It’s too early to tell the impact of the new federal tax law on retail here in New Jersey, or how things might change now that we have a new governor. But one can place a sizable bet, literally, on the fact that medical marijuana dispensaries now given the go-ahead here will lead to recreational use, and that sports betting in New Jersey is going to also be a hit.
Betting on Jersey’s retail sector is a great wager too. North Jersey’s top markets — Paramus, Wayne, Woodbridge, Bridgewater and Princeton — are all in great shape. Vacancy rates are low and rents are stable. Although the area was hit hard dur- ing the financial crisis and onetime retail juggernauts such as A&P and Sports Authority had to shutter their doors, much of that space was redeveloped. The space vacated by retailers due to the big impact of the Internet — Toys ‘R Us was stung badly by e-commerce, for example — has quickly been absorbed. Opportunity is at such a premium, it’s tough to find a steal at any of the area’s major regional malls or power centers, or the other desirable retail corridors for that matter. North Jersey retail is that tight.
Big Apple’s Big Impact
North Jersey’s proximity to New York City provides unique opportunity for the region. New York City is booming despite high rents and high vacancy rates (although they’ve come down). People are moving back to the city in record numbers. Google, Facebook and other high-tech startups are expanding their workforce.
Jordan Cohn
Partner,
The Shopping Center Group
Millennials prefer urban living. But even empty nesters are returning to buy small apartments, often keeping a home elsewhere. The Garden State is a nice place to call home despite its reputation as portrayed in movies and TV shows. It’s affordable and a desirable place to live, eat and shop.
And since New York City continues to be a mecca for tourism, that’s good news for Newark Airport, one of the metro area’s main international gateways, as well as for what will most certainly become North Jersey’s top tourist destination: the American Dream Meadowlands complex.
Formerly known as Xanadu, the property reemerged out of bankruptcy and has become a compelling combination of entertainment, theme parks and retail.
Expectations are high for the spring 2019 opening. With DreamWorks Water Park, the Nickelodeon Amusement Park, Sealife Aquarium and an indoor ski slope, The American Dream should truly become an international destination with more cache and draw than the Mall of America, given its proximity to New York City. Jersey also offers strategic distribution facilities for the likes of supermarkets, drugstore chains and even Amazon. Space is available and less expensive than the boroughs of New York City, plus its proximity to shipping, rail and highway make North Jersey an even more compelling distribution option. These huge facilities create jobs, and that ultimately creates demand for retail.
Not Immune to Trends
Of course, many of the national trends affecting retail have also hit Jersey. The deal activity continues to be in the grocery sector, quick-service restaurants with a healthy twist, entertainment, value fashion and value housewares.
We have a lot of players in the grocery space, ranging from Whole Foods Market to Aldi, Trader Joe’s, Stew Leonard’s, Lidl and Wegmans. In the quick-serve healthy segment, it’s brands like Cava, B. Good, Chopt and Sweetgreen on the hunt for deals.
In value fashion, Burlington and TJ Maxx are the main players. And in value housewares, it’s At Home, Home Goods and Home Sense.
The new wave of quality cinemas has populated the Garden State. Cinemark will be opening in Wayne and Watchung. AMC is in Paramus. CMX opened in Closter (Bergen County). All offer comfortable seating, alcohol and decent food.
Undoubtedly, at some point we will hit a saturation point followed by some sort of consolidation in terms of these “hot” categories, but for now the party is going strong.
That can’t be said for the “Doc in Box” category, which had a good run up and down the New Jersey Turnpike and Garden State Parkway, but which has tailed off due to the slow, but relentless legislative repeal of Obamacare. When fewer people have insurance, fewer people go to the doctor. It’s no surprise this category has slowed somewhat.
Improved Urban Landscape
Newark garnered national attention by making Amazon’s final 20 list for its HQ2 and the accompanying 50,000 jobs. That has raised quite a few eyebrows. But those in the know have seen the city’s slow, but steady transformation now for many years.
Whole Foods Market recently opened in the old Hahne’s department store. The New Jersey Devils play in the Prudential Center. The New York Red Bulls soccer team plays in town. A new class of professionals now live in Newark condos, and many more are on the way.
Newark hasn’t solved all of its issues, but the fact it can even compete, let alone make the finals of such a nationally competitive field for Amazon, indicates how far the city and the state have come in terms of wanting to play ball with business (Trenton pledged significant subsidies in the Amazon bid). Regardless of whether Jeff Bezos sets up shop in Newark or not, the city has already gotten bang for its effort.
Not to be left out, Jersey City is another urban area headed in the right direction. Jersey’s tallest residential building is under construction there, joining a slew of new apartments and condos already making the town a highly sought-after destination.
Razzas Pizza, voted by The New York Times as the metro areas best pizza is a big attraction. One could not have imagined this transformation 20 years ago, but that’s what makes this business so interesting. Yesterday’s blight is today’s hot commodity.
Turn up the A/C
Although Atlantic City is part of South Jersey, its resurgence is good news for the entire state. The Hard Rock just opened in what was Trump’s Taj Mahal. The billion-dollar Revel that went bankrupt shortly after opening is now the hot Ocean Resorts. Whether this is a short-term burst or will continue for the long term is still to be determined. But with football season here, betting will be top of mind for many, and that means more people coming to Jersey and Atlantic City due to statewide sports betting.
Looking Ahead
Next year should be more of the same, assuming that a global trade war doesn’t derail the progress made by the tax cuts and decreased regulations. Expect the good markets to withstand minor fluctuations in the economy. Great deals will continue to be challenging to come by. Wins go to those who persevere and build the long-term relationships to get in on opportunities before they become widely known.