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South Jersey has room to grow, with several proposed ground-up centers taking center stage in the seven-county region as developers capitalize on residential growth tied to the market’s relative affordability. Meanwhile, “redevelopment” is the operative word for the 14 counties in the state’s more densely populated north and central regions, where industrial sites are being converted into mixed-use centers.
Fueled by big-box absorption, the vacancy rate for open-air and freestanding retail in the northern counties inched down to 8.1 percent in mid-2013 from 8.2 percent a year ago. Central Jersey’s vacancies rose to 9.8 percent from 9.1 percent a year earlier, driven by small-shop closures. In the south, the average is 9 percent.
Rents in the north crept up 0.1 percent in the first three quarters of 2013, with a median of $20 to $26 per square foot in top markets; central counties crept up 0.3 percent to a median of $15.50 to $16. South Jersey rents increased just 0.1 percent in the first two quarters of 2013, with a median of $13.
For regional malls, one continuing trend is the move by owners to take interior spaces and turn them outward for more of a lifestyle feel. This began with the successful outdoor area completed at Freehold Raceway Mall, where the state’s third L.L. Bean store just took over the former Borders.
A similar ‘outdoor streetscape’ project is planned for Hamilton Mall in Mays Landing, following an expansion this year that added junior anchors H&M and Forever 21 and two pad restaurants to the mall.
Another trend, exemplified by Bridgewater Commons: Replacing great tenants with even greater ones. With vacancy rates as little as 2 percent to 6 percent, the state’s stronger malls have the means to bring in fresh new names and get better rents.
We also see more malls creating pad sites for restaurants, working with department stores to release parking areas for such development. For example, Seasons 52 is under construction in a former parking area at Menlo Park Mall in Edison and has signed a similar lease in Bridgewater.
Among major new retail projects, an enclosed mall is part of O’Neill Properties’ residential/retail development, The Point, on a former industrial site in Sayreville, with Taubman Centers partnering on the mall. The masterplan also calls for a power center, movie theater and pad sites. Bass Pro Shops is the first committed anchor.
Elsewhere, Wolfson Verrichia Group has proposed a 523,000-square-foot, Walmart-anchored power center on Route 322 in Woolwich. Stavola Realty Corp. plans a 200,000-square-foot power center at Route 22 and Chimney Rock Rd. in Bridgewater. Hartz Mountain is working with OTB Destination LLC on an outlet center for the former Ford plant site on Route 1 in Edison, where a Sam’s Club is already in place. South along Route 1, Garden Commercial is developing Main Street North Brunswick, an open-air town center anchored by Costco and Target. The former Johnson & Johnson site has also been approved for a NJ Transit rail station.
Among retailers, Whole Foods remains active, with the chain under construction at Marlboro Commons in Marlboro, slated to anchor a new center in Montvale, and signing deals to anchor the Closter Plaza redevelopment in Closter and the mixed-use redevelopment of the former Hahne & Co. department store in Newark.
Indeed, Newark is getting the supermarkets local officials have long desired. Besides Whole Foods, Shop-Rite will anchor Tucker Development’s Springfield Avenue Marketplace.
To be sure, supermarkets are hot, with Aldi and urban markets like Key Food joining the quest for new locations. Likewise, restaurant chains remain on the move. Within our tenant portfolio, New Jersey newcomers BurgerFi and Corner Bakery Café are working on deals, while Red Robin and Tommy’s Coal Fired Pizza are seeking opportunities.
— Ron DeLuca, senior vice president, Danielle Brunelli-Albrecht, senior vice president, R.J. Brunelli & Co. Inc.