previously housed Marshall’s, as the once-bankrupt furniture brand continues its expansion under new ownership, and Bob’s Furniture opened in the 22,000-square-foot space once occupied by Office Depot. The two stores join fellow furniture retailer Raymour & Flanigan in the ring road strip. Additionally, Hobby Lobby opened its second location along the corridor at Friendship Plaza in Howell, taking the 20,700-square-foot former AC Moore space and approximately 50,000 square feet of adjoining vacancies. Hobby Lobby will soon be joined in the center by a World Class Shop-Rite, which took over the Pathmark supermarket and a portion of the Kmart store, both of which closed since the time of the 2013 survey. On Route 1 in North Brunswick, Crunch Fitness took the remaining 26,400 square feet of the long-vacant Office Depot in Commerce Center.
Besides the move of Shop-Rite into Friendship Plaza, other notable big-box leases involving new sites or spaces that were still occupied at the time of the firm's 2013 survey included the openings of a 136,000-square-foot Target and 152,000-square-foot Costco at the new North Brunswick Town Center on Route 1; the signing of Whole Foods at Allaire Plaza on Route 35 in Wall Township, where the chain will take an approximate 40,000-square-foot space created from the recently closed Brielle Sports Club and adjoining small-store vacancies; and Nordstrom Rack's deals for 35,000-square-foot spaces at Mercer Mall on Route 1 and the expanded Crossroads at Eatontown on Route 35 (anchored by Macy's Furniture).
As accounted for in last year's survey, other major big-boxes debuting on the corridors include the 150,000-square-foot Walmart Supercenter that just opened on Route 18 North in East Brunswick on a site previously occupied by Sam's Club, a flea market and furniture store. This came on the heels of the April 2014 opening of a Walmart Supercenter on Route 18 South in Old Bridge (an area not included in the firm's survey) on a site that previously housed a golf driving range and arcade.
"As we saw in northern New Jersey, the central region is experiencing somewhat of a revival in new development and redevelopment activity, as landlords move to capitalize on an improving economy," Mr. Brunelli noted. At the junction of Routes 1 and 35 in Woodbridge, R.J. Brunelli is serving as exclusive leasing agent for Richmond Plaza, an approved 75,000-square-foot center. Just south of there on Route 1, the firm is also assisting Onyx Equities on the redevelopment of the Woodbridge Crossing power center, serving as exclusive leasing agent for the 33,300-square-foot former Circuit City space and over 10,000 square feet of smaller store spaces. Existing anchors include Burlington Coat Factory, Big Lots, Modell's, and Party City. Further south on Route 1, leasing continues on the balance of the aforementioned North Brunswick Town Center anchored by Target and Costco, which is zoned for up to 450,000 square feet of space. Not far off the Route 1 corridor, R.J. Brunelli serves as exclusive leasing agent on Onyx's major redevelopment and renovation of Plainsboro Plaza, a 215,000-square foot neighborhood center at the junction of Scudders Mill and Schalks Crossing Roads that is in the process of replacing its two anchors, with Planet Fitness just signed for one of the spaces.
On Route 9 and Lanes Mill Road, site work is under way on The Grove at Howell, a 290,000-square-foot power center whose anchor lineup will include an 88,000-square-foot BJ's Wholesale Club. Also in Monmouth County, National Realty & Development Co. is now marketing The Shoppes at Middletown, a 380,000-square-foot, open-air town center that will be built on a long under-developed site at the intersection of Route 35 North and Kings Highway that currently houses the Spirits Unlimited liquor store with its landmark 'clown' sign.
Results for central New Jersey's individual roadways are as follows:
Route 1. The vacancy rate along the 30-mile corridor extending from Woodbridge to Trenton dropped for the sixth straight year to 6.4% from 6.7% in 2013. Over the past 10 years, the corridor's vacancy factor has gone from a low of 2.4% in both 2006 and 2007 to a high of 9.5% in 2009.
In the most recent study, R.J. Brunelli found 581,481 square feet of vacancies in 9.08 million square feet; availabilities were seen in 31 of the roadway's 138 retail sites.
Big-box vacancies declined 14.2% to 254,603 square feet, or 43.8% of the roadway's empty space—down from 51.4% a year ago. That relatively high ratio reflects the impact of a number of longstanding vacancies, led by the lower level of the former Great Indoors store at Woodbridge Crossing (approximately 79,000 square feet), the former Oscar Huber Furniture building in Lawrenceville (60,000 square feet), and a former Pathmark in North Brunswick (54,000 square feet).
Route 18. Ending two years of improvements, the vacancy rate along the five-mile retail corridor in East Brunswick rose to 12.1% from 11.4% in 2013. Though still well below the 22.1% peak set in 2011, the highway remains a long way from the 10-year low of 4.0% notched in 2005.
A total of 329,466 square feet of vacancies were found in the roadway's 2.72 million square feet of space, with availabilities in 19 of the 89 properties reviewed.
The inventory of empty big-box spaces remained unchanged at 77,437 square feet, or 23.5% of the corridor's vacancies. These include the long-vacant former Home Depot (approximately 54,700 square feet) and Office Depot (22,800 square feet), and the remaining 18,500 square feet of the Car-Khuff's Furniture store that went dark in 2012.
Route 9. The aforementioned big-box deals on the Freehold Raceway Mall ring road and at Friendship Plaza, combined with a large number of mid-range and smaller space leases to drive the vacancy rate along the 35-mile Woodbridge-to-Lakewood corridor down to 7.7% from the 10-year high of 8.6% in 2013. Over the last 10 years, the roadway's vacancy factor was as low as 3.6% in 2008.
The firm's 2014 study showed 693,976 square feet of vacancies in the 9.01 million square feet reviewed. Empty spaces were seen in 67 of the 247 properties visited.
Route 9's inventory of empty big-boxes declined 28.5% to 193,000 square feet, or 27.8% of the highway's total vacancies. The available big-box space is clustered in the 165,000-square-foot former Lowe's in Old Bridge that's been closed for several years and a long-vacant 28,000-square-foot former Linens 'n Things in Howell.
As work gears up on the aforementioned BJ's-anchored power center in Howell, development was completed this fall on the roadway's newest center, Pagano Associates' Marlboro Commons (which will be included in the 2015 survey). R.J. Brunelli served as exclusive leasing agent on the 100,000-square-foot property at the intersection of Route 520, which has just 4,700 square feet available, and is anchored by Whole Foods and Walgreens. Across the road, the 306,500-square-foot Marlboro Plaza underwent a major renovation and re-tenanting highlighted by the 2013 opening of a 61,000-square-foot Hobby Lobby in the former Pathmark space, as well as the addition of several new tenants this past year, including specialty grocer Livoti's Old World Market (12,000 square feet) in a deal brokered by R.J. Brunelli. Following these moves, less than 2% of the property's space is available.
Route 35. The vacancy rate along the most heavily-retailed corridor in central and northern New Jersey plummeted to 7.2% from a 10-year high of 13.0% in 2013 amid continued progress at Seaview Square and the completion of a large number of small and mid-range deals up and down the highway. Over the last 10 years, the vacancy factor had been as low as 3.4% in 2006.
A total of 729,508 square feet remained vacant in the 10.12 million square feet studied along the 25-mile Aberdeen to Brielle corridor and an adjoining section of Route 36 extending from its intersection with Route 35 in Eatontown to West Long Branch. Availabilities were seen in 63 of the 341 properties studied.
The corridor's big-box inventory dropped 39.3% to 271,013 square feet, or 37.2% of the corridor's vacancies. All remaining big-box space has been on the market for at least three years, led by the 82,000-square-foot Levitz building in Wall Township, the 65,000-square-foot Value City at Seaview Square and a 53,000-square-foot Pathmark in Middletown.
For copies of R.J. Brunelli & Co.'s central or northern New Jersey studies, contact R.J. Brunelli & Co., 400 Perrine Road, Suite 405, Old Bridge, N.J., 08857; visit www.njretailrealty.com, or call (732) 721-5800.
SOURCE R.J. Brunelli & Co., LLC