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NORTHEAST SNAPSHOT, DECEMBER 2006
Northern New Jersey Retail Market
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Jeff Lagowitz, principal, Metro Commercial Real Estate.
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The northern New Jersey retail market continues to have some of the lowest vacancy rates in the Northeast due to relatively low retail construction and the constant expansion of new retailers in the area. The market is currently experiencing a redevelopment of industrial properties in both urban areas and along retail corridors into new retail properties. Retailers are embracing New Urbanism and conceptual city living as consumers look for an alternative lifestyle to the suburbs or major metropolitan areas. People want to be part of an urban environment, but they don’t want the high cost and stress often associated with living in an urban area. Because of this trend, the retail market is catering to the demand of consumers and developing new centers within mixed-use communities.
There are currently four major developments that are exhibiting this trend. Toll Brothers and Apollo Real Estate Advisors have redeveloped the former Lipton Tea Company industrial building into Hudson Tea, a luxury condominium building in Hoboken. The 12-story building, located on the Hudson River, contains 525 units that range from 735 to 1,640 square feet. The property also includes a 6,000-square-foot fitness center and 1,600 square feet of retail space. Another development is i.park Edgewater, a mixed-use complex in Edgewater. The complex, located at 45 River Road, contains retail space, office space, restaurants and residential facilities.
Harrison MetroCentre is another major mixed-use development that is currently under construction in northern New Jersey. Once completed, the urban center will contain more than 3 million square feet of office space, 3,500 residential units, 300,000 square feet of retail space, a 25,000-seat soccer stadium and recreational areas. Westmont Station in Wood-Ridge, which is currently being constructed by Somerset Development, will contain 737 residential units, 130,000 square feet of retail space, a new middle school, office space and a variety of public spaces.
These new developments will create new jobs and generate tax revenue for the municipalities. Each mixed-use development has extensive transportation components planned, which enables residents to commute by rail, bus or ferry to surrounding urban areas. Nearby residents will enjoy access to alternative shopping and entertainment.
The majority of retail development in northern New Jersey is taking place along the New Jersey Gold Coast, which runs from Bergen to Hudson County. It is located within close proximity to Manhattan and contains the highest residential densities and household incomes in the state. In addition, these residential areas are situated off major New Jersey roadways, contain very few wetland areas and have a relatively easy permit process; thus, there is a growing interest in the redevelopment of properties in this area rather than ground-up suburban development. Many state initiatives such as the New Jersey Smart Growth Plan and Urban Enterprise tax programs have encouraged further redevelopment of urban and industrial areas as well as at former Brownfield sites.
Vornado Realty Trust, Hartz Mountain Industries and Cogswell Realty are also active retail developers in the area. Vornado Realty Trust has developed more than 39 retail centers throughout the state of New Jersey including Bergen Town Center, a 1.07 million-square-foot shopping center in Paramus and Monmouth Mall, a 1.5 million-square-foot mall in Eatontown. Hartz Mountain Industries has developed more than six retail centers throughout New Jersey including, Tonnelle Plaza, an easily accessible shopping center for surrounding residents in North Bergen. Also, Cogswell Realty has acquired several office buildings in the Newark area and has begun converting them into retail and residential rental units.
Northern New Jersey is attracting a variety of new retailers to its market. Blue Tulip, Blue Mercury and Destination Maternity are all aggressively seeking locations in this marketplace. Gourmet grocers such as The Fresh Market and Wild Oats have entered this growing market as well. Restaurants such as Chipotle, Fresh City and Pei Wei are also new to northern New Jersey.
Despite the current boon of retail development in northern New Jersey’s key markets, there are still several submarkets with retail development potential. As government officials work to make Newark a safe and secure city, there is great potential for residential and retail developments on the horizon. The new Devils/Nets arena promises to create more jobs and bring more life into the city. The Newark Penn Station was recently renovated, and plans are in place to improve Broad Street. In addition, major corporate headquarters in the area will ensure that retail development in the city continues to thrive.
— Jeff Lagowitz is a principal at Metro Commercial Real Estate’s New Jersey office.
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