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Retail vacancy falls, but big boxes still a big problem

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Vacancy along North Jersey’s main retail corridors ticked down through midyear, but the region is still grappling with the effects of several big-box retail bankruptcies in 2009.

Those are the findings of an annual survey by R.J. Brunelli & Co., an Old Bridge-based retail brokerage. The firm found vacancy edged down to 8.1 percent, from 8.2 percent through the second quarter of 2012, with two of the region’s six major retail highways showing improvement from last year.

Route 22 saw vacancy fall most dramatically, from 9.7 percent to 8.3 percent, thanks in part to plans by Costco and ShopRite to fill shuttered Pathmark sites in North Plainfield and Union, respectively. But the corridor also is dealing with recent big-box closures, such as that of Sears Auto Center in Union, as is the rest of the region.

“Big boxes tend to be the challenge right now,” said Ron DeLuca, senior vice president with R.J. Brunelli. That study found that for stores exceeding 20,000 square feet, vacancy fell slightly, but still accounts for nearly 46 percent of empty space.

Nearly 60 percent of that inventory, or 612,700 square feet, has sat vacant for at least three years, and had previously been operated by the likes of Circuit City, Linens ‘N’ Things, Borders and Pathmark, the report said.

A wave of bankruptcies in 2009 pushed vacancy up from 3.3 percent to 6.6 percent, according to Brunelli’s firm. Vacancy along the North Jersey retail corridors has since increased to 8 percent and remained stuck there.

DeLuca said the region was unlikely to get back to 3 percent in the near future, but “if we get down around 6 percent we’re doing great — it would be a good market.”

And while several big-box retailers have been active in the market, the higher vacancy rates and an unpredictable economy will keep users from taking a chance on sites that are less than ideal.

“Everyone’s looking for quality real estate,” DeLuca said. “No one’s settling, so it’s got to be B-plus or nothing.”

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