Diverse Mix of Retailers, Restaurants Remain Active in Northern New Jersey

by Taylor Williams

By Danielle Brunelli, president, R.J. Brunelli & Co. 

On both the landlord and tenant sides, 2020 was a tough year for the Northern New Jersey retail market. But as some of the industry’s most optimistic voices predicted, the hard times are passing, and actually passing fairly quickly.

In 2020, we saw leasing activity decline by almost 30 percent year over year. This languishing activity resulted in a 3.1 percent drop in the market rent on a per-square-foot basis.

Over the past couple years, there were several bankruptcies in the works that were accelerated by the COVID-19 pandemic. These bankruptcies resulted in many new vacancies in the region, including former stores of Modells, Justice, Pier 1 Imports, Tuesday Morning, Steinmart and others.

Danielle Brunelli, R.J. Brunelli & Co.

Danielle Brunelli, R.J. Brunelli & Co.

However, light has appeared at the end of the tunnel, and we are seeing renewed leasing activity as we close the first quarter of 2021. Users including Planet Fitness, Dollar Tree, Harbor Freight, Raymour and Flanigan, salon suites concepts, Five Below and others are leasing up vacant spaces quickly.

Tenant Expansions

A good example of an essential service business that has benefited from an increase in sales throughout the pandemic and aggressively expanded in the region in 2020 is Dollar Tree. The discount retailer signed leases for eight new Dollar Tree stores and one new Family Dollar store in New Jersey in 2020.

Another notable tenant that we have heard is signing leases in New Jersey is Amazon Fresh. Terms of these deals are confidential, and although we have not seen any of their stores open yet, there are several in New Jersey that are in the process of coming on line.

In addition to Amazon Fresh, German discount grocer Lidl has also been busy in 2020. Uncle Giuseppe’s, a large-format Italian specialty grocer, also signed a lease in Morris Plains and continues to expand opportunistically.

With dining restrictions in place during 2020, all restaurants suffered to some degree. Some, like Panera and First Watch, completely froze their pre-pandemic expansion plans. However, others took advantage of the increase in drive-up and curbside pickup business; examples of these users include Popeyes, Chipotle Mexican Grill, Jersey Mikes, Wingstop and Smashburger, all of which continued to sign leases in 2020.

Despite various public health encumbrances, some tenants were able to move quickly to lease, build-out and debut their stores in 2020. For example, RJ Brunelli & Co. negotiated a deal for Chipotle at a drive-thru location in North Bergen in which the tenant signed the lease, obtained permits, constructed its space and opened all within 2020. Raising Cane’s, a fast casual restaurant known for its chicken, is also seeking drive-thru locations as part of its goal of expanding in New York and New Jersey.

Gregory’s Coffee, primarily a New York City-based specialty coffee shop with 30 existing locations, did not sit idle during 2020, and rather refocused energy and expansion efforts on drive-thru locations in New Jersey. The chain will soon be opening new stores on State Route 17 in Paramus and on State Route 10 in East Hanover.

Development Activity

New construction starts have declined by almost 5 percent over the past 12 months. But some development success stories did manifest in 2020. In Wayne, The Parke at Hamburg had a tremendous grand opening in the fourth quarter of 2020. The property was fully preleased prior to opening to tenants such as Trader Joe’s, ULTA Beauty and The Paper Store.

The developer constructed the new center throughout the pandemic and by the time it was open, the community was more than ready to get out of their homes and shop! Sports Clips and The Habit Burger have also recently opened at The Parke at Hamburg, and Panera will soon follow.

Some big box tenants were also active in 2020. Walmart launched a new store in Ledgewood and relocated and opened its new Linden store. Target was making moves and signed a lease to backfill the former Kmart in Wall Township. Burlington was also busy rolling out a new format that would downsize its stores from 80,000 to 30,000 square feet.

Even with people driving less in 2020, car maintenance needs still persisted. Mavis Discount Tire signed several leases in New Jersey, as did Aamco and other automotive retailers and service providers.

In general, landlords were aggressive in getting new deals done in 2020 and continue to be so in 2021. Rents have dropped slightly, and landlords have been more willing to provide free-rent periods, though they still may not provide tenant allowances. Landlords spent months concentrating on keeping their existing tenants in place, working on rent abatements or rent deferral agreements.

The past calendar year was one that brought people together, not in conference centers or meetings, but on Zoom calls from the comfort of their homes. Real estate professionals spent less time on the roads and had more time to pick up the phone and talk.

Zoom calls occurred in which multiple brokers shared information on their clients who continued to make deals, and landlord reps shared information on their available locations. Professional relationships were built, new retail prototypes were created and retailers adjusted the way they did business with unprecedented speed.

In 2021, these new modes of operating will only help the future of brick-and-mortar retail, in both Northern New Jersey and the country.

— R.J. Brunelli & Co. provides leasing and advisory services for landlords and tenants throughout Northern New Jersey.

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