When Saurabh Gadgil chose Oak Tree Road in Iselin to open the first East Coast location of his India-based business this month, it wasn't just because of the commercial district's reputation of being a South Asian hub.
The 185-year-old, family-owned Purushttam Narayayan Gadgil Jewelers has opened two other U.S. locations, since 2008, in California, and now has a total of almost 25 locations in the U.S., United Arab Emirates and India.
The international brands’ presence fortifies what those in the area already know: Oak Tree Road is once again a strong market, with rents rising faster than parts of New York City, according to Jeffrey Otteau from Otteau Group.
“While rents are not nearly as high as Manhattan, they are higher than other suburban markets, vacancy is extremely low and rents are rising rapidly … faster than most NYC submarkets,” Otteau said.
A report from Matawan-based Otteau Group showed the numbers for the third quarter of 2016.
Year-over-year, commercial rents rose 43 percent on Oak Tree Road. By comparison, they rose 32 percent in downtown Manhattan, the report said.
Midtown Manhattan was the strongest, at 48 percent rise in rent, while the southern Midtown area dropped 16 percent and uptown Manhattan rates dropped 9 percent, according to Otteau.
In a comparison of retail vacancy, Oak Tree Road is near the bottom at 2.3 percent, compared with Manhattan midtown at 4 percent, the report said.
Average retail asking rents in the markets show that while Oak Tree Road remains at about $30 per square foot, it is higher than the average $25 for Woodbridge Township, and half of the asking price of $63 for uptown Manhattan.
The new PNG store is located in an existing two-story commercial space. The first floor, about 2,500 square feet, is currently open with plans to expand into the second floor soon, Gadgil said.
When looking for his newest location, Gadgil said he was familiar with the two known South Asian commercial districts in the tri-state area: Jackson Heights in New York and Oak Tree Road in New Jersey.
“New Jersey is the biggest Indian jewelry market in the U.S. in terms of population, in terms of consumption of it, so it makes logical sense,” Gadgil said.
In India, the gross profit margin for a jewelry store is roughly 10 to 15 percent, Gadgil said. Compare that to a store like Tiffany & Co., which is well above 60 percent.
But the goal isn’t to emulate Tiffany, Gadgil said, adding that he anticipates a 25 to 30 percent profit margin for his U.S. stores.
“(South) Asians around the world are smart people, they know the intrinsic value of what they are buying,” he said. “Our goal is to have the best of designs at the right price in the right environment. We are offering transparency — not every product is a MRP (maximum retail price) product. “
The jewelry-buying habits in the U.S. involve viewing each piece as a work of art, he said.
For the South Asian market, jewelry is an investment, and value is based on weight of the metal (typically gold), and diamond and gemstone size and quantity.
Even a younger generation of Indian-Americans buy traditional Indian jewelry, Gadgil said, so he isn’t worried about serving just the native community which typically keeps their “investment” jewelry tucked away in a safe.
And though there has been a string of closures and businesses over the years, according to longtime business owners in the area, Gadgil said being nimble and smart about catering to the customer base is the key to success— no matter where in the world he opens a store.
If all goes well, he aims to open a new U.S. store every year in strong South Asian markets including Atlanta; Chicago; Tampa, Florida; and Texas.