The vacancy rate in the 21.5-million-square-foot community-neighborhood shopping center market for Northern New Jersey has edged up and down recently, but the 5.8% rate for the second quarter of 2012 was the fifth lowest among the top Reis markets. Although the rate edged up to 5.9% in August, a 5.8% rate is forecast for year-end, the same as in 2010 and 2011. The stability is the result of near flat net absorption and near absent new supply, but with 195,000 square feet under construction Reis predicts both new supply and net absorption will move into the 200,000-to-300,000-square-foot range starting in 2013. The vacancy rate is expected to remain low.
Community center rents are increasing moderately, with the average asking rent up 0.4% in the second quarter to $27.82 psf and the average effective rent up 0.3% to $24.65 psf. There were slight additional gains through August, and increases of about 1.5% are forecast for all of 2012. Subsequent annual increases are expected to range from 2.0% to 3.0%.
The Northern New Jersey power center segment also has strong occupancy according to Reis, with a 3.4% second quarter vacancy rate that is far below the U.S. average though up 50 basis points from a year earlier. The power center average asking rent was $27.83 psf, up 0.8% year-over-year. The 700,000-square-foot Wayne Town Center power center in Wayne and the 2.4-million-square-foot American Dream Meadowlands regional center (see Special Real Estate Factors) dominate space under construction.
“With new big-box store closures negating the benefits of absorptions, the vacancy rate in retail properties along northern New Jersey’s six major shopping corridors edged up to 8.2% in April from 8.1% a year ago and 8.0% in 2010, according to R.J. Brunelli & Co., LLC,” as cited by Real Estate Weekly News. The rate was just 2.9% in 2007, with big-box spaces accounting for much of the recent increase. The study covers State Highways 4, 10, 17, 22, 23, and 46/3, and certain intersecting arteries.