Danielle
Brunelli-Albrecht,
R.J. Brunelli & Co. LLC
Despite a bump in big-box inventory in the wake of the A&P bankruptcy, the New Jersey retail real estate market continues to gain strength. Leasing activity remains robust, with strong suburban markets augmented by heightened urban activity. The inventory of properties for sale remains tight, while new development is highlighted by large-scale projects.
This year’s major headline has been A&P’s bankruptcy. The sell-off of the grocer’s stores is ongoing, with Stop & Shop and Acme key bidders. Still, the stores remaining unsold are forcing landlords to think outside the box and/or redevelop their shopping centers, providing the opportunity to improve tenant mix and increase lease rates. Meanwhile, these immediate opportunities could slow down nearby projects in the works, including developments that could have come out of the ground in 2016 or 2017.
Hot markets include Paramus, a perennial favorite. Also in the north, the redevelopment of Wayne Town Center has attracted Costco, Nordstrom Rack, Saks Off 5th, Dick’s Sporting Goods, and ULTA. In Bridgewater, Whole Foods signed a lease at Bridgewater Crossing, and negotiations are progressing with several major off-price and full-price specialty retailers. In Union County, Clark Commons opened with Whole Foods, LA Fitness, Home Goods, Michaels, Petco, ULTA, Modell’s, and Chipotle.
Activity in Woodbridge includes a major home furnishing retailer’s commitment for the majority of space at the proposed 92,000-square-foot Richmond Plaza on Routes 1 and 35, and the redevelopment of the former American Signature Furniture building for Hobby Lobby. Further south, the redevelopment of Middletown’s former Pathmark center will bring in Bed Bath & Beyond and a TJX Companies concept, while Nordstrom Rack just opened at the expanded Eatontown Crossing, joining Macy’s Furniture and Fortunoff’s Backyard.
Statewide, the list of major new projects that are likely to come to fruition in the next few years is led by the Meadowlands’ American Dream, back on track for a proposed 2017 debut. Triple Five has announced leases with Cinemax, LegoLand Discovery Center, Sea Life Aquarium, Toys ‘R’ Us, Hermes, Lululemon and Hudson Bay’s Lord & Taylor, Saks Off 5th and Saks Fifth Ave.
The Point at Sayreville is a phased mixed-use redevelopment of an industrial site, with Bass Pro signed as an anchor. Elsewhere in Middlesex, Hartz Mountain’s Edison Town Center will feature Top Golf, which is anticipated to open in late 2016. The company has leases out or in negotiation with several big-box and restaurant tenants for 2017 openings. In Monmouth County, National Realty & Development has unveiled plans for the mixed-use Middletown Town Center at Route 35 and Cane Road.
On the urban front, Jacobs Enterprises assembled a Bloomfield site for the mixed-use Glenwood transit village, sold it to Avalon Bay, which developed the property and sold the 60,000-square-foot retail component back to Jacobs. Foodtown will be joined by Tilted Kilt and others at the site.
Newark is similarly seeing much-needed new supermarkets, with the recently opened ShopRite to be followed by Whole Foods, which will anchor the redevelopment of the former Hahne’s department store. Jersey City is seeing retail development along the Hudson waterfront, and neighboring Hoboken has approved a proposed Trader Joe’s-anchored development.
Besides the aforementioned supermarket chains, active tenants include Dollar Tree, which has signed 13 New Jersey deals in 2015, with another four leases out. Others include Wawa, Quick Check, The Fresh Market, Wegmans, AutoZone, Advance Auto, and Planet Fitness. The burger wars continue with Red Robin, Zin Burger, Shake Shack, and Habit Burger, while expanding pizza concepts include Blaze and Anthony’s Coal-Fired Pizza.
The ongoing strength of the market has had an impact on investment sales. Owners are retaining properties, creating a tight market, with little for sale and cap rates at historic lows. Money is cheap and plentiful, but properties with good credit are supporting reasonable rents and returns, to the ongoing benefit of current owners.
— Danielle Brunelli-Albrecht, President and Principal, R.J. Brunelli & Co. LLC. This article originally appeared in the November/December 2015 issue of Northeast Real Estate Business magazine.