New Jersey Retail Market

Many retailers continue to target the New Jersey area. Northern New Jersey, long established with a high density of population, is particularly attractive for retailers. However, the central and southern areas are quickly garnering more attention. These areas have more land for development with, percentage-wise, the largest increases in population and income.

New Jersey’s Smart Growth initiative combined with a difficult approvals process, are proving to be barriers to new development. Mixed-use town centers and transit hubs are desirable because they spur additional growth without requiring the amount of land that more traditional retail development requires. There is also a trend for tenants from enclosed malls to seek outside positions, resulting either in the addition of lifestyle components to enclosed malls, or the establishment of new lifestyle centers, or open air centers.

The addition of lifestyle components at Bridgewater Commons and the Freehold Mall will have an impact on that market, though the affect is yet to be determined. This trend towards outdoor lifestyle retail could adversely affect sales inside the malls and could take some business from other centers. In addition, it also could affect the plans of some retailers, who might choose to wait until an expansion opens or opt to extend leases in their current locations while they wait for new opportunities.

Similarly, The Shoppes at Old Bridge, The Shoppes at North Brunswick, both lifestyle centers, may affect mall traffic, since they offer mall-type tenants an opportunity for much more visibility and ease of access. Klockner Corner in Hamilton is a community center that will attract business from several market areas because of its location and highway access. Edgewater Square in Edgewater will continue the trend of lifestyle retailers and restaurants coming to the Gold Coast, following the increase in population and wealth in the area.

Development is currently taking place in the less-developed areas of southern New Jersey at brownfields sites and on any available piece of land in the more populous areas of the central and northern regions of the state. Adaptive reuse will also become increasingly important in New Jersey. Two of the more active retail developers in the area include Stanbery Development and RE/Sources, the developer of Edgewater Square. Retailers new to the New Jersey markets include Tiffany in Red Bank, Loehmann’s and Justice.

Recent leases include Ruth’s Chris Steak House, a 12,000-square-foot pad site at Princeton Forrestal Village; Staples, which opened in a 20,000+-square-foot space at Green Brook on Route 22; and the new Tiffany and Co. store, occupying 6,000 square feet of the former Garmany building in Red Bank. Vacancy rates in northern New Jersey are low, and central New Jersey is showing signs of weakness along Routes 9 and 35, but the vacancy rate is still below 5 percent.

The area of U.S. 1, from Linden in the north to as far south (at least) as Quakerbridge Mall (Mercerville), especially around the Brunswicks, is the new hot market. In Linden, Hartz Mountain is developing the former Ford plant as a mixed-use property. The General Motors truck plant in Linden will need to be redeveloped as well. In north Brunswick, near Route 130, Stanbery is building The Shoppes at North Brunswick. In South Brunswick, Heritage Square will include a Target and other big box retail. Princeton Forrestal Village, at College Road West, is combining a Westin Hotel and Class A office space (98 percent leased) with a destination retail segment, which includes restaurants and retailers not found elsewhere. Leasing activity is extremely strong here. The southern ends of both the Garden State Parkway and the New Jersey Turnpike are also worth watching. There continues to be a strong appetite among institutions to acquire retail properties, with cap rates of 5.75 to 6.25 not uncommon for better properties, and 8 or 9 caps for less desirable properties. There is upward pressure on rents due to high purchase prices and the rapidly rising cost of construction, which will begin to affect retailers at some point since their pro formas may not support these rents.

— Matt Harding, president; Bob Carson, executive vice president; Dale Mulartrick, director of leasing; Stanley Bernstein, leasing representative; Ethan Goldsmith, leasing representative; and David Silver, corporate director of marketing, all of Levin Management.

©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.

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