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12/16/2015

A&P bankruptcy pushes central New Jersey retail vacancy rate up

The demise of The Great Atlantic & Pacific Tea Co. elevated the retail vacancy rate along central New Jersey’s major shopping corridors to 8.8% from 7.5% in 2014.



That’s according to the latest study by R.J. Brunelli & Co. Despite the uptick, the region’s 2015 vacancy factor remained a healthy distance from the 10.2% recorded in 2013 and the eight-year high of 10.5% set in 2011, but was well above the period’s low point of 4.8% posted in 2008.



R.J. Brunelli’s 2015 study found vacancies in 179 of the 821 sites visited throughout the region during this year’s third quarter. The study evaluates shopping centers and freestanding buildings exceeding 2,000 sq. ft. — including restaurants, auto service facilities and vacant auto dealerships whose location and configuration makes them viable for retail use. Regional malls and centers under construction or in the early or mid-stages of major redevelopment are excluded.



When combined with the year-over-year increase in the vacancy factor for six northern New Jersey highways to 7. 9% from 7.3%, the overall north/central vacancy rate for the 10 retail corridors surveyed by the firm rose to 8.4% from 7.4% a year ago. R.J. Brunelli found a total of 5.23 million sq. ft. of empty space in the 62.36 million sq. ft. reviewed in the two regions, with big-box spaces (20,000 sq. ft. and above) representing 2.07 million sq. ft., or 45.7%, of the vacancies — up sharply from 1.41 million, or 31.2%, in the 2014 study.



“Clearly, the A&P bankruptcy was the big story for New Jersey retail real estate in 2015,” said R.J. Brunelli CEO/principal Ron DeLuca, who directs the firm’s annual survey. “Along the four central New Jersey corridors alone, recent closures of four A&P and two Pathmark locations that have yet to find new occupants threw approximately 322,000 square feet of space on the market. Indicative of the impact of the closings, had those stores remained occupied, the central region’s vacancy factor would have ticked up 30 basis points from a year ago to 7.8%.”



DeLuca added that those A&P totals exclude a number of locations off the four corridors that remain vacant.



“A&P’s bankruptcy exacerbated another difficult year for supermarkets in central New Jersey, compounding the effects of closures of a Stop & Shop on Route 9 in Manalapan and several Foodtowns off the corridors. The closings point to heightened competition from the likes of volume-leader ShopRite, such higher-end players as Wegman’s and Whole Foods, Aldi at the low end, as well as Walmart Supercenters, Costco and other warehouse clubs, and the growing web-based delivery services,” he said.