The retail space vacancy rate has increased to 9.3 percent along the major highway shopping corridors of northern and central New Jersey, from 8.9 percent in 2010 and 7.8 percent in 2009, according to an annual survey by R.J. Brunelli & Co. that predicted vacancy rates will start to decline, and rents increase, in 2012.
The Old Bridge-based retail real estate brokerage’s 22nd annual survey, conducted in April, found 5.52 million square feet of vacancies in the 59.06 million square feet of gross leasable area, with big-box spaces of 20,000 square feet and above driving 49.6 percent of the vacancies.
Three major bankruptcies — Great Atlantic & Pacific Tea Co., Blockbuster Video and Borders Group — had varying impacts on the corridors’ vacancy rates, with A&P generating more than 553,000 square feet of darkened space, according to the study. Blockbuster closed 18 stores with a combined 99,000 square feet, but only one Borders store has so far closed, the study said.
“Including off-corridor sites, the closures of Pathmark and A&P supermarkets are creating a growing number of anchorless neighborhood centers,” said Richard J. Brunelli, president of the firm. “Given the level of saturation in many markets and the industry’s consolidation, finding replacement supermarkets is becoming increasingly difficult. In particular, some chains are reluctant to take locations in close proximity to high-volume operators like ShopRite and Wegman’s.”
Well-located spaces are still performing well, Brunelli said. Most Circuit City and Linens ‘n Things locations that flooded the northern and central New Jersey markets in 2009 have been absorbed by other big boxes, like Bed, Bath & Beyond and Dick’s Sporting Goods. Other locations have been subdivided for use by smaller chains, like Ashley Furniture and Fashion Bug.
“There’s clearly a great deal of inventory out there,” Brunelli said. “But with New Jersey’s dense population and high household income, the northern and central markets remain high on the radar screen of expansion-minded retail and restaurant chains. Against that background, we expect most prime spaces will be absorbed, causing vacancy rates to tighten in 2012-13 and rents to begin creeping upward.”
The study looked at shopping centers and freestanding buildings exceeding 2,000 square feet — including restaurants, auto service facilities and closed auto dealerships deemed suitable for retail use. Regional malls and centers under construction or major redevelopment were excluded.