It found that the vacancy rate increased from 6.7% at the beginning of the year to 8.2% in July. Of the roughly 95 million square feet it evaluated, more than 7.5 million square feet was empty, up from 6.5 million square feet six months earlier. About a million square feet of retail product is currently under construction.

"We anticipate high vacancies to continue even after the recession," said Chuck Lanyard, president of the Goldstein Group, in a statement accompanying the report. "Absorption will be slow over the next few years."

Yet the news could have been worse, Lanyard maintained. "Other states are reporting vacancy rates from 11% to 15%," he stated. "It was surprising that the rate increased just over 1% from the beginning of the year. We thought the rate would be considerably higher. This could also be an indication that landlords are assisting retailers stay afloat during this recession by providing rent concessions, but as we know, this recession is far from over."

Leading the pack with the slimmest vacancies were the Route 17-Ramsey/Mahwah corridor (2%) and Route 17-Rochelle Park/Rutherford submarket (3.7%), both in Bergen County. The highest vacancies were found along Route 18 in East Brunswick (18%) in Middlesex County and the Route 35-Shrewsbury/Ocean corridor (11.8%) in Monmouth County.

Overall, the scenario in the New Jersey retail market is mixed. It is one of the most densely populated states in the nation, with the second highest per household median income--$67,035, which stands 32% higher than the national median of $50,233. However, the cost of living in the Garden State is also 32% higher than the national average and the state's unemployment rate has risen to a 17-year high of 9.3%, which is slightly below the national average of 9.4%.

"The recession has hit consumers in their pocketbooks and many are shifting toward purchasing necessities such as food and household supplies at discounters such as BJ's, Costco, Wal-Mart or Kohl's and away from discretionary spending on clothing and luxury items," Lanyard noted. "Don't be surprised to see more retailers close stores or file bankruptcy over the next few months. The silver lining in all this turbulence is that, for the retailer looking to open a new business, there are now excellent opportunities to secure prime locations that normally weren't available to them before. They now can take advantage of very favorable rent deals as well. When the economy does rebound, they will already be there."

Several major retailers with a large presence in New Jersey have closed up shop in the past year, including Linens 'N Things, Circuit City, Fortunoff and Kay Bee Toys. Yet several national and regional retailers have slipped into their vacant spaces. For example, PC Richards took over three former Circuit City locations in Woodbridge, East Brunswick and Brick, and HomeGoods is set to occupy a former Linens 'N Things property in West Windsor. "There are many more deals in negotiations and we will continue to see some of these big-box stores being re-leased," Lanyard stated.

Moreover, the state is seeing an influx of health club and fitness purveyors and several national and regional retailers and eateries have targeted the Garden State for expansion, such as 7-Eleven, Chipotle, Walgreens and Sonic Restaurants, which opened three outlets in Hasbrouck Heights, Totowa and Howell.

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