North Jersey Retail Rising
For the first time in a long time in Central and Northern New Jersey, we can stop talking about the light at the end of the tunnel. The market has emerged into full sunshine, and the lingering aftereffects of the recession are now fully in the rearview mirror.
The current strength of the market and robust activity in terms of new commercial development is something we have not seen for some time. Not only are there more opportunities for developers to get financing, but with rates at low ebb as well, developers are moving to take advantage. At the same time, banks and financial institutions are motivated and aggressively looking to make deals. The result is a perfect storm of sorts: the money is there, developers are willing and ready, and retailers are looking for quality space.
That dynamic is good news not only for Central and Northern New Jersey, but also for all of the metropolitan New York City market. It is noteworthy that very few of the big box retail spaces that became available in the wake of high-profile closings and bankruptcies from brands like Linens ’N Things and Borders are still available. Slowly but surely, the inventory of those boxes has been re-tenanted, and as retail corridors become healthier, there is a lack of second-generation retail spaces available.
We can see this retail lifecycle in action in projects such as Livingstone Center in Livingstone, which was 90 percent empty after losing tenants like Circuit City and Linens ’N Things. Today, new names like TJ Maxx, Nordstrom Rack, Cost Plus World Market, DSW and Buy Buy Baby have moved in to fill those spaces, and the project is thriving. Paramus Towne Square in Paramus went through a similar cycle, rebounding with brands like Dick’s Sporting Goods, L.A. Fitness, Golf Galaxy and Bassett Furniture, helping the project climb back to its current status at 98 percent leased.
Coming out of a period when we saw a marked slowdown in new construction, this rising demand is contributing to a surge in new development. For example, Clark Commons in Clark, a 245,000-square-foot, 28-acre development anchored by Whole Foods Market, Home Goods and L.A. Fitness, is set to open this summer. The revival of a long-planned Edison Town Square project in Edison promises to add a significant new mixed-use destination to Middlesex County. And in Kearny, several buildings on an industrial warehouse site will be repurposed into a new 87,000-square-foot BJ’s Wholesale Club with an additional 42,000 square feet of retail space.
Supermarket-anchored centers are always strong performers, and grocery and restaurant retailers continue to set the pace in terms of leasing volume in Central and Northern Jersey. There are also some new and emerging retail concepts making their way into the market in the very near future. Forever 21’s value priced F21 red concept is looking at possible New Jersey locations, and Macy’s will be unveiling its own new off-price concept in the market in 2015.
One particularly interesting market trend to watch going forward is the growing popularity of a development model that is essentially a specialty retail center concept with some lifestyle components. The apparent goal in this hybrid approach is to bring together lifestyle/specialty tenants with a strong restaurant component and some kind of anchor presence — not infrequently a grocer. Clark Commons, for example has Whole Foods Market as an anchor, but also features a strong cosmetic and clothing component with brands like Dress Barn and Carters. In a market long known for innovation, this approach might herald the beginning of the next big national development trend.
— By Jerry Welkis, Founder, Welco Realty, Inc., an X Team International partner. This article originally appeared in the March/April 2015 issue of Northeast Real Estate Business magazine.