OLD BRIDGE, nj-Bankruptcies and closures of big-box stores sapped the impact of retail expansion that occurred over the past year, says R.J. Brunelli in its annual report on vacancies in northern New Jersey's six major retail corridors.
In fact, the retail vacancy rate edged up again, to 8.2% from 8.1% a year ago, and 8% in 2010, reported the Old Bridge-based firm. In 2008, the pre-recession vacancy rate was 3.6%.
The company’s survey, conducted in April, found 2.33million square feet of vacancies within the 28.3 million square feet of leasable area along the corridors. "I thought last year that we would have lower vacancy rates at this point, because the retail real estate market bottomed out last year at this time," said Richard J. Brunelli, president. "There was a lot more activity this year than last year with retailers seeking new locations. But I didn't anticipate more bankruptcies and more closures. They offset the substantial amount of expansion that occurred."
The Borders bookstore chain closing, and the bankruptcies of Sixth Avenue Electronics, Syms Corp. and rug dealer Einstein Moomjy combined to deliver a huge hit to the retail property market. About 20,000 square feet of big-box space went dark, which was close to half of all new vacancies occurring in the past 12 months.
Brunelli said the large majority of empty big-box lots – 73 % - have been vacant since April 2011. "A lot of the closed locations only have home-furnishing uses, and that industry is still heavily stuck in a recession," Brunelli added. "Until we see a lot of new housing getting built, there's always going to be a substantial amount of vacancies."
"I hope there won't be any new surprises going forward … but you just never know," Brunelli said. "There are still some smart retailers taking advantage of some of the lowest rents we've seen in prime locations. The problem is, we're in an indecisive period. Companies don't know where they'll be even a few months from now."
Brunelli said the 10-mile Route 23 corridor between Wayne and Butler continued to display "the least volatility of any northern New Jersey corridor." He attributed that to the lack of any available land to build new retail structures.
The study evaluated shopping centers and freestanding buildings of at least 2,000 square feet, including restaurants, auto service facilities and closed auto dealerships deemed suitable for retail use. Regional malls and centers under construction or major redevelopment were excluded.
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