Big-box store closures continued to drive up the vacancy rate along northern New Jersey's six major retail corridors in the past year, according to an annual survey by Old Bridge-based retail real estate broker R.J. Brunelli & Co.
The survey, conducted in April, found 2.33 million square feet of vacancies within the 28.34 million square feet of leasable area examined along the corridors, which edged up the North Jersey retail vacancy rate to 8.2 percent from 8.1 percent a year ago and 8 percent in 2010 — compared to 3.6 percent in 2008.
"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."
According to the survey, the demise of Borders Group Inc. and the bankruptcies of Sixth Avenue Electronics, Syms Corp. and Einstein Moomjy Inc. had a devastating impact on the North Jersey retail market in the past 12 months. In total, big-box stores exceeding 20,000 square feet represent 46.8 percent of the region's darkened space.
Brunelli said 73 percent of those lots have remained vacant since at least April 2011, and of the six Pathmark stores that closed along the corridors in the past two years, only two have been leased.
"A lot of these closed locations only have home-furnishing uses, and that industry is still heavily stuck in a recession," Brunelli said. "Until we see a lot of new housing getting built, there's always going to be a substantial amount of vacancies."
Brunelli said the 10-mile Route 23 corridor between Wayne and Butler has consistently had "the least volatility of any northern New Jersey corridor," because "no other big boxes are available along the highway … due to the absence of buildable retail land."
"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."
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.