Experts discussing the current status of New Jersey’s retail real estate market report that the vacancy rate of principle shopping malls and corridors in the central part of the state fell slightly over nine percent, down from the extremely high 11 percent of last year. This decrease in New Jersey’s empty retail spaces seems to indicate that the market niche as finally bottomed out and will predictably continue to fall over the first six months of 2013. President R. J. Brunelli of the New Jersey retail brokerage firm R. J. Brunelli & Company also believes that this drop in the retail vacancy rate supports the idea that recovery will not only begin in 2013 but will also accelerate if Europe’s economy issues are repaired and taxes remain stabilized.
Brunelli further remarks that it is the emergence of The Great Atlantic and Pacific Tea Company from Chapter 11 bankruptcy, coupled with the end of Borders, that is contributing to the recovery of central and northern New Jersey’s retail real estate market. The optimism felt by the retail real estate market is hesitantly optimistic, however, since the recovery also depends on the continuance of low interest rates, the willingness of banks to begin approving more loans to commercial real estate buyers and the projected growth of the economy to spur developers into renovating or constructing retail buildings.
Another reason why northern New Jersey’s real estate market is rebounding from last year’s bottoming out is an increase in rental activity as well as housing purchases in that area. For the past few years, retailers have been clamoring to become part of the lucrative business industry in Bergen County and other prosperous counties in this area of the state. Due to operating and leasing costs being unusually high, retailers were avoiding these counties until the recession was over. In 2012, however, the economy slowly but steadily started improving, leasing costs decreased and more people began purchasing real estate in northern New Jersey, which allowed businesses to experience better sales.
Favorable retail real estate conditions have allowed both small and large retailers to rent spaces of all sizes. Chain grocery stores and “large box” retailers are finding that excellent opportunities exist in New Jersey to open a new business or add on to an already established business. Everything from fitness clubs to specialty shops to family restaurants are now actively seeking leasing possibilities in Bergen and surrounding counties, a phenomenon that is also attracting homebuyers to the area as well.
With this year expected to be one of the best years for the retail real estate industry in northern New Jersey, in addition to the housing market, retailers should get a head start on exploring available commercial properties before the most desirable sites are leased or purchased.