The vacancy rate is edging down in the 34.8-million-square-foot Central New Jersey community-neighborhood shopping center market, and rents are edging up. The 43,000-square-foot Crossroads at Somerset Phase II neighborhood center completed construction in Somerset in April, but net absorption totaled 95,000 square feet in the second quarter and the vacancy rate slipped 10 basis points to 10.4%. The pattern repeated in the subsequent two months, as the 16,000-square-foot fourth phase of Village Shopper in Montgomery completed in August, but 69,000 square feet of net absorption brought the rate down to 10.2% that month. Reis reports 383,000 square feet of community-neighborhood center space still under construction, but predicts a 10.3% rate for year-end 2012 and 8.2% for year-end 2016, as the downward trend continues.
Community-neighborhood center rents are barely moving. In the second quarter the average asking rent rose 0.1% to $22.23 psf with the average effective rent up 0.2% to $19.50 psf, respectively. The year-over-year gains were just 0.2% and 0.3%, respectively. There was no additional change by August, and Reis predicts the increases for all of 2012 at 0.5% asking and 0.7% effective, only slightly more than last year. A year-by-year acceleration is forecast to follow, however, with annual gains exceeding 3.0% for the asking average starting in 2015 and for the effective average starting in 2014.
For power centers, Reis reports a vacancy rate of 5.5%, down 80 basis points from the prior quarter and 10 from a year earlier. The average asking rent for power centers is $28.97 psf, up 0.6% from the prior quarter and 2.0% from a year earlier. Accordingly the power center market is strong. Two power centers with 1.6 million square feet are under construction, the 1-million-square-foot Edison Towne Square in Edison in Middlesex County and the 628,000-square-foot Stafford Park in Manahawkin in Ocean County. The latter started construction in 2006 and is partially open. Only 676,000 square feet of additional power center space is planned and proposed, however.