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Report: North Jersey retail among toughest in US

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North Jersey is among the top five markets in which investors might consider selling retail properties, according to Ten-X Commercial U.S. Retail Market Outlook.

Other cities listed as top “sell” markets include Detroit, Kansas City, Chicago and Memphis. All face adverse retail conditions linked to stagnant population growth, tepid job growth or an overabundance of new supply, according to the report.

“In terms of brick-and-mortar stores and the real estate that supports it, the phrase ‘retail apocalypse’ is no hyperbole,” Ten-X Chief Economist Peter Muoio said. “Store footprints are continuing to shrink, and we are seeing droves of traditional retail assets being repurposed or simply demolished. Headlines of store closings and bankruptcies of household names like Toys “R” Us and Radio Shack are some of the most visible signs of the massive reordering taking place in the retail space. While there are some markets that have managed to stay afloat and even thrive, the national retail picture is decidedly bleak.”

E-commerce has steadily chipped away at the retail sector and now comprises more than 14 percent of total non-auto retail sales, up from 5.5 percent five years ago. Warehouse and distribution sectors have been the biggest beneficiaries, with sales increasingly fulfilled from warehouses instead of retail stores.

“With fewer shoppers coming in the door, brick-and-mortar locations simply do not need as much in-store inventory as they used to,” Muoio said. “We’ve seen many traditional retailers partner with e-commerce companies in recent months, underscoring the importance for even brick-and-mortar stalwarts to have significant e-retail components.”

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Elana Knopp

Elana Knopp

Elana Knopp covers all things real estate for NJBIZ. You can contact her at eknopp@njbiz.com.

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