6A — December 24 - January 14, 2016 — Shopping Centers — M id A tlantic
Real Estate Journal
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S hopping C enters
ith the effects of the Great Atlantic & Pacific Tea Co. R.J. Brunelli Survey Vacancies along Central & Northern NJ’s Retail Corridors rise to 8.3% in wake of A&P bankruptcy W the north (nearly double last year’s 23.2% ratio).
of the two regions’ retail real estate market found a total of 5.18 million s/f of vacancies in the 62.36 million s/f evalu- ated during the third quarter of 2015. This compared with 4.38 million s/f of empty space in 61.23 million studied in the firm’s 2014 survey. Over the last eight years, the combined vacancy rate ranged from a low of 4.2% in 2008 to the high of 9.5% in 2013. This year’s jump largely reflected a 130-basis-point increase in the central region, where the vacancy factor rose to 8.8% (2.87 million s/f avail- able in the 32.85 million s/f
studied) from 7.5% in 2014. In the northern region, the rate grew 50 basis points to 7.8% (2.31 million s/f vacant in the 29.77 million s/f reviewed) from 7.3% a year ago. Notably, big-box spaces (20,000 s/f and above) ac- counted for 2.01 million s/f , or 44.5%, of the vacancies, up from 1.31 million s/f , or 28.8%, in 2014. The sharp uptick put the big-box ratio above the 42.1% registered in 2013, but still down from 47.0% in 2012 and 49.6% in 2011. Big-boxes drove 43.6% of the vacancies in central counties (up from 34.1% in 2014) and 45.4% in
including restaurants, auto service facilities and vacant auto dealerships whose loca- tion and configuration makes them viable for retail use. Re- gional malls and centers under construction or in the early or mid stages of major redevelop- ment are excluded. The central region includes properties along Rtes. 1, 9, 18 and 35 and an adjoining section of Rte. 36 in Middlesex, Monmouth, Mercer and parts of northern Ocean County. The northern region covers heavily retailed parts of Rtes. 4, 10, 17, 22, 23, 46/3 and certain intersect- ing arteries in Bergen, Essex, Morris, Passaic, Somerset and Union counties. “Clearly, the A&P bank- ruptcy was the big story for New Jersey retail real estate in 2015,” said R.J. Brunelli CEO/ principal Ron DeLuca, who di- rects the firm’s survey. “While the bankruptcy process is still being played out, along the 10 central and northern retail corridors alone, recent closures of five A&P and three Path- mark locations that remain unclaimed placed more than 438,000 s/f of space on the mar- ket. Indicative of the impact of the closings, had those stores remained occupied, the aggre- gate vacancy factor for the two regions would have edged up 20 basis points to 7.6%.” DeLuca added that those to- tals exclude a number of A&P, Pathmark and Food Basics locations off the corridors that have yet to attract approved bids in bankruptcy court. “Still, a number of supermarket com- panies pounced on the oppor- tunities presented through A&P’s demise to expand their New Jersey footprint, most notably Acme, which took 35 sites, including 25 in northern counties, five in the central region and another five in the southern Shore region. These sites, most of which were lo- cated outside the 10 corridors, accounted for nearly half of the 72 locations the chain took in an area extending from Mary- land to Connecticut.” Stop & Shop, the second larg- est player in the A&P auction, took 24 locations in the metro New York area, including three in northern New Jersey. The eight other New Jersey loca- tions acquired to date through the auctions—all but one in northern counties—were taken by smaller operators, including several focused on ethnic fare. continued on page 36A
Although A&P was a major contributor to the big-box va- cancy surge along the central region’s corridors, northern counties were more of a mixed bag, with closed Kmarts in Paramus and Randolph and the shuttered Macy’s at Ledge- wood Mall (now undergoing redevelopment) combining for nearly 324,000 s/f of the mar- ket’s 1.02 million s/f of empty big-box space. As in past years, the R.J. Brunelli study evaluated shop- ping centers and freestanding buildings exceeding 2,000 s/f
bankruptcy r i p p l i n g through the market, the c o m b i n e d vacancy rate along central and northern New Jersey’s 10 major re-
Ron DeLuca
tail corridors escalated to 8.3% from 7.4% a year ago, accord- ing to a new survey by R.J. Brunelli & Co., LLC.
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