"Once you get past the top-tier stores that are opening right now, the next tier of the market is really struggling," says Ed Walters, founder of and partner with the Walters Group, Barnegat.
[IMGCAP(1)]"The overall picture is a bit different from how it was a year ago," agrees Matt Harding, president and COO of Levin Management, North Plainfield. "The market is a bit softer, and there are fewer tenants looking for space. The mood is cautious; people are holding back, waiting to see what the rest of the year will bring."
Does this mean disaster for New Jersey? Not quite.
"There are some national tenants who have pulled back on their expansion plans, but there's still a big universe of retailers who are looking to relocate or expand in New Jersey," says Harding. The fact is, the economic slump is hitting some retailers harder than others. The highest-end retailers, those whose customers are so wealthy the businesses are considered essentially recession-proof, haven't felt the pinch. Neither, according to both Walters and Harding, have necessities stores such as supermarkets and pharmacies or bargain stores such as Target, Costco and WalMart.
[IMGCAP(3)]"The national numbers say that the Costcos and Targets are doing better now than they were during the good times," says Walters. The Walters Group's massive Stafford Park mixed use development in Stafford recently welcomed both chain retailers to the tenant lineup. It's the space in the higher-end Market Plaza area of the development that's slower to lease.
Perhaps part of the reason retail developers can still find tenants is because New Jersey, with its wealth and dense population, hasn't suffered as acutely as other states have as a result of the downturn.
"The density and prosperity of our population makes us popular for retailers who are looking and want to locate in the state," says Harding. "Also, the New Jersey economy is more diversified than other parts of the country, so we tend to not quite hit the peaks or the valleys of the economic cycle that other parts of the country do. We're not seeing big increases in vacancy rates as of yet."
Perhaps the biggest change in the retail landscape is not a vastly increasing number of empty storefronts, but the way retail is now situated. It simply isn't enough to build a strip mall and wait for the tenants to come. You have to offer your tenants (and shoppers) much more, such as landscaping, outdoor seating and, increasingly, built-in customers living in adjacent homes or working in offices on site.
[IMGCAP(4)]One of the great benefits of a mixed-use development is its diversity. With many different product types, the project can remain reasonably stable no matter what happens to the economy. Both Stafford Park and Edgewater Square, which is being developed by Levin Management, are mixed-use developments consisting of retail, housing and offices, and many other developments cropping up in the state share the same model. They, too, are having their share of difficulties (it's harder to get financing for the residential portions just now, for instance), but their popularity is undeniable.
All is not lost in the world of retail and development. New Jersey hasn't had the same tumble other markets have, and hopefully it never will. But no fortress can stand forever, and only time will tell how well New Jersey rides through the current storm.
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